Texas protects homeowners with some of the strongest homestead laws in the country — but those same laws put a hard limit on how much equity you can pull out in a cash-out refinance. If you're self-employed and considering tapping your home's value, here's what you need to know.
The 80% rule
The Texas Constitution limits cash-out refinancing on a primary residence (your homestead) to 80% of the home's appraised value. That means you must keep at least 20% equity in the home — no exceptions, regardless of loan type. This applies to bank statement loans just like any other mortgage.
Why it exists
Texas homestead protections are designed to keep families from over-leveraging their homes. It can feel restrictive, but it also means Texas homeowners tend to have more of a cushion when markets dip.
What it means for self-employed borrowers
If you're using a bank statement loan to refinance and take cash out, plan around that 80% ceiling. A lender who understands both non-QM income calculation AND Texas homestead rules can structure the loan so you maximize your cash within the legal limit.
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