Put Your Equity
to Work
A cash-out refinance replaces your mortgage with a larger one and hands you the difference in cash. Texas has its own constitutional rules for this — they protect you, and we’ll walk you through every one.
What Is a Cash-Out Refinance?
You refinance for more than you currently owe, and the difference comes to you in cash at closing. Homeowners use it to renovate, consolidate higher-interest debt, fund a business, or cover major expenses — generally at a far lower rate than credit cards or personal loans.
Because the loan is secured by your home, this is a decision worth making carefully. The equity you pull out is equity you no longer have, and the new payment has to make sense in your budget. We’ll run the numbers both ways and tell you honestly whether it’s the right tool for what you’re funding.
The Texas Cash-Out Rules, in Plain English
Texas writes its homestead cash-out rules into the state constitution (Section 50(a)(6)) — the strongest homeowner protections in the country. Here’s what they mean for you.
| Rule | What It Means for You |
|---|---|
| 80% cap | Your new loan can’t exceed 80% of the home’s value. You always keep at least 20% equity in your home. |
| 12-day wait | Closing can’t happen sooner than 12 days after you apply and receive the required Texas disclosure. Built-in time to be sure. |
| Once per year | Only one cash-out loan on your homestead in any 12-month period. |
| Fee limits | Texas caps certain lender fees on these loans — a protection most states don’t have. |
| Where you close | Closing must happen at a title company, attorney’s office, or lender’s office — never at your kitchen table. |
| Right to rescind | You have three days after closing to change your mind and cancel. |
What Homeowners Use It For
Renovations
Improvements that add value to the home — funded by the home. Often the cleanest use of a cash-out.
Debt Consolidation
Rolling high-interest credit cards or loans into one lower-rate payment. Powerful when it comes with a plan not to rebuild the balances.
Major Expenses
Education, medical costs, a family need — cash at a mortgage rate rather than a personal-loan rate.
Investing Forward
Some homeowners pull equity to fund a business or the down payment on an investment property. That’s a strategy conversation — bring it to us early.
Cash-Out Questions, Answered
Up to the 80% cap: take your home's value, multiply by 0.80, subtract what you owe. A $400,000 home with a $250,000 balance leaves up to $70,000 before closing costs. We'll pin down the real number with a valuation.
Loan proceeds are generally not taxable income — you're borrowing, not earning. For how it affects deductions, talk to your tax professional.
No — it limits how often you can take a new cash-out on the homestead. And after 12 months, Texas allows a cash-out loan to be refinanced into a regular rate-and-term loan if that's the better structure.
A cash-out gives you one fixed loan and works best for a large, one-time need. A HELOC is a revolving line that fits ongoing or uncertain costs. Both fall under the same Texas 80% rule — we'll help you compare.
No. The Texas homestead rules apply only to your primary residence. Investment-property cash-outs follow standard (more flexible) guidelines — see our investor page.
This page is general educational information and is not a commitment to lend, an offer of credit, or legal, tax, or financial advice. Whether refinancing makes sense depends on your rate, loan balance, closing costs, and how long you plan to keep the loan. All loans subject to credit approval, underwriting, and property qualification. Equal Housing Opportunity.
Curious What Your Equity Could Do?
Tell us the goal and we'll show you the real number — what you can access, what the new payment looks like, and whether it's the right tool for the job.
