VA Cash Out Refinance in Texas

Two types of loans that are considered VA Cash Out loans. 

  1. Refinancing your mortgage and receiving cash at closing. This type of refinance is not allowed in Texas. See details below. 
  2. Refinancing your mortgage and paying off another non-VA loan and not receiving cash at closing. This type of cash out refinance is allowed in Texas. 


The first type is, the VA Cash-Out refinance program that allows you to receive cash at closing operates differently compared to many other states due to specific state laws that govern home equity lending. One such regulation is the Texas Constitution Article XVI, Section 50(a)(6) — commonly referred to as the “Texas 50(a)(6) law” — which imposes stricter rules on home equity loans and lines of credit. 

Texas 50(a)(6) Law and Its Implications:

  • No Cash-Out: Under the Texas 50(a)(6) law, veterans in Texas are not allowed to receive cash-back from a VA Cash-Out refinance. The primary purpose of this legislation is to protect homeowners by restricting the amount and conditions under which they can borrow against their home equity.
  • Refinancing Loans: While Texas veterans cannot take cash out, they are permitted to refinance their existing mortgage into a VA loan. This is beneficial if you currently have a Conventional, FHA, or USDA loan and are looking to benefit from the typically lower rates and better terms provided by VA loans. If you have had a Conventional Cash Out within 12 months, you would need to wait 12 months from your closing date to refinance into a VA loan.
  • Debt Consolidation: Unfortunately you are not able to use a VA home loan to consolidate debt in Texas. Contact us to discuss other solutions for reaching your goal.
  • Energy-Efficient Improvements: Texas veterans are still able to finance energy-efficient improvements to their home through a VA refinance, as long as the funds are paid directly to the supplier or contractor performing the improvements.

Navigating the VA Cash-Out Refinance in Texas: 

Understanding and navigating the complexities of the VA Cash-Out refinance in Texas can be challenging due to the restrictions imposed by the Texas 50(a)(6) law. This is where Shirley can be of assistance: 

  • Expert Guidance: Shirley can help explain the nuances of Texas laws regarding VA loans and how they impact your refinancing options. 
  • Loan Comparison: She can provide a detailed comparison of your current mortgage terms versus the potential terms of a VA refinance vs a Conventional Cash Out refinance, and see if you could benefit from better loan terms. 
  • Application Assistance: Shirley can guide you through the application process, ensuring you have all the necessary documentation and understanding each step along the way. 

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