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Texas Cash Out

A Texas cash-out refinance loan is also called a Section 50(a)(6) loan. With this option, you refinance your current mortgage while also tapping into your home’s equity. This tapped equity converts into cash paid out at closing. The cash can be used for anything you’d like, from home improvements to paying off higher-interest debt.

Recent changes to Texas Cash Out loans

In November 2017, Texas voters amended the Texas Constitution. This vote changed the rules related to pulling equity out of your home. As a result, the Texas cash-out refinance loan is friendlier and more flexible to Texas consumers.

Overview of Changes:

You can now refinance your Section 50(a)(6) loan

You are now able to refinance your loan from cash out to a rate/term refinance without pulling cash out.  Prior to this change “once a cash-out, always a cash-out” was the rule which caused consumers to be charged fees even when they did not pull cash out on a refinance.  

The fees on the loan have decreased

Now the max fees are 2 percent, before they were 3 percent of the original loan amount.

**Note that the fee doesn’t include appraisal and survey costs, title insurance premiums, a title exam report, or discount points used to buy down the interest.

Agricultural homesteads 

Now you can qualify for a Texas cash-out.  Prior to this change consumers with agricultural properties like a farm, were unable to pull cash out due to their agricultural exemptions.   

Other Rules

  • FHA, VA and USDA loans are not permitted under Section 50(a)(6) rules
  • You are legally allowed to get a Texas cash-out only once per year
  • Texas cash-out rules only apply to your primary residence.  This means your investment or second homes are not bound to these rules.  
Texas Cash Out
Minimum FICO
Credit Score
620
Maximum
Loan To Value
80%
Maximum
Debt To Income
45%*
Mortgage
Insurance
No
Years Since
Bankruptcy
4
Years Since
Foreclosure
7
Years Since
Short Sale
4
Special
Qualification
Requirements
Texas Only
Texas Cash Out
Minimum FICO
Credit Score
:
620
Maximum
Loan To Value
:
80%
Maximum
Debt To Income
:
45%*
Mortgage
Insurance
:
No
Years Since
Bankruptcy
:
4
Years Since
Foreclosure
:
7
Years Since
Short Sale
:
4
Special
Qualification
Requirements
:
Texas Only