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Texas a6 cash out refinance: Find out how to qualify for it

Author: Jessica Bennet
Community Mentor
Ask Jessica
Posted on: 14th Mar, 2007 11:37pm
In the state of Texas, there is a law pertaining to cash-out refinance. This law is known as Texas cash out 50(a)(6). This is more popularly known as Texas a6 law. Under Texas refinance laws, you are required to take out a cash out loan of 80% of the appraised value of the property.

If you are a US citizen, a permanent resident alien or a non-permanent resident alien, then you may be eligible for this loan. However, if you are a foreign national or a borrower with diplomatic immunity, then you will not be eligible for this loan.

Eligibility criteria for Texas a6 cash out refinance

Eligibility criteria to get approved for Texas a6 cash out refinance are listed below.


Single family residences, warrantable attached/detached condos and PUDs classified as homestead under Texas a6 laws. Non-warrantable condos, non-warrantable Planned Unit Developments (PUDs), manufactured home etc. are however not eligible. Anyways, the minimum property area should be 600 sq ft. Property must be classified as a homestead under Texas refinance laws.

Credit score and DTI

The minimum credit score required for this is 620. In addition to this, the maximum permissible DTI (debt to income) ratio is 45%.

Credit history

You should have established a good credit score after you have filed bankruptcy and/or foreclosure. If your property has been foreclosed, then the waiting period to get approved for this loan is 7 years.


A continuous employment of 2 years is required. For self-employed persons, proper documentation of income is required.


Assets that are used to close the transaction must be disclosed. Funds that you use in the transaction must come from a verified source.
While taking out this loan, you should follow the Texas a6 cash out refinance rules properly. It is advised that you should get the help from a mortgage attorney for this.
Posted on: 14th Mar, 2007 11:37 pm
hi, has anyone here heard of texas a6 cash out refinance rules or something like that? i am looking to refi my property in texas. any info will be helpful.
Hi Reb

As far as I know, you can refinance an existing mortgage in Texas through a VA loan. However, in the title of your post, you have mentioned about the Texas A6 laws. I don't think refinancing through VA loans has anything to do with Texas A6 laws, however if you want to know more about the law, check out the link:

Posted on: 31st Dec, 2008 02:11 am
thanks for such great info.
i just moved to texas in oct 2008 and love being here. i was taken by suprise when i tried to refinance my mortgage to a lower rate because i wanted to take cash out. i put down 50% thinking when rates lowered i would refinance and recover funds. now i find i must wait. i would have appreciated that info before i provided such a large down payment!
best regards to all who contribute!
Posted on: 24th Jan, 2009 09:41 am
Hi mike,

Yes, the lender should have informed you that you will not be able to refinance the mortgage before one year of taking the mortgage. In my opinion, you will have to wait and then take a cash out refinance.

Posted on: 25th Jan, 2009 10:54 pm
since a home equity loan can only be refinanced with another home equity loan are the interest rates quoted for a refi generally the same as a home equity ratel?
Posted on: 15th Feb, 2009 01:04 pm
Hi ann,

I think the rates will be more or less the same when you refinance the home equity loan. As the rates are low now-a-days, lot of people are refinancing their mortgage. However, you should note that you can refinance only if you have equity in the property.


Posted on: 16th Feb, 2009 01:20 am
I bought investment property in San Marcos, TX which has actually appreciated about 60k over the last 3 years. I have 2 loans on those which I am trying to get a lower rate on. My countrywide loan office tells me that I cannot consolidate the 2 because it would count as a cashout and I cannot cash out on an investment property in Texas. Is that true and if it is, can I still refinance one of the 2 loans?
Posted on: 06th Mar, 2009 04:10 pm
I would suggest you to speak to other lenders. This will help you to know whether you will be able to refinance both the loans or not.
Posted on: 08th Mar, 2009 11:06 pm
I'm being told I can't utilize an A6 loan because we have an Agriculture Exemption called Open Space Land. We can refinance, but not get cash to pay off other bills. Anyone know about this?
Posted on: 11th Mar, 2009 06:13 pm
I think you have been rightly informed in this matter. However, to be sure enough, you can speak to few other lenders and take their opinion regarding this.
Posted on: 12th Mar, 2009 03:40 am
I am being told the bank can't refinance my home with a cash out option unless I make the terms 30 yrs - Texas law. I wanted a 15 yr term. Is this true? I can't find this "law" anywhere.
Posted on: 03rd Apr, 2009 11:57 am
I have two rental properties that have signifigant equity in them. I also have a line of credit that I used as downpayment and improvement money when I first purchased the two rentals. My goal is to refinance the two rentals, and use the equity to combine the downpayment and improvement money to each rental unit respectively, creating two larger loans, and freeing up my line of credit. My question is, is there any way around the 80% equity (A6) rule in my case?
Posted on: 04th Apr, 2009 02:01 pm
Does an a(6) refi that was previously cash out, but is not cash out now, have to close at a title office or with an attorney?
Posted on: 09th Apr, 2009 10:51 am
Hi CC,

I am not aware of any such 'law' either. If you want to pay off your debt quickly and save money on the total amount of interest paid, you can reduce the term to 15 yrs. I think you should shop around more and contact other lenders and see what they have to say about this.

Hi Joshuaksig,

As far as I know, you cannot do a cash-out refinance of more than 80% as per the Texas A6 laws. Thus if you want to refinance the two rentals, you have to restrict it to not more than 80% of the equity.
Posted on: 10th Apr, 2009 11:49 pm
Hi Dennis,

As far as I'm aware of, a texas refi loan has to close either at the permanent office of the lender, a title company or an attorney's office.
Posted on: 11th Apr, 2009 03:35 am
Are there no prepayment penalties on a Texas Cash out?
Posted on: 12th May, 2009 04:11 pm
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