LEGAL OPINION

Exhibit 5.1


September 16, 1997



Dynex Capital, Inc.
10900 Nuckols Road
Glen Allen, Virginia 23060

Re: Dynex Capital, Inc.
Registration Statement on Form S-3

Ladies and Gentlemen:

We have acted as counsel to Dynex Capital, Inc., a Virginia corporation
(the "Company"), in connection with its Registration Statement on Form S-3 (the
"Registration Statement"), filed under the Securities Act of 1933, as amended
(the "Act"), relating to the registration of 6,000,000 shares of its Common
Stock, $.01 par value, to be issued pursuant to the Company's Dividend
Reinvestment and Stock Purchase Plan.

In that connection, we have examined originals or copies of such
documents, corporate records and other instruments as we have deemed necessary
or appropriate for purposes of this opinion, including the Articles of
Incorporation, as amended, and By-laws of the Company. We have assumed without
independent verification the genuineness of signatures, the authenticity of
documents, and the conformity with originals of copies.

Based upon the foregoing, we are of the opinion that the shares being sold
by the Company, when authorized by the Board of Directors of the Company and
issued and sold in accordance with the terms of the Company's Dividend
Reinvestment and Stock Purchase Plan described in the Registration Statement,
will be validly issued, fully paid and non-assessable.

We hereby consent to the use of this opinion as an exhibit to the
Registration Statement.

By giving the foregoing consent, we do not admit that we come within the
category of persons whose consent is required under Section 7 of the Act.

Very truly yours,


Venable, Baetjer & Howard, LLP