Texas 50(a)(6) Loans

Texas 50(a)(6) loans, commonly known as cash-out refinance loans, allow homeowners in Texas to access their home equity. These loans come with specific guidelines to protect borrowers and ensure responsible lending.



What Is a Texas 50(a)(6) Loan?

A Texas 50(a)(6) loan enables you to refinance your mortgage while tapping into your home's equity. The funds can be used for various purposes, including debt consolidation, home improvements, or other financial needs.


Loan Limits & Equity Requirements


  • Maximum Loan Amount: Up to 80% of the home’s fair market value (combined loan-to-value, or CLTV, cannot exceed 80%).
  • Minimum Equity Retained: Homeowners must retain at least 20% equity after the cash-out refinance.


Down Payment & Credit Score Requirements


  • Minimum Credit Score: 620
  • Equity Requirement: Unlike purchase loans, Texas cash-out refinances require homeowners to leave a 20% equity cushion in their property.


Mortgage Insurance


  • When Required: If the loan type requires it and equity is below the required threshold, mortgage insurance may be applicable.
  • Impact of Credit Scores: Higher credit scores often result in lower mortgage insurance premiums, reducing overall monthly payments.


Unique Features of Texas 50(a)(6) Loans


  • 12-Month Rule: Borrowers can only complete one cash-out refinance on the same property every 12 months.
  • Closing Requirements: The loan must be closed at a title company office rather than a lender’s or borrower’s home.
  • Home Equity Line of Credit (HELOC) Considerations: Texas law restricts combining a cash-out refinance with a HELOC at closing.


Property Types Allowed


  • Primary Residences: Texas 50(a)(6) loans are available only for primary residences.
  • Investment & Second Homes: Not eligible for cash-out under Texas 50(a)(6) guidelines.
  • Manufactured Homes: Eligible if the home is permanently affixed to the land and meets underwriting requirements.


Assumability


  • Non-Assumable: Like conventional loans, Texas 50(a)(6) loans are not assumable.


Important Considerations


  • Refinance Restrictions: Once you’ve completed a Texas 50(a)(6) loan, even if you later refinance without taking cash out, future refinances are generally subject to the same 50(a)(6) rules.
  • Title Insurance & Fees: Texas law requires certain disclosures, and closing costs must adhere to state guidelines.


Contact Us for Texas 50(a)(6) Loan Guidance

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.