Texas 50(a)(6) Loan: Rules, Requirements, and How to Qualify
Written by Travis Erickson Branch Manager & Licensed Mortgage Loan Officer NMLS#1193479 Bonelli Financial Group
Last updated: May 2026
A Texas 50(a)(6) loan is a cash-out refinance that lets Texas homeowners borrow against the equity in their primary residence. Unlike standard cash-out refinance products available in other states, Texas loans are governed by constitutional protections that limit LTV, cap fees, and require specific closing procedures. The rules governing this loan are written into the Texas Constitution — not just state statute — which means they apply to every lender, every borrower, and every transaction involving a Texas homestead.
Texas has the most protective home equity laws in the country. Understand the rules before you apply, and this is a straightforward process. Miss one requirement, and the lien can be legally invalid.
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What Is a Texas 50(a)(6) Loan?
A Texas 50(a)(6) loan is any loan that allows a homeowner to borrow against the equity in their Texas primary residence. It replaces the existing mortgage with a larger loan, and the borrower receives the difference as a lump sum of cash at closing.
Texas homeowners and lenders use several names to describe this product: Texas A6 loan, Texas home equity loan, Texas cash-out refinance, and Texas 50a6 loan. All of these terms refer to the same constitutionally-regulated transaction.
The name comes directly from Article XVI, Section 50(a)(6) of the Texas Constitution — the specific provision that governs home equity lending. The purpose of Section 50(a)(6) is to prevent homeowners from repeatedly borrowing against their homes without limits, preserve a minimum level of equity, and protect against predatory lending.
Common uses for a Texas 50(a)(6) loan:
- Consolidating high-interest debt such as credit cards, medical bills, or personal loans
- Funding home improvements and renovations
- Covering major expenses including education or business costs
- Using equity as a down payment on a separate investment property. For investment properties themselves, consider a DSCR loan which doesn't require personal income documentation.
- Building a financial reserve or emergency fund
The 10 Constitutional Rules Every Texas 50(a)(6) Loan Must Follow
These are not lender guidelines. They are constitutional requirements. If any of these requirements are not followed, the lien may be invalid. This is why working with a lender who understands Texas home equity law — not just general mortgage guidelines — is essential.
Rule 1: Maximum 80% loan-to-value
The total of all loans secured by the property cannot exceed 80% of the home's appraised fair market value at closing. The borrower must retain at least 20% equity after the loan closes. This limit applies to the combined loan-to-value of all liens — not just the new loan.
Rule 2: Lender fees capped at 2%
Lender-charged fees cannot exceed 2% of the loan amount. This cap includes origination fees, underwriting fees, and credit report fees charged by the lender. The cap does not include appraisal fees, survey costs, title insurance premiums, attorney fees, or discount points.
Rule 3: Primary residence only
A Texas 50(a)(6) loan can only be secured by the borrower's primary homestead. Investment properties and second homes are not eligible for a Texas cash-out refinance under Section 50(a)(6).
Rule 4: Conventional financing only — no FHA or VA
Texas law limits cash-out refinancing on homestead property to conventional mortgage products. FHA cash-out refinances and VA cash-out refinances are not permitted on a Texas homestead under Section 50(a)(6). Homeowners with FHA loans can use FHA streamline refinancing for rate reduction without cash out. VA loan holders should consider VA IRRRL for rate-and-term refinancing.
Rule 5: One active equity loan at a time
Only one Texas 50(a)(6) loan may be secured by the homestead at any time. A new home equity loan cannot close until the previous one is fully paid off and released. Simultaneous second-lien home equity loans and HELOCs are not permitted alongside an existing 50(a)(6) loan.
Rule 6: 12-day mandatory waiting period
After the borrower receives the required loan disclosures, the loan cannot close for at least 12 calendar days. This waiting period begins when both the borrower and their spouse sign and date the 12-day disclosure notice. The 12-day period cannot be waived.
Rule 7: In-person closing required
All borrowers and their spouses must appear in person at a Texas title company, the lender's office, or an attorney's office to sign closing documents. Remote closings and power of attorney are generally not permitted for Texas 50(a)(6) loans.
Rule 8: Non-recourse protection
The loan must be non-recourse. The lender cannot pursue personal liability against the borrower or their spouse unless fraud occurred. If the borrower defaults, the lender's remedy is limited to foreclosure of the homestead — not pursuit of the borrower's personal assets.
Rule 9: No prepayment penalty
A Texas 50(a)(6) loan must allow prepayment without penalty or additional charge. The borrower may pay off the loan early at any time without incurring fees.
Rule 10: Homestead-only collateral
No additional collateral beyond the homestead may secure the loan. The lender cannot require the borrower to pledge any other property or asset as security for a Texas 50(a)(6) loan.
Navigating the rules of Texas cash-out refinancing can be complex. Our team is here to simplify the process and help you access your home equity while ensuring full compliance with Texas laws. Whether you're consolidating debt or funding a home renovation, we’re ready to find the best solution for your needs. Check current mortgage rates to see how Texas 50(a)(6) pricing compares to conventional refinancing.
| Requirement | Details |
|---|---|
| Property type | Primary homestead only |
| Maximum LTV | 80% of appraised value |
| Minimum equity retained | 20% after closing |
| Minimum credit score | 620+ |
| Lender fee cap | 2% of loan amount |
| Loan type | Conventional only |
| Closing location | Title company, lender, or attorney in person |
| 12-day disclosure waiting period | Required cannot be waived |
| Waiting period after purchase | 6 months minimum |
| Waiting period between cash-out refinances | 12 months minimum |
| Active liens at closing | All existing liens paid off |
| Investment properties | Not eligible |
| Second homes | Not eligible |
| FHA or VA cash-out | Not permitted |
Waiting Periods — Texas 50(a)(6) Timeline Rules
Texas imposes specific waiting periods that apply regardless of lender or borrower preference. These cannot be negotiated, waived, or shortened.
6 months after purchase: A homeowner must wait at least six months from the original purchase closing date before a Texas 50(a)(6) cash-out refinance can close.
12 months between cash-out refinances: Only one Texas 50(a)(6) loan may close on a given property in any 12-month period. Even if the previous loan has been paid off in full, the 12-month prohibition from the prior closing date still applies.
7 years after foreclosure: Homeowners who have had a foreclosure must wait seven years before obtaining a Texas 50(a)(6) loan.
4 years after bankruptcy or short sale: A four-year waiting period applies following a bankruptcy discharge or short sale.
12 days after disclosures: The mandatory 12-day waiting period from disclosure delivery is a constitutional requirement, not a lender policy. It applies to every Texas 50(a)(6) transaction without exception.
What Is a Texas 50(f)(2) Loan?
A Texas 50(f)(2) loan is a rate-and-term refinance of an existing Texas 50(a)(6) home equity loan. It was introduced by constitutional amendment in 2018.
Before 2018, an existing Texas 50(a)(6) loan could only be refinanced as a new 50(a)(6) loan — meaning every subsequent refinance carried all the same constitutional restrictions, including the 80% LTV cap and in-person closing requirement. The 50(f)(2) path allows a borrower to refinance an existing home equity loan into a non-home-equity rate-and-term loan, removing many of the ongoing restrictions.
The "Once a Texas Equity Loan, Always a Texas Equity Loan" rule
Once a property has been encumbered by a Texas 50(a)(6) lien, any subsequent refinance that includes cash out — even one dollar — must be treated as a new Texas 50(a)(6) loan with all accompanying constitutional restrictions. This rule permanently applies the 80% LTV limitation to future cash-out transactions on that property.
The 50(f)(2) path exists specifically to allow homeowners who previously took cash out to later refinance for rate and term — without taking additional cash — and exit the 50(a)(6) framework for future transactions.
All six 50(f)(2) requirements must be met:
- The refinance cannot close until at least one year has passed since the closing date of the previous home equity loan.
- The refinance cannot include the advance of any additional funds beyond the payoff of the existing lien and actual closing costs. No cash out — not even one dollar — is permitted.
- The combined loan-to-value of the 50(f)(2) loan and all other valid liens cannot exceed 80% of the home's fair market value.
- The lender must deliver the required 50(f)(2) Notice to the borrower within three business days of the loan application and at least 12 days before closing.
- An affidavit executed by the owner or their spouse acknowledging that all 50(f)(2) requirements have been met must be prepared and recorded.
- The transaction must be a rate-and-term refinance only — no debt consolidation, no additional funds to the borrower for any purpose.
50(a)(6) vs 50(f)(2) — which one applies to your situation:
| Your situation | Correct loan type |
|---|---|
| First-time cash-out on primary residence | Texas 50(a)(6) |
| Second cash-out, no existing 50(a)(6) on title | Texas 50(a)(6) |
| Rate-and-term refi, existing 50(a)(6) on title, no cash out | Texas 50(f)(2) |
| Cash-out refi, existing 50(a)(6) on title | New Texas 50(a)(6) |
| Purchase loan | Neither — standard purchase financing |
| Investment property in Texas | Neither — standard cash-out rules apply |
How Much Can You Access? A Real Texas 50(a)(6) Example
Dallas homeowner — debt consolidation scenario:
| Detail | Amount |
|---|---|
| Home appraised value | $480,000 |
| Maximum loan at 80% LTV | $384,000 |
| Existing mortgage balance | $290,000 |
| Maximum cash available | $94,000 |
| Lender fee cap (2% of $384,000) | $7,680 max |
| Time since purchase | 8 months ✓ |
| Time since last cash-out | First cash-out ✓ |
| Credit score | 720 ✓ |
| Closing location | Texas title company ✓ |
| Result | Qualifies — full cash-out available |
This borrower has $94,000 in available equity under Texas constitutional rules. They use $60,000 to pay off high-interest debt and receive the remaining $34,000 in cash at closing. Their total lien after closing is $384,000 — exactly 80% of the appraised value.
Use our mortgage calculators to run your own numbers with different loan amounts and rates.
Texas 50(a)(6) vs Cash-Out Refinance in Other States
Most homeowners who relocate to Texas from other states are surprised by the differences. Here is what makes Texas unique:
| Rule | Texas 50(a)(6) | Most Other States |
|---|---|---|
| Maximum LTV | 80% — constitutional | Often 85–90% |
| Lender fee cap | 2% — constitutional | No cap in most states |
| In-person closing required | Yes — constitutional | Usually optional |
| FHA or VA cash-out | Not permitted | Permitted |
| Investment properties | Not eligible | Eligible in most states |
| Multiple equity loans | One at a time — constitutional | Often allowed simultaneously |
| Waiting period between cash-outs | 12 months — constitutional | Often no waiting period |
| Foreclosure process | Court order required | Non-judicial in many states |
| Prepayment penalty | Prohibited — constitutional | Allowed in some states |
The restrictions exist to protect Texas homeowners. Texas has significantly lower homeowner foreclosure rates than most states — the constitutional protections are a direct reason why.
What You Cannot Do With a Texas 50(a)(6) Loan
Understanding what this loan does not allow is as important as understanding what it does.
- A Texas 50(a)(6) loan cannot be used to purchase a home. It is a refinance product only. However, the cash proceeds can be used as a down payment on a separate investment property or second home, provided that property is financed with its own independent purchase loan.
- A Texas 50(a)(6) loan cannot close on an investment property or second home. The property must be the borrower's primary homestead.
- A Texas 50(a)(6) loan cannot use FHA or VA financing. Only conventional loan products are eligible.
- A Texas 50(a)(6) loan cannot close within 12 months of a previous 50(a)(6) on the same property — even if the previous loan has been fully paid off.
- A Texas 50(a)(6) loan cannot be a second lien. It must be a first mortgage that pays off all existing liens on the property.
- A Texas 50(a)(6) lender cannot require the cash proceeds to pay off debts owed to that same lender that are not secured by the homestead. A lender cannot steer your cash-out proceeds toward their own unrelated loans.
Documents Required to Close a Texas 50(a)(6) Loan
Beyond standard mortgage documentation, Texas 50(a)(6) loans require specific instruments that are unique to Texas home equity transactions.
- The Texas Home Equity Security Instrument (First Lien) — Form 3044.1 — must be used as the deed of trust.
- The Texas Home Equity Affidavit and Agreement (First Lien) — Form 3185 — must be prepared and recorded in connection with every Texas 50(a)(6) transaction.
- Title insurance must be written on Texas Land Title Association forms and supplemented by the Equity Loan Mortgage Endorsement (Form T-42) and the Supplemental Coverage Equity Loan Mortgage Endorsement (Form T-42.1).
- The 12-day notice disclosure must be signed and dated by both the borrower and their spouse, with the closing occurring no sooner than 12 calendar days after the date of signing.
- A new full appraisal is required for every Texas 50(a)(6) transaction. Appraisal waivers accepted in other states are not permitted for Texas home equity loans under Fannie Mae guidelines.
Frequently Asked Questions
What does Texas 50(a)(6) mean?
Texas 50(a)(6) refers to Article XVI, Section 50(a)(6) of the Texas Constitution. It is the specific constitutional provision that governs home equity cash-out lending in Texas. Any loan that allows a homeowner to take cash out against the equity in their Texas primary residence is a Texas 50(a)(6) loan, regardless of what a lender calls it.
What is the maximum loan-to-value on a Texas 50(a)(6) loan?
The maximum loan-to-value on a Texas 50(a)(6) loan is 80% of the home's appraised fair market value. The borrower must retain at least 20% equity in the property after the loan closes. This limit is set by the Texas Constitution and cannot be exceeded by any lender under any circumstances.
How long do I have to wait between Texas cash-out refinances?
A Texas 50(a)(6) loan cannot close within 12 months of a previous Texas 50(a)(6) loan on the same property. The 12-month waiting period is measured from the closing date of the previous loan, not its payoff date. Even if the previous loan is paid off early, the 12-month clock still runs from the original closing date.
Can I do a cash-out refinance in Texas if I have an FHA or VA loan?
No. Texas law prohibits FHA cash-out refinances and VA cash-out refinances on homestead property. If you currently have an FHA or VA loan on your Texas primary residence and want to take cash out, the only option is to refinance into a conventional Texas 50(a)(6) loan.
Does my spouse have to be on the loan to sign at closing? Your spouse does not have to be listed as a borrower on the loan, but Texas law requires that both the borrower and their spouse sign the closing documents and appear in person at the title company or lender's office. This applies even if the spouse is not on the mortgage or the title.
Can I take out a HELOC on my Texas primary residence?
A HELOC on a Texas primary residence is subject to the same Section 50(a)(6) constitutional rules, including the 80% LTV limit and the single-lien requirement. You cannot have a HELOC and a separate 50(a)(6) cash-out mortgage on your Texas homestead simultaneously — only one home equity lien is permitted at a time.
What is the difference between a Texas 50(a)(6) and a 50(f)(2) loan?
A Texas 50(a)(6) loan is a cash-out refinance that allows the homeowner to receive money at closing beyond what is needed to pay off existing liens. A Texas 50(f)(2) loan is a rate-and-term refinance of an existing 50(a)(6) loan with no cash out to the borrower. The 50(f)(2) path allows homeowners who previously took cash out to later refinance for a lower rate without remaining in the more restrictive 50(a)(6) framework going forward.
Can I use the cash from a Texas 50(a)(6) loan to buy an investment property?
Yes, indirectly. The cash proceeds from a Texas 50(a)(6) loan can be used for any purpose, including as a down payment on an investment property or second home. However, the investment property itself must be purchased with its own separate financing — the Texas 50(a)(6) loan only encumbers the primary homestead.
Is a new appraisal always required for a Texas 50(a)(6) loan?
Yes. A full appraisal from a licensed appraiser is required for every Texas 50(a)(6) transaction. Appraisal waivers and automated value acceptance options that are available for standard refinances are not permitted for Texas home equity loans.
What happens if a lender violates the Texas 50(a)(6) rules?
The consequences are severe. If a Texas 50(a)(6) loan does not comply with the constitutional requirements, the lien securing the loan can be declared invalid. A lender who makes a non-compliant loan forfeits all principal and interest and may be required to return all interest and fees paid by the borrower. This is why working with a lender experienced in Texas home equity law matters.
Why Experience With Texas 50(a)(6) Matters
Texas 50(a)(6) compliance is not optional, and the penalty for getting it wrong falls on the lender — not just administratively, but legally. An invalid lien is the worst-case outcome, and it happens when lenders who don't regularly work in Texas miss constitutional requirements that simply don't exist in other states.
Bonelli Financial Group is licensed in Texas. We have closed Texas 50(a)(6) loans across Dallas, Houston, San Antonio, Austin, and Odessa. We know the required instruments, the title endorsements, the 12-day disclosure timing, the single-lien rule implications, and which wholesale lenders process Texas equity loans correctly and efficiently.
We closed a $285,000 Texas 50(a)(6) cash-out refinance in Dallas for an investor pulling equity to fund their next acquisition. We've closed first-time cash-out loans for Texas homeowners consolidating debt and funding home renovations. We know this product and we know how to close it cleanly.
If you want to know how much equity you can access, whether you're within the waiting period, or whether a 50(a)(6) or 50(f)(2) is the right path for your situation — tell us your numbers and we'll give you a straight answer.
Ready to Apply for a Texas 50(a)(6) Loan?
Tell us your home's current value, your existing mortgage balance, and what you want to use the funds for. We'll tell you exactly what you'd qualify for under Texas constitutional rules, estimate your rate, and walk you through the timeline — no commitment required.
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Licensed Mortgage Broker | Branch NMLS #2621584 | Licensed in AZ, CA, CO, FL, ID, NM, OH, SC, TX
About the Author
Travis Erickson | Licensed Mortgage Broker | NMLS #1193479
Travis Erickson is a Mesa-based mortgage broker with over 10 years in the lending industry and a specialty in DSCR, bank statement, and non-QM investment property loans. He started his career as a loan officer at Desert Financial Credit Union, built his way up to Vice President at AmeriSave Mortgage, and joined Bonelli Financial Group in 2024 to build a faster, more transparent mortgage experience for borrowers that traditional lenders often overlook.
His expertise in non-conforming and investor financing has been recognized nationally — including a citation in Bankrate's Non-Conforming Loans Guide, one of the most widely read mortgage resources in the country. He regularly writes about complex lending scenarios on our blog and helps clients compare offers through our mortgage calculators.
Travis has helped investors across Arizona, Texas, Florida, and six other states close DSCR deals that conventional lenders couldn't structure — often in under 30 days. He lives and works in Mesa, knows the East Valley market firsthand, and believes the best loan is the one that actually closes.
Learn more about Travis and the full Bonelli team on our meet the team page
Bonelli Financial Group | Branch NMLS #2621584 | Licensed in AZ, CA, CO, FL, ID, NM, OH, SC, TX
Disclosure: Bonelli Financial Group is a licensed mortgage broker, not a direct lender. Texas 50(a)(6) and 50(f)(2) requirements are established by Article XVI of the Texas Constitution and applicable Texas Administrative Code. This content is for informational purposes only and does not constitute legal advice or a commitment to lend. Consult a licensed Texas real estate attorney for legal guidance specific to your transaction. Loan approval is subject to lender guidelines and individual borrower qualification. Branch NMLS #2621584.
