How to do a Cash Out Refinance in Texas in 2026: What You Should Know

Cashout Refinance Snapshot (Texas 2026)

• Determine Your Max Loan Amount: 80% of the home’s appraised value (primary residence); 75% (second homes or investment properties)

• Speak to a Mortgage Broker: To see your detailed options.

• Complete a Mortgage Application: and submit documents (Paystubs, W2s, current mortgage statement, etc)

• Receive Cash: Underwriting typically takes 15-30 calendar days. Upon final approval, you’ll receive the cash in your bank account via wire in 3 days.

If you're a homeowner in Texas sitting on significant home equity, a cash-out refinance could be the financial strategy you’ve been looking for. With rising home values across cities like Austin, Dallas, San Antonio, and Houston, more Texans are tapping into their equity for renovations, debt consolidation, or large purchases.

But this isn’t a decision to rush. Understanding how a cash-out refinance works, when it makes sense, and how to find the best mortgage lenders in Texas is key to protecting your investment.

This guide from AsertaLoans breaks down the essentials so you can make informed decisions that suit your financial goals.

What Is a Cash-Out Refinance?

A cash-out refinance replaces your current mortgage with a new, larger loan, allowing you to pocket the difference in cash. You’re essentially borrowing against your home equity.

For example:

• Your home is worth $400,000

• You owe $250,000 on your current mortgage

• You refinance for $320,000

• You receive $70,000 in cash (minus closing costs)

This isn’t the same as a home equity loan or home equity line of credit (HELOC). A cash-out refinance gives you a new mortgage entirely and replaces your existing one, often with a new rate and term.

Why Texans Are Opting for Cash-Out Refinancing

Texas homeowners are using cash-out refinances for:

• Home renovations (upgrades that may increase home value)

• Paying off high-interest debt (like credit cards or personal loans)

• Funding education or starting a business

• Emergency expenses

With rising property values, especially in areas like Dallas and Austin, homeowners have more equity to leverage.

Data Insight

According to the Texas Real Estate Research Center, median home prices in major cities have increased 35% over the past five years, meaning more available equity for refinancing.

Requirements to Do a Cash-Out Refinance in Texas

Texas has some of the strictest cash-out refinance laws in the country to protect homeowners. Here's what you need to qualify:

1. Equity Requirements

You can borrow up to 80% of your home’s appraised value in Texas if it’s your primary residence, and 75% for second homes or investment properties.

Example

Home value = $400,000 → Max new loan = $320,000 If you owe $250,000, your max cash out = $70,000 (before closing costs)

2. Rules on Occupancy Types

Cash-out refinances in Texas are allowed for your primary residence, investment properties and vacation homes.

For primary residences, Texas has a unique rule on cash out refinance where the loan-related fees cannot exceed 2.0% of the loan amount. So if your new loan amount is small (less than $250,000), you may be limited on how much lower your rate can be.

3. Waiting Period

You must have owned the property for at least 6 months before applying unless you purchased your home with cash. The only exception to this rule is if you purchased the home with no mortgage.

4. Credit Score and DTI

While exact requirements vary by lender, most Texas mortgage lenders look for:

• Minimum 620 credit score

• Debt-to-income (DTI) ratio under 50%

• Minimum 24 months of employment history (primary residences & second homes only)

Step-by-Step Guide to Doing a Cash-Out Refinance in Texas

Step 1: Check Your Equity and Credit

Use online tools or contact a mortgage broker in Texas to estimate your home's current value and see if your credit is refinance-ready.

Step 2: Speak with a Mortgage Broker

Not all lenders are created equal. Mortgage brokers in Texas, especially in areas like San Antonio, Houston, or Dallas, can help you shop multiple cash out refinance programs and find the best deal.

Pro Tip

Search for terms like “mortgage lenders in Texas” or “Houston mortgage loan” to find competitive rates.

Step 3: Choose Your Loan Type

You can opt for:

• Conventional Cash-Out Refinance (lowest rate & employment history required)

• Investor Cash Flow (DSCR) loan (investment properties only, employment info not required)

Most homeowners choose the conventional loan because it has the lowest rate. But this loan requires borrowers to have a debt-to-income ratio below 50%.

If your income is too low or debt payments are too high, and you own an investment property, then the Investor Cash Flow (DSCR) loan is the way to go. This doesn’t require a review of your income nor monthly debt payments. However, the loan limit is lower at 70-75% of your home’s appraised value. In Texas, this loan type isn’t subject to the 2% fee limit, allowing you to buy down your points.

Step 4: Appraisal and Documentation

Expect a home appraisal to confirm the market value. You’ll also need to submit:

• Pay stubs

• Tax returns (self-employed or own other rental properties)

• W-2s

• Current mortgage statement

• Proof of homeowner’s insurance

Step 5: Underwriting and Approval

Your lender reviews your financials and property appraisal. If everything checks out, you’ll get a closing disclosure with final loan terms.

Step 6: Close the Loan and Get Your Cash

Sign the paperwork, and your loan will fund after a 3-day rescission period. The cash is typically wired to your bank account.

Pros and Cons of Cash-Out Refinancing

Pros	Cons
Lower interest than personal loans or credit cards	Restarting your mortgage term
Potential tax deductions on mortgage interest*	Higher total loan balance
One payment instead of multiple debts	Requires home appraisal and closing costs
May improve credit by consolidating debt	Risk of foreclosure if you can’t repay

Check with a tax advisor to confirm eligibility.

Cash-Out Refinance in Texas vs. Other States

Unlike other states, Texas has unique constitutional restrictions (Section 50(a)(6) of the Texas Constitution) on primary residence homes that cap the total loan-to-value (LTV) at 80%, limit the loan fees to 2%, and enforce stricter consumer protections.

That means even if you qualify for a higher amount in other states, in Texas, you’ll be limited to 80% LTV, no exceptions.

When Is the Best Time to Do a Cash-Out Refinance?

• When interest rates are stable or falling

• When you need to lower your borrowing costs (e.g., paying off credit cards with > 20% interest rates)

• When you’ve built substantial equity (over 25%)

• When you plan to keep your home over a long period

If your mortgage rate is much lower than today’s market rate (3.00% or less), a HELOC or home equity loan might be a better option. But keep in mind that HELOC products are very limited in Texas due to many lenders choosing not to offer them because of the state’s strict rules on cash out refinances.

How AsertaLoans Can Help

At AsertaLoans, we’re not tied to one lender. As experienced mortgage brokers in Texas, we help you:

• Compare cash-out refinance rates from top Dallas mortgage loan and Austin mortgage loan wholesalers

• Understand your eligibility and the 80% rule in Texas

• Get expert guidance from application to closing

We’ve helped homeowners across San Antonio, Houston, Austin, and beyond to access their equity safely, affordably, and intelligently.

Should You Cash Out?

A cash-out refinance can be a powerful tool if used wisely, but it’s not for everyone. If you need liquidity and want a single, manageable payment, without relying on high-interest debt, a cash-out refinance can help you unlock your home’s hidden potential.

But it’s essential to weigh the costs, read the terms, and familiarize yourself with Texas-specific rules before moving forward.

Ready to Explore Your Cash-Out Refi Options?

Talk to the mortgage experts at AsertaLoans.

Whether you’re in Houston, Dallas, San Antonio, or anywhere else in Texas, we’ll help you understand your refinance options, and guide you every step of the way.

Start your refinance application today or call us to speak with a trusted Texas mortgage broker near you.

FAQs About Cash-Out Refinancing in Texas

Can I Do a Cash-Out Refinance on an Investment Property In Texas?

Yes, the max loan amount would be 70-75% of your home’s appraised value depending on your credit score.

How Much Cash Will I Receive?

Up to 80% of your home’s appraised value, minus your current mortgage balance and closing costs (2-5% of your loan amount).

How Long Does the Process Take?

Typically, 15-30 days from application to funding, depending on appraisal and documentation.

What’s the Difference Between a HELOC and a Cash-Out Refinance?

A HELOC is a second loan you draw from as you need (like a credit card). A cash-out refinance replaces your current mortgage with a new one and gives you the difference in cash upfront.