How Much Equity Do You Need for a Texas Cash-Out Refinance?

In many cases, Texas cash-out refinance loans require homeowners to keep at least 20% equity in the property after refinancing.

This usually means the new loan cannot exceed 80% of the home’s appraised value, often referred to as the loan-to-value ratio, or LTV.

For example, if a home is worth $500,000, many lenders may allow a maximum loan amount of around $400,000 under standard Texas cash-out refinance guidelines.

The amount you may be able to borrow depends on factors such as:

• your home’s current value
• your remaining mortgage balance
• estimated closing costs
• lender guidelines
• your overall financial profile

Even if your home has significant equity, approval still depends on factors like credit score, debt-to-income ratio, and income verification.

The 80% loan-to-value limit is one of the most important parts of a Texas cash-out refinance.

Loan-to-value ratio, often called LTV, compares the size of the new loan to the home’s appraised value.

In many Texas cash-out refinance scenarios, the total loan amount cannot exceed 80% of the property’s value.

Basic Example

• Home value: $500,000
• Maximum 80% loan amount: $400,000
• Current mortgage balance: $300,000
• Estimated available cash before closing costs: $100,000

Closing costs and lender fees are usually deducted from the available amount, so the final cash received may be lower.

If the property appraises lower than expected, the maximum loan amount may also decrease.

You can estimate how much cash may be available by using a simple formula based on your home’s value and current mortgage balance.

Basic Formula

1. Start with your home’s current appraised value
2. Multiply the value by 80%
3. Subtract your current mortgage balance
4. Subtract estimated closing costs and fees

The remaining amount is your estimated cash available before final lender approval.

Example Calculation

• Home value: $500,000
• 80% maximum loan amount: $400,000
• Current mortgage balance: $300,000
• Estimated closing costs: $8,000

Estimated available cash:
Approximately $92,000 before final loan adjustments.

The actual amount available may vary depending on the lender, appraisal results, and loan program.

Texas Cash-Out Refinance Examples

The amount of cash available can vary significantly depending on your home’s value and remaining mortgage balance.

Here are a few simplified examples based on a standard 80% loan-to-value limit.

These examples are simplified and do not include estimated closing costs, lender fees, prepaid taxes, or insurance adjustments.

The final amount available may vary depending on the lender, appraisal results, and overall borrower profile.

Several factors can affect how much equity you may be able to access through a Texas cash-out refinance.

Your Home’s Appraised Value

The higher your home’s appraised value, the more equity may be available. If the appraisal comes in lower than expected, the available cash amount may decrease.

Your Current Mortgage Balance

The remaining balance on your current mortgage directly affects how much equity is available after refinancing.

Closing Costs and Fees

Closing costs, lender fees, prepaid taxes, and insurance adjustments are often deducted from the available loan proceeds.

Credit Score and Debt Levels

Lenders also review your credit score and debt-to-income ratio when determining approval and loan eligibility.

Lender Guidelines

Different lenders may have different requirements for credit scores, reserves, maximum debt ratios, and loan limits.

If you want to learn more about borrower qualification requirements, read our guide to Texas cash-out refinance requirements.

Possibly, depending on the type of refinance.

Some rate-and-term refinance programs may allow homeowners to refinance with less than 20% equity, although private mortgage insurance or additional lender requirements may apply.

Texas cash-out refinance rules generally require homeowners to keep at least 20% equity in the property after refinancing.”

In many cases, Texas cash-out refinance guidelines require homeowners to keep at least 20% equity in the property after refinancing. This usually limits the new loan amount to 80% of the home’s appraised value.

Because of this, borrowers with lower equity levels may have fewer cash-out refinance options available.

Pro Tip: Use an online equity calculator or consult with a professional to assess your home equity and determine if you meet the refinancing requirements.

A cash-out refinance is not the only way to access home equity in Texas.

Some homeowners may also consider:

• home equity loans
• HELOCs
• rate-and-term refinancing

The right option often depends on factors such as your current mortgage rate, how much cash you need, repayment preferences, and long-term financial goals.

For example, some borrowers may prefer a home equity loan or HELOC if they want to keep their existing mortgage rate rather than replacing the current loan entirely.

If you want to compare the differences in more detail, read our guide on cash-out refinance vs home equity loan options.