Cash-out refinance rules in Texas

A state page on turning equity into cash usually has to begin by explaining that the state has nothing to say about it. This one has the opposite job. The rule quoted at the head of this page is a line in the state constitution, it binds every homestead here, and it cannot be waived by agreement, so no lender's appetite and no investor's guideline can lift it. Which means the ceiling is not the thing a Texas owner should be uncertain about. What is genuinely unknown, on the day the question first gets asked, is the value that ceiling is a share of.

A share, not a sum

Read the constitutional provision above for what it deliberately does not settle. It settles a proportion. It does not settle an amount, and it does not settle the quantity the proportion is taken from: that quantity is the fair market value of the homestead on the day the credit is extended, a future date and an appraisal nobody has ordered. So the same balance owed, under the same share, releases one sum for one owner and another for the next, and which is which cannot be known until somebody values the house.

That is the reverse of how this question sits nearly everywhere else, and the reversal is the useful part. In most places the proportion is a private number that moves whenever somebody reissues a guideline, while the valuation is the ordinary business of an appraiser. Here the proportion is public, fixed and the same for every owner in the state. All of the uncertainty has migrated into the other half of the arithmetic.

The figure on the appraisal district notice is measured against something else

Once a year the county appraisal district sends an owner a value for their home, and it is a natural mistake to treat that as the number the constitutional share multiplies. It is not, and the gap between them is not small.

Texas runs no fractional assessment: property is appraised at market value and assessed at the whole of it, which sounds as though it ought to close the question. What the county actually bills against is taxable value, and taxable value is that assessed figure less every partial exemption the owner is entitled to. The largest of those for somebody living in the house is the school-district residence homestead exemption, which stands at $140,000 (Texas Legislative Council, Texas Constitution, article VIII, section 1-b(c), and Texas Comptroller of Public Accounts, read 25 August 2026) after the amendment the voters adopted, and the statewide figure charged on taxable value across all taxing units is 1.858% (Texas Comptroller of Public Accounts, Tax Rates and Levies (Tax Code Section 5.091), read 25 August 2026).

So one article of this constitution lifts a fixed sum off the base the schools tax, and a different article measures a borrowing ceiling against market value with nothing lifted off at all. The same word, homestead, is doing the work in both places, and the two are not naming the same quantity. An owner who reaches for the exempted figure on their tax notice is starting from the smaller of the two.

Liens already of record come out of the same allowance

The other half people misread is the top of the ratio, and it is the half that costs them. The constitutional test is not applied to the new loan standing alone. It is applied to the new loan added to the outstanding principal of every other debt secured by a valid encumbrance of record against the homestead, and it is that total which may not cross the line.

A second lien still sitting on the title consumes part of the allowance before the new loan is written, and so does anything else of record against the property. The honest answer to how much a Texas owner can take out is therefore a subtraction whose first term is an appraisal and whose second is a title search, and on the day somebody asks, neither has been done.

Size is not the only thing that subdivision fixes

Three further limits ride on the same provision, and they are unusual enough to be worth naming individually, because a constitution that legislates fees and calendars is not something a borrower meets in other states.

Fees first. What an owner may be charged to originate, evaluate, maintain, record, insure or service the credit is capped at two percent of the original principal amount. Four things sit outside that cap: a third-party appraisal, a survey by a state registered or licensed surveyor, the state base premium for a mortgagee title policy with endorsements, and a title examination report costing less than that base premium. Interest and bona fide discount points sit outside it as well.

Then the calendar, in two directions. Closing is forbidden before the twelfth day after the later of the application and the delivery of the notice the same subdivision requires — the record states it as a prohibition on closing early, which is a floor under the process rather than a schedule for it. And a second extension of credit of this kind, secured by the same homestead, is forbidden before the first anniversary of the closing date of the earlier one.

That anniversary is not the clock in the refinancing statute recited above, which turns on where the loan being replaced originally came from. This one turns on the homestead itself and on how recently it last carried credit of this kind. It is not absolute: the subparagraph carries at least one way out of it, and how many is one of the things nothing behind this page settles. The last section says so rather than guessing.

The federal ceiling is flat here too

A second ceiling on a Texas cash-out is federal rather than constitutional, and it turns out to behave the same way: one number, no geography. The baseline one-unit conforming limit is $832,750 (Federal Housing Finance Agency, read 25 August 2026), announced nationally and lifted for counties designated high cost. None. All 254 Texas counties sit at the 2026 national baseline one-unit limit of $832,750; not one is designated high cost. (Federal Housing Finance Agency, Conforming Loan Limit Values for Calendar Year 2026, All Counties, read 25 August 2026)

So both of the ceilings capable of stopping a Texas cash-out before an underwriter has read anything are uniform across every county in the state. Nothing about where the house stands moves either one. What does differ from one county to the next is the appraisal and the tax bill, which is to say the two figures already established as belonging to a different calculation.

What the clerk charges counts paper

The recited section on what this state charges to record a new mortgage names the taxes that do not exist here and a constitutional bar on the legislature inventing one. Read it narrowly, because that is the whole of what it says. Those particular taxes are absent from Texas; nothing in it speaks to what a closing costs, and rounding it up to "no closing taxes" is precisely the misreading it invites.

What a county does charge is a filing fee, and a filing fee counts paper. In Harris County the clerk takes $25 (Harris County Clerk, Real Property fee schedule, read 25 August 2026) for the first page of an instrument, a smaller sum for every page after it, and a further amount for each name past the fifth that has to be indexed. A long deed of trust costs more to put on record than a short one; a large one does not. Nothing a county collects at that counter moves with the size of the credit. The one figure in this arrangement that does move with it is the constitutional fee cap, and a ceiling on what may be charged is not itself a charge.

Who supervises this, and where the fund's limits are read from

The section above names the department that licenses residential mortgage loan originators in this state and takes complaints about them. One thing attached to that department belongs here, because it is an owner's remedy of last resort and because of where its numbers come from. The Finance Code establishes a Mortgage Recovery Fund that reimburses out-of-pocket losses caused by a licensed originator, and the Finance Code is also what sets its limits: a cap on what may be paid out per transaction however many claimants there are, a separate cap on what may be recovered against a single originator across separate transactions, and a deadline for bringing a claim at all. Both caps have to be cited to that statute and to nothing else, because the department's own page about the fund omits them, and so this page states them only in words.

BEDRWay originates nothing. It is not a lender, not a broker and not a servicer, and holds no licence from that department or from anybody else. A request sent here reaches a mortgage professional licensed to work in this state, and every term of whatever they put in front of somebody is written by them.

Four things nobody behind this page has settled

How many exceptions the once-a-year rule on these loans carves out. Both readings of the subparagraph agree that it carries at least one and disagree about the rest; neither wording survived into the record, so nothing above should be read as a list of them, and nothing above should be read as saying there are none.

Who bears the cost of title insurance at a Texas closing. A sentence that answered it was cut from the sourced material, because the constitutional carve-out it leaned on grants a permission and says nothing about incidence, and no title-industry source could be reached to put anything in its place.

The day the Harris County fee schedule took effect. That county publishes its real property fees with no effective date and no revision stamp, so the amount above is current and is attributable to no particular day.

One county's contribution to the statewide property figure. Culberson reports a market value, a taxable value and a school levy, but no adopted rate of its own, so no per-county figure can be derived there and none is published. A hole that is named is worth more than a number that merely looks right.

Everywhere else the question is how far a lender is willing to go. In Texas the far end is written down, it is the same for every homestead, and no agreement signed at a closing table moves it. What nobody can hand an owner in advance is the value it is a share of, and how much of the allowance the liens already standing against the house have spent.