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Best HELOC Lenders April 2024

A home equity line of credit, is a revolving credit line that allows homeowners to borrow against the equity in their homes, typically with a variable interest rate. Comparing the best HELOC providers: choosing the right HELOC provider is crucial.

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Key Facts

  • Mortgage Types: Purchase, Refinance, Home Equity
  • Min. Credit Score: 620
  • APR: Varies
  • NMLS#: 6606

Pros

pros iconManual underwriting available to evaluate credit

pros iconOne of the few non-bank lenders offering equity lending and reverse mortgages

pros iconCan participate in the entire process online

pros iconEnglish and Spanish-speaking loan officers available

Cons

cons iconNot available in Hawaii or New York

cons iconDoesn’t work with down payment assistance programs in all states

New American Funding Disclaimer:© 2020 Broker Solutions, Inc. DBA New American Funding. All Rights Reserved. Corporate Office: 14511 Myford Road, Suite 100, Tustin, CA 92780.†14 business day guarantee only applies to purchase transactions. This guarantee does not apply to Reverse Mortgages, FHA 203k, VA, Bond, MCC, loans that require prior approval from an investor, or brokered loans.
The guarantee does not apply if events occur beyond the control of New American Funding, including but not limited to; appraised value, escrow or title delays, 2nd lien holder approval, short sale approval, or lender conditions that cannot be met by any party.
The 14 business day trigger begins when the borrower’s initial mortgage application (including income and assets documentation) is complete, and the borrower has authorized credit card payment for the appraisal. If New American Funding fails to perform otherwise, a credit of $250 will be applied toward closing costs.

  • check mark Offers a manual underwriting service
  • check mark Customized quotes for home equity loans
  • check mark Dedicated to serving minorities
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Key Facts

  • Mortgage Types: Refinance, Home Equity
  • Min. Credit Score: 640
  • APR: Undisclosed
  • NMLS#: 1717824

Pros

pros iconLow fixed rates

pros iconSecured online application and quick funding time

Cons

cons iconAn origination fee

Figure Disclaimer: Figure Lending LLC dba Figure. 15720 Brixham Hill Avenue, Suite 300, Charlotte, NC 28277. (888) 819-6388. NMLS ID 1717824.

For licensing information, go to www.nmlsconsumeraccess.org. Equal Opportunity Lender. Equal Housing Opportunity. This site is not authorized by the New York State Department of Financial Services. No mortgage solicitation activity or loan applications for properties located in the State of New York can be facilitated through this site.

As representative example, an eligible borrower obtained a loan amount of $15,000 with a 5% origination fee at an interest rate of 9.65% for 36 months. That would include an origination fee of $750.00 for an APR of 13.204%. They would receive $14,250.00 and make 36 monthly payments of $481.55. Loan amounts range from $5,000 to $50,000; loan term lengths are 36 months or 60 months.

California loans are made and arranged according to a Finance Lenders Law License. Licensed by the Department of Financial Protection and Innovation under the California Finance Lenders Law (License 60DBO81967). To check the rates and terms you qualify for, we will conduct a soft credit pull that will not affect your credit score. Yet, if you continue and submit an application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

Figure’s Personal Loan APRs range from 5.75% to 31.44%, inclusive of a 0.25% discount for enrolling in autopay. The lowest APRs are for the most qualified applicants based on factors such as credit score, debt-to-income ratio, credit utilization, and credit inquiries; rates will be higher for other applicants. The advertised APR is only available for applicants who are eligible for and select 3-year loan terms; longer terms have higher rates. Rates frequently change, so your exact rate will depend on the date you apply.

You will be responsible for an origination fee of up to 5.00% of your loan amount, depending on your credit profile and the state where you reside. Loan terms and prices are also subject to change. Figure’s Personal Loan amounts range from a minimum of $5,000 to a maximum of $50,000. You may not be eligible for our maximum amount, as the minimum and maximum loan amounts vary depending on the state in which you reside and your credit profile.

Figure’s Personal Loan Referral Program is unavailable for borrowers or applicants in Kentucky, Ohio, or Rhode Island and does not apply to any of Figure’s other loan products. For either party to be eligible to receive the $150 gift card, they must fund the referred loan. Once complete, it may take up to 5 business days to fulfill the gift card orders, which will be delivered electronically to the email addresses associated with each account.

Next Day Funding requires the application to be approved and documents signed before 4 p.m. PST or 7 p.m. EST. Please check with your institution to ensure funds availability before attempting to access the funds. Limit one $100 bonus per customer. The bonus will be deposited in the Figure Pay account within 30 days of the second consecutive deposit, satisfying the requirements for the bonus.

HELOC:* Approval may be granted in five minutes but is ultimately subject to verification of income and employment, as well as verification that your property is in at least average condition with a property condition report. Five business day funding timeline assumes closing the loan with our remote online notary. Funding timelines may be longer for loans secured by properties located in counties that do not permit recording of e-signatures or that otherwise require an in-person closing.
*Available APRs range from 8.75% – 17.40%*.(the advertised APR includes a combined 0.50% discount for opting into a credit union membership (0.25%) and enrolling in autopay (0.25%) as well as payment of higher origination fee in exchange for a reduced rate, which is not available to all applicants or in all states). The lowest APRs are only available to the most qualified applicants, depending on credit profile and the state where the property is located, and those who also select five year loan terms; APRs will be higher for other applicants and those who select longer loan terms. As representative example, for a borrower with a 60% CLTV and a 740 credit score who is eligible for and chooses to pay a 4.99% origination fee in exchange for a reduced APR on a five-year Figure Home Equity Line with an initial draw amount of $50,000 would have a fixed annual percentage rate (APR) of 10.55%. The total loan amount would be $55,275. Alternatively, a borrower with the same credit profile who pays a 3.99% origination fee would have an APR of 10.85% and a total loan amount of $55,425. Your actual rate will depend on many factors such as your credit, combined loan to-value ratio, loan term, occupancy status, and whether you are eligible for and choose to pay a higher origination fee in exchange for a lower rate. Rates change frequently so your exact APR will depend on the date you apply. APRs for home equity lines of credit do not include costs other than interest. Property insurance is required as a condition of the loan and flood insurance may be required if your property is located in a flood zone.

  • check mark Borrow up to $400k, flexible HELOC terms
  • check mark 100% digital app & online appraisal
  • check mark Rated Excellent on TrustPilot
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Key Facts

  • Mortgage Types: Home equity
  • Min. Credit Score: 550
  • APR: Undisclosed

Pros

pros iconProvides flexibility to use cash for a variety of purposes without incurring monthly payments or interest charges

pros iconOffers the opportunity to buy back equity at any time during the agreement

pros iconDesigned to be a flexible option for homeowners who may not qualify for traditional home equity loans or credit lines

pros iconCan help homeowners facing financial hardship or who are looking for a way to access the equity in their property

Cons

cons iconInvolves giving up a stake in the future value of your home

cons iconEach home equity agreement is subject to individual underwriting review, which means that not all borrowers may qualify

cons iconMay not be suitable for homeowners who are looking to borrow a large amount of money or who need a long-term financial solution

cons iconSome homeowners may prefer the security of a traditional loan or credit line that is secured by their home as collateral

Unlock Agreements are provided exclusively by Unlock Partnership Solutions Inc., Unlock Partnership Solutions AO1 Inc., Unlock Partnership Solutions AO2 Inc., and Unlock Homeownership Solutions Inc., all of which are wholly-owned subsidiaries of Unlock Technologies, Inc. (collectively, “Unlock”).
The applicable Unlock entity enters into the Unlock Agreements directly with consumers and does not act as an agent or broker on behalf of any third-party. No agency relationship shall be formed between any Unlock entity and a consumer pursuant to or in connection with an Unlock Agreement. All Rights Reserved.
*Application to funding may take over 60 days to complete. Funding timelines may vary depending on factors, including, but not limited to appraisal turnaround times and follow-ups required for verification of property details and a clear title.
Liens or any interest secured on the property by MV Realty must be paid off and removed as a condition to close.
Terms and conditions apply.

  • check mark Minimum credit score as low as 550
  • check mark No obligation; quote within a few minutes
  • check mark Quick and easy online experience
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Key Facts

  • Mortgage Types: Purchase, Refinance, Jumbo, Fixed, Adjustable, FHA, VA, USDA
  • Min. Credit Score: 620
  • APR: Undisclosed
  • NMLS#: 167283

Pros

pros iconRate Lock

pros iconOnline application process

pros iconGood reputation for customer satisfaction

pros iconPre-approval available

Cons

cons iconFees could potentially be high

cons iconNo physical branches available

Rocket Mortgage Disclaimer: ©2000 – 2020 Quicken Loans, LLC. All rights reserved. Lending services provided by Quicken Loans, LLC., a subsidiary of Rock Holdings Inc. “Quicken Loans” is a registered service mark of Intuit Inc., used under license. Quicken Loans® (also doing business as Rocket HQ), Rocket Homes Real Estate LLC, and Rocket Loans® are separate operating subsidiaries of Rock Holdings Inc. Each company is a separate legal entity operated and managed through its own management and governance structure as required by its state of incorporation and applicable legal and regulatory requirements.

  • check mark Powerful home equity solutions
  • check mark Free loan calculators
  • check mark Get rates from our providers

What is a home equity line of credit, or HELOC?

A Home Equity Line of Credit (HELOC) is a revolving line of credit secured by the equity in your home. Unlike traditional loans, where you receive a lump sum upfront, a HELOC allows you to draw funds as and when you need them, up to a predetermined limit. This flexibility makes it a popular choice for homeowners who want to tap into their home's value without selling. The interest rates for HELOCs are typically variable, which means they can rise or fall based on market indices.

What are today's average HELOC rates?

HELOC rates are influenced by various factors, including the Federal Reserve's actions, economic conditions, and the lender's internal criteria. The average HELOC rate hovers around 7.80%-9.71%. However, these rates can change frequently.

How to Get the Best HELOC Rate?

Securing a favorable HELOC rate can save you thousands over the loan's life. Here's how:

  1. Boost Your Credit Score: A higher score can unlock lower rates. Regularly check your credit report for errors and pay off outstanding debts.
  2. Research and Compare: Different HELOC lenders offer varying rates. Use online comparison tools and visit local banks and credit unions.
  3. Consider Rate Caps: HELOCs have rate caps that limit how much your rate can increase over time. A lower cap can protect you from drastic rate hikes.
  4. Understand the Market: Familiarize yourself with current economic conditions. If rates are expected to rise, consider locking in a rate.

How Does a HELOC Work?

A HELOC has two phases: the draw period and the repayment period. During the draw period, you can borrow up to your limit, and you're typically only required to make interest payments. This period can last up to 10 years. Afterward, the repayment period begins, usually lasting 10-20 years, where you pay back both principal and interest.

Who is a HELOC Best For?

A HELOC is ideal for those who:

  1. Anticipate large expenses spread out over time, like multiple home projects or college tuition payments.
  2. Are disciplined spenders and can manage the temptation of having accessible credit.
  3. Have a plan to tackle potential rate increases or can pay off the loan early.

What Can You Use A HELOC For?

HELOC for Home Improvements:

  • Purpose: Many homeowners tap into their HELOC to fund home renovations and improvements. Whether it's remodeling a kitchen, adding a new room, or landscaping the garden, a HELOC can provide the necessary funds.
  • Benefits: Investing in home improvements can increase the property's value, potentially offering a higher return on investment when selling. Additionally, certain improvements can enhance the quality of living for the residents.
  • Considerations: It's essential to budget and plan the renovations carefully to ensure the borrowed amount aligns with the project's costs.

Debt Consolidation with HELOC:

  • Purpose: Many homeowners tap into their HELOC to fund home renovations and improvements. Whether it's remodeling a kitchen, adding a new room, or landscaping the garden, a HELOC can provide the necessary funds.
  • Benefits: Investing in home improvements can increase the property's value, potentially offering a higher return on investment when selling. Additionally, certain improvements can enhance the quality of living for the residents.
  • Considerations: It's essential to budget and plan the renovations carefully to ensure the borrowed amount aligns with the project's costs.

Debt Consolidation with HELOC:

  • Purpose: A HELOC can be used to consolidate high-interest debts, such as credit card balances or personal loans, into a single, lower-interest payment.
  • Benefits: Consolidating debts can simplify financial management, reduce monthly payments, and save on interest costs over time.
  • Considerations: While this strategy can be beneficial, it's crucial to avoid accumulating new high-interest debt after consolidation.

HELOC for Emergencies:

  • Purpose: Life is unpredictable. A HELOC can act as a financial safety net for unforeseen expenses like medical emergencies, sudden home repairs, or unexpected personal events.
  • Benefits: Having a ready line of credit can provide peace of mind, ensuring you have access to funds when you need them most.
  • Considerations: It's essential to differentiate between genuine emergencies and discretionary spending to avoid unnecessary debt.

HELOC for Business Investments:

  • Purpose: Entrepreneurs and business owners might use a HELOC to fund a startup, expand an existing business, or cover short-term cash flow gaps.
  • Benefits: Using a HELOC can be a quicker and less bureaucratic way to secure business financing compared to traditional business loans.
  • Considerations: While a HELOC can provide the necessary capital, it's crucial to remember that your home secures the line of credit. Ensure a clear business plan and repayment strategy to mitigate risks.

How do I qualify for a HELOC?

Qualifying for a HELOC involves several factors:

  1. Home Equity: Typically, you'll need at least 20% equity in your home.
  2. Credit History: Past financial behavior can indicate future reliability.
  3. Debt-to-Income Ratio: Lenders prefer a ratio below 43%, ensuring you can manage the additional debt.
  4. Appraisal: Some lenders may require a professional appraisal of your home.

Pros and Cons of HELOCs

Pros:

  • Flexibility in borrowing and repayment.
  • Potential tax benefits if used for home improvements.
  • Competitive interest rates compared to credit cards.

Cons:

  • Risk of losing your home if you default.
  • The temptation to overspend due to easy access to funds.
  • Fluctuating payments due to variable interest rates.

Alternatives to a HELOC

HELOC vs. Home Equity Loan

Both HELOCs and home equity loans allow homeowners to borrow against the equity in their homes, but they serve different purposes and have distinct features:

  Home Equity Loan HELOC
Nature This is a second mortgage that provides a one-time lump sum amount It's a revolving line of credit, similar to a credit card
Interest Rate Typically comes with a fixed interest rate, ensuring consistent monthly payments Usually has a variable interest rate, which can fluctuate over time
Use Ideal for homeowners who have a specific project or expense in mind, such as a major home renovation Suitable for those who need flexibility in borrowing over time, such as ongoing home projects or education expenses
Repayment Regular monthly payments that cover both the principal and interest Interest-only payments during the draw period, followed by principal and interest payments during the repayment phase

Both options tap into home equity but differ in distribution and interest. A home equity loan gives you a lump sum with a fixed interest rate, making it predictable. In contrast, a HELOC offers flexibility but comes with variable interest rates, which can be unpredictable.

HELOC vs. cash-out refinance

Both options allow homeowners to access their home's equity, but they function differently:

 

Cash-Out Refinance

HELOC
Nature This involves replacing your existing mortgage with a new one for a larger amount than what you currently owe A separate line of credit that doesn't affect your existing mortgage
Interest Rate Typically fixed, but variable rates are available  Typically variable.
Use Can be used for any purpose, from home improvements to debt consolidation Offers flexibility in borrowing, making it suitable for varied expenses over time

While both allow homeowners to tap into their home's equity, a cash-out refinance replaces the original mortgage with a new, larger one, and you receive the difference in cash. This option can be beneficial if current mortgage rates are lower than your existing rate. A HELOC remains separate from your primary mortgage, providing a line of credit based on your home's equity.

Other Alternatives to a HELOC

Personal Loans vs. HELOC:

  • Nature: Personal loans are unsecured, meaning they don't require collateral.
  • Interest Rate: Fixed interest rates, ensuring consistent monthly payments.
  • Use: Suitable for various purposes, from debt consolidation to vacations.
  • Repayment: Fixed monthly payments over a set term.

Credit Cards:

  • Nature: Revolving line of credit with a set limit.
  • Interest Rate: Typically higher than HELOCs and personal loans.
  • Use: Suitable for everyday expenses or short-term needs.
  • Repayment: Minimum monthly payments with the option to pay in full.

Savings or Investments:

  • Nature: Using your saved money or liquidating assets.
  • Use: This can be a quick way to access funds without borrowing.
  • Considerations: Liquidating investments might have tax implications or result in a loss if sold at a low market value.