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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.

As far as I'm aware of, a Texas A6 loan always has to be refinanced with another Texas A6 loan. You cannot refinance it with a normal rate and term loan. But it is not quite clear why your lender says you cannot refinance the loan. You ought to talk with the lender and find out what exactly makes it impossible for you to refinance. A refinance would surely have been a better option, but you can also try doing a loan modification on the mortgage. It can help you reduce the mortgage payments as the lender will either lower the interest rate or extend the term of the loan to make the mortgage affordable.
Posted on: 23rd Oct, 2009 05:39 am
is there a limit of 3% fees when it is an investment home orr second home?
Posted on: 03rd Feb, 2010 05:34 pm
The lender cannot charge more than 3% as fees while going for a Texas cash out refinance. You can check out the given page to find a discussion on this topic:
Posted on: 04th Feb, 2010 02:17 am
Posted on: 29th Apr, 2010 07:19 am
As far as I know, once you take out a cash out loan, it will remain a cash out loan. In that case, the second loan that you've taken out will be considered as a Texas A6. You can contact your lender and he will help you know whether or not it is a Texas A6 loan.
Posted on: 30th Apr, 2010 03:11 am
i currently have a 1st and a heloc that i pulled at a later day. it has been more than 2 years since i took out the heloc. with both loans combined, my equity is still under 80%. i am looking to refinance both loans into a 5/1 arm. i plan to move within the next 5 years, so the arm makes since for me. i was told by one loan officer that texas law does not allow a heloc to be refinanced into an arm. i have another loan officer that feels that i can do it and says he has never heard of that problem. he is well aware of the other a6 issues though. has anyone seen this problem before? i can't find anything in the a6 law that states anything in regards to requiring a fixed loan. i don't want to go forward with everything and then have an issue at closing. thanks
Posted on: 24th Jun, 2010 03:13 pm
Well... even I haven't heard of any such law which states that you cannot refinance an existing HELOC with a 5/1 ARM in Texas. I think you should go with the loan officer who can originate the loan for you.
Posted on: 25th Jun, 2010 02:04 am
We initiated a refinance with Citibank who has been our fixed rate Mortgagee since 2007. We have excellent credit, never late on mortgage or other payments. Everything was approved - until one-hour prior to closing when we were contacted and told we could not get an ARM since we had previously refinanced and took out cash $17000 to complete paying for a $40000 home improvement. The cashout did not go directly to the contractor, but we paid it out of the total funds received. CitiMortgage informed us that this cashout made us ineligible for an ARM and have offere us a fixed rate that is much higher. Is this a 'bait and swithch? or is it a valid issue?
Posted on: 09th Jul, 2010 10:22 am
CitiMortgage just sent me a note saying that a Refinance in TX is not eligible for an adjustable rate mortgage because it is found to be ' a TX equity'. The only $$ coming out of refinance was for Escrow (we had not previously escrowed for taxes and insurance) and loan processing costs. Is this valid ...
Posted on: 09th Jul, 2010 10:54 am
Hi Gabe,

As far as I know, if you had refinanced your home loan and also taken cash out for home improvement loan where funds go directly to the contractor, the it won't be considered as Texas A6 loan. As your funds did not go directly to the contractor, your loan may be considered as Texas A6 and thus you may not qualify for an ARM. Your best option would be to get in touch with an attorney and get to know about Texas A6 in details and clarify the whole issue.

Posted on: 10th Jul, 2010 12:21 am
per my loan officer you can take out only 1 equity loan out at a time. NOT to be confused with a refi. You can refi as many times as you wish. Make sure you file the home as your "homestead". That makes your taxes less, tax deductable, and as long as you pay your mortgage and taxes (unless you leverage the home in a loan) NO ONE CAN TAKE YOUR HOME. If MC Visa or anyone else comes after you for non payment they can do lots of stuff but; THEY CAN NOT TAKE YOUR HOME. Good luck. Hope you love it here in Texas. No place like it in the world.
Posted on: 14th Jul, 2010 10:31 am
go to a local bank. They can and will help you. The big banks don't know all the laws. WELL, they know but dont interp, them as they should be. You can refi. I took out a refi loan 5 years ago and am in the process of doing it again right now. Wishing you the best and sending prayers that it may all work out for you.
Posted on: 14th Jul, 2010 10:41 am
in 2008 I refinanced my home to pay my ex husband's share of the equity AND pay some of his bad debt. I was given an Owelty loan which is A6.
I November last year I also got an equity loan to consolidate my credit card debts. I am reading here that this is not allowed. How come no one told me and what are the consequences? I do not want to do anything illegal...
Posted on: 24th Jul, 2010 03:06 pm
I recently tried to obtain cashout mortgage everthing was fine until I told him a lived in a rural area. He stated I didnt qualify because I dont have available natural gas.. I have propane which if I'm not mistaken is a natural gas. I also have a septic system they said I had to have Municipal sewer. So I'm being discriminated against because I live in the country.
Posted on: 27th Jul, 2010 08:42 am
To Joelle,

You lender should have informed you about that such a loan is not allowed when you already have an A6 mortgage on your property. You should speak to your lender now and check if anything can be done now.

To Red Neck,

You should speak to some of the other lenders of your locality and apply for a mortgage with them. If you meet their requirements, you would be able to qualify for the loan. You can even speak to the lenders of this community and seek a no obligation free mortgage quote from them. This will give you a fair idea about the rates and terms that you can get when you apply for a loan.
Posted on: 28th Jul, 2010 02:09 am
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