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Best Home Equity Loans March 2024

Discover and evaluate the top home equity loan providers on this page. Our list of lenders can help you compare rates, fees, and other terms to make informed decisions and find the ideal loan that fits your financial aspirations and needs.

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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 a 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 8.1% – 16.30%*.(the advertised APR includes a combined 0.45% discount for opting into a credit union membership (0.2%) 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 9.95%. The total loan amount would be $54,975. Alternatively, a borrower with the same credit profile who pays a 3.99% origination fee would have an APR of 10.24% and a total loan amount of $55,120. 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
Low Rates
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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: Purchase, Refinance, Home Equity, Adjustable, Fixed
  • Min. Credit Score: 620
  • APR: Undisclosed
  • NMLS#: 3030

Pros

pros iconClosing costs rolled into loan automatically

pros iconSmartphone app

pros iconSyncs with your bank account for easy application process

pros icon98% of financial institutions supported for digital asset verification

Cons

cons iconCan’t have face-to-face interaction with loan officer; online only

cons iconNo alternative credit data considered

Ro©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. Loan Example: A $10,000 loan with a 5-year term at 13% Annual Percentage Rate (APR) would be repayable in 60 monthly installments of $228 each. The actual payment amount and year-end balance will vary based on the APR, loan amount, and term selected. In this case the total amount expected to pay by the borrower will be $13,680

  • check mark Convenient, fixed-rate payments
  • check mark Support from qualified Home Loan Experts
  • check mark Finance your next big home improvement project
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Key Facts

  • Mortgage Types: Purchase, Refinance, adjustable, fixed, jumbo, FHA, VA, and USD
  • Min. Credit Score: 620
  • APR: Undisclosed
  • NMLS#: 1168

Pros

pros iconEasy online application process

pros iconTransparent information on their website

pros iconCustomized rates and quick pre-qualification

pros iconDiverse range of loan options

pros icon3% minimum down payment on offer

pros iconAccurate quotes given

Cons

cons iconLock fee of $500

The advertised rates also assume the borrower fully documents income, assets and liabilities, escrows for taxes and insurance, and there is no subordinate financing. * While SSN and hard credit pull are not typically required in order to review your available mortgage rates and get pre-qualified, if you choose to continue and submit a loan application, AmeriSave will then request your consent to pull a full credit report in order to proceed.

  • check mark Low Rates: Quick Quote & Approval
  • check mark Rate lock protection. Lock now before rates go up
  • check mark Over $100 billion funded. 21 Years in business
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Key Facts

  • Mortgage types: Purchase
  • Min. credit score: 620
  • APR: Undisclosed
  • NMLS#: 46375

Pros

pros iconStreamlined online application process

pros iconAccess to an experienced home loan officer

pros icon$2,000 credit toward closing costs (under the 14-day closing guarantee)

pros iconCurrent standard rates and terms clearly listed online

pros iconOption to complete the closing process remotely (in certain states)

Cons

cons iconSpecific rates and terms not available without completing an application

cons iconLive chat feature is glitchy

cons iconFunding and approval times not clearly listed

Loans Provided by Warp Speed Mortgage, a dba of CalCon Mutual Mortgage LLC NMLS #46375 (www.nmlsconsumeraccess.org); 3838 Camino del Rio N Suite 305, San Diego, CA 92108. Corporate phone (877) 707-2050. For licensing information, go to: www.nmlsconsumeraccess.org © 2013 – 2021 Warp Speed Mortgage By refinancing your existing loan, your total finance charges may be higher over the life of the loan. (Reference: 10 VAC 5-160-60 (F)) All products are not available in all states. All options are not available on all programs. All programs are subject to borrower and property qualifications. Rates, terms and conditions are subject to change without notice. 14 Day Closing Guarantee

  • check mark Digital lender offering a variety of mortgage loans
  • check mark $2,000 credit if the loan doesn’t close in 14 business days
  • check mark Get real-time interest rates & loan programs online without contacting a salesperson
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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
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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 Access between $30,000 to $500,000 in home equity
  • check mark Flexible income requirements
  • check mark No need to refinance
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Key Facts

  • Mortgage types: Purchase, Refinance
  • Min. credit score: 680
  • APR: Undisclosed
  • NMLS#: 46375

Pros

pros iconVariety of home loans, including conventional, FHA, VA, USDA, Jumbo, and portfolio loans

pros iconSome borrowers may qualify for down payment assistance

pros iconeClosing and eSigning can make the closing process faster and easier

pros iconOption to work with a loan officer in your state

Cons

cons iconRates, terms, amounts, and availability not listed online

cons iconApplication process isn’t fully online

cons iconNeed to speak with a loan officer to learn more about your options

Loans Provided by OneTrust Home Loans, a dba of CalCon Mutual Mortgage LLC NMLS #46375 (www.nmlsconsumeraccess.org); 3838 Camino del Rio N Suite 305, San Diego, CA 92108. Corporate phone (888) 488-3807.

All products are not available in all states. All options are not available on all programs. All programs are subject to borrower and property qualifications. Rates, terms and conditions are subject to change without notice.

By refinancing your existing loan, your total finance charges may be higher over the life of the loan. (Reference: 10 VAC 5-160-60 (F))

  • check mark Offering an array of home lending solutions
  • check mark Home loans may be as high as $3M
  • check mark Down payment assistance to eligible borrowers

Top Home Equity Loan Lenders

580

Min Credit Score

5.75-6.96%

APR. Fixed Rate

Max $2M

Mortgage Amount

8-30 years

Repayment terms

No

Soft Credit Pull

Marketplace

Lender Type

None

Underwriting Fee

Yes

Other Fees

Undisclosed

Origination Fee

None

Prepayment Fee

14 Days

Funding Time

6606

NMLS

Mortgage Refinance

5.250-6.437%

APR. Fixed Rate

Home Equity

Min 3.5%

APR. Fixed Rate

Pros & Cons

drop-down-btn
  • con-icon Manual underwriting available to evaluate credit
  • con-icon One of the few non-bank lenders offering equity lending and reverse mortgages
  • con-icon Can participate in the entire process online
  • con-icon English and Spanish-speaking loan officers available
  • con-icon Not available in Hawaii or New York
  • con-icon Doesn’t work with down payment assistance programs in all states

Mortgage Type

drop-down-btn
  • Mortgage Purchase
  • Mortgage Refinance
  • Fixed
  • Adjustable
  • Home Improvement
  • Home Equity Line of Credit
  • FHA
  • VA
  • Jumbo
Quicken Loans Logo
Quicken Loans

Expert Support Every Step of The Way

620

Min Credit Score

Max $3M

Mortgage Amount

8-30 years

Repayment terms

Yes

Soft Credit Pull

Direct

Lender Type

None

Underwriting Fee

Yes

Other Fees

$1,200 on average

Origination Fee

None

Prepayment Fee

26 Days

Funding Time

167283

NMLS

Mortgage Refinance

$25K-$3M

Mortgage Amount

Home Equity

$45K-$350K

Mortgage Amount

Pros & Cons

drop-down-btn
  • con-icon Rate Lock
  • con-icon Online application process
  • con-icon Good reputation for customer satisfaction
  • con-icon Pre-approval available
  • con-icon Fees could potentially be high
  • con-icon No physical branches available

Mortgage Type

drop-down-btn
  • Mortgage Purchase
  • Mortgage Refinance
  • Fixed
  • Adjustable
  • FHA
  • USDA
  • VA
  • Jumbo

580

Min Credit Score

6.475-7.186%

APR. Fixed Rate

$25K-$3M

Mortgage Amount

8-30 years

Repayment terms

Yes

Soft Credit Pull

Direct

Lender Type

None

Underwriting Fee

Yes

Other Fees

Variable, around $1,200

Origination Fee

None

Prepayment Fee

26 Days

Funding Time

3030

NMLS

Mortgage Refinance

Max $3.5M

Mortgage Amount

Home Equity

$45K-$350K

Mortgage Amount

Pros & Cons

drop-down-btn
  • con-icon Closing costs rolled into loan automatically
  • con-icon Smartphone app
  • con-icon Syncs with your bank account for easy application process
  • con-icon 98% of financial institutions supported for digital asset verification
  • con-icon Can’t have face-to-face interaction with loan officer; online only
  • con-icon No alternative credit data considered

Mortgage Type

drop-down-btn
  • Mortgage Purchase
  • Mortgage Refinance
  • Fixed
  • Adjustable
  • Home Equity Loan
  • FHA
  • USDA
  • VA
  • Jumbo
amerisave_vertical_nmls_l_mobi
AmeriSave

Low Rates: Instant Quote & Pre-Qualification

630

Min Credit Score

6.5-6.6%

APR. Fixed Rate

Min 6.5%

APR. Variable Rate

$60K-$1.5M

Mortgage Amount

10-30 years

Repayment terms

Yes

Soft Credit Pull

Direct

Lender Type

Undisclosed

Underwriting Fee

Yes

Other Fees

None

Origination Fee

None

Prepayment Fee

25 Days

Funding Time

1168

NMLS

Mortgage Refinance

Min 6%

APR. Fixed Rate

Min 6%

APR. Variable Rate

Pros & Cons

drop-down-btn
  • con-icon Easy online application process
  • con-icon Transparent information on their website
  • con-icon Customized rates and quick pre-qualification
  • con-icon Diverse range of loan options
  • con-icon 3% minimum down payment on offer
  • con-icon Accurate quotes given
  • con-icon Lock fee of $500

Mortgage Type

drop-down-btn
  • Mortgage Purchase
  • Mortgage Refinance
  • Fixed
  • Adjustable
  • Home Equity Loan
  • Home Equity Line of Credit
  • FHA
  • USDA
  • VA
  • Jumbo

What is a Home Equity Loan?

A home equity loan uses property equity as collateral to borrow money. Homeowners often use it for large expenses like home improvements or big purchases. You may have heard of home equity loans referred to under a different name, such as:

  • Home equity installment loan
  • Second mortgage
  • Equity loan

These all mean the same thing: obtaining a loan against the equity (ownership) you’ve accumulated in your property.

How Does Home Equity Work?

Home equity loans allow homeowners to borrow against the equity they have built in their homes. The amount you can borrow typically ranges from 80% to 90% of your home equity, depending on the lender's policies and your creditworthiness. For example, if you have $100,000 in home equity, you can borrow between $80,000 and $90,000.

Home equity loans usually come with fixed interest rates and a set repayment period, which means your monthly payments remain consistent throughout the life of the loan. This predictability can be helpful for budgeting, but it also means you need to be sure you can afford the payments before taking out the loan.

These loans are attractive for several reasons: they often have lower interest rates than other types of loans, like credit cards or unsecured personal loans, and the interest may be tax-deductible if used for home improvements. However, it's crucial to remember that your home secures these loans. This means if you fail to make payments, there is a risk of foreclosure.

How to Get the Best Home Equity Loan in 6 Steps

How to Get a Home Equity Loan in 6 steps

How is The Loan Amount Calculated?

Lenders will typically determine loan amounts based on several criteria. Usually, the better the borrower's financial position, the higher the loan amount and the more favorable the rate they will obtain.

In addition to considering a borrower’s credit score and payment history, lenders will usually determine a loan amount in part based on a combined loan-to-value (CLTV) ratio.

The metric represents the ratio of all secured loans on a property relative to the property’s entire value. Lenders typically lend to borrowers with CLTV ratios of no more than 80%.

In other words, lenders usually limit the loan to 80% of the property value.

For example, a $100,000 property with a CLTV ratio of 80% would imply the loan size is $80,000 (80% of $100k).

Check it out: Home Equity Loan Calculator

How to Choose a Home Equity Lender

Choosing a home equity lender involves several key considerations to ensure you get the best terms and rates for your financial situation. Here are some steps and factors to consider:

  • Determine Your Equity: Calculate how much equity you have in your home. This is the difference between your home's current market value and the amount you owe on your mortgage. Most lenders allow you to borrow up to 80-85% of this equity.
  • Research Lenders: Look at various lenders, including banks, credit unions, and online lenders. Each may offer different rates, terms, and fees. Don't just focus on your current bank; shop around for the best deal.
  • Compare Interest Rates and Fees: Interest rates can vary significantly between lenders. Also, be aware of origination fees, appraisal fees, closing costs, and any penalties for early repayment. The Annual Percentage Rate (APR) can give you a more comprehensive view of the loan's cost.
  • Review Loan Terms: Pay attention to the length of the loan term, as this will affect your monthly payments and the total interest paid over the life of the loan. Shorter terms usually have higher monthly payments but lower overall interest costs.
  • Customer Service and Reputation: Consider the lender's reputation and the quality of their customer service. Read reviews and check if they have a history of satisfied customers. Good customer service can be crucial, especially if you encounter issues or have questions.
  • Pre-Approval Process: Some lenders offer a pre-approval process that can give you an idea of the loan amount and terms you might qualify for without affecting your credit score.
  • Flexibility and Additional Features: Some lenders may offer more flexibility regarding repayment options or the ability to borrow more. Also, consider if the lender offers any additional benefits, like reduced rates for existing customers or for setting up automatic payments.
  • Understand the Risks: Remember that a home equity loan uses your home as collateral. Ensure you understand the implications and are confident in your ability to repay the loan.
  • Consult a Financial Advisor: If you're unsure, consider consulting a financial advisor. They can help you understand the implications of a home equity loan and whether it's the right choice for your financial situation.

What is a Good Home Equity Loan Interest Rate?

Average Interest Rates for Home Equity Loans (as of December 2023):

  • General Home Equity Loan:  The average rate is 8.92%, ranging from 8.60% to 10.00%.
  • 10-Year Fixed Home Equity Loan:  The average rate is 9.07%, fluctuating between 7.97% and 9.94%.
  • 15-Year Fixed Home Equity Loan:  The average rate is 9.09%, ranging from 8.07% to 10.73%.

Top Home Equity Rates

Figure_nmls_L
Figure Home Equity Line
  • Borrow up to $400k, flexible HELOC terms
  • 100% digital app & online appraisal
View rates
New American Funding (NAF)
New American Funding
  • Offers a manual underwriting service
  • Customized quotes for home equity loans
View rates
Rocket-Mortgage-logo
Rocket Mortgage
  • Convenient, fixed-rate payments
  • Support from qualified Home Loan Experts
View rates
amerisave_vertical_nmls_l_mobi
AmeriSave Mortgage
  • Low Rates: Quick Quote & Approval
  • Rate lock protection. Lock now before rates go up
View rates
Unlock Logo
Unlock
  • Access between $30,000 to $500,000 in home equity
  • Flexible income requirements
View rates

Average Home Equity Loan Rates by Market

Market Average * Rate Average * Rate Range
Boston 8.60% 7.13%-9.74%
Chicago 9.32% 8.01% - 11.37%
Detroit 10.00% 8.25%-11.37%
New York Metro 9.79% 9.74%
Philadelphia 8.71% 6.50%-9.74%
Market Total 8.92% 6.50%-11.37%

*  Updated: December 23

How to Get a Home Equity Loan

Obtaining a home equity loan can be broken down into four simple steps:

  1. Perform a credit check: Before applying for a home equity loan, consider checking your credit score to confirm your eligibility. This step will also help determine the interest rate you might expect to receive. Typically, lenders require credit scores of 620 and up.
  2. Shop around: Compare available options before deciding on a lender to ensure you can find the institution that can best fulfill your needs.
  3. Complete the application: Lenders require several documents, like pay stubs and tax returns, to be completed and provided.
  4. Obtain your loan: Once the loan is approved and signed, the lender will release the funds to you. This stage can range from two weeks to upwards of two months.

Home Equity Loan Requirements

The eligibility requirements can vary widely between lenders. Still, by and large, the following criteria can typically be expected:

  • Homeownership: Only homeowners can apply for a home equity loan. You must have an ownership stake in the property and be listed on the title.
  • Sufficient equity: You need to have built up enough equity in your home to qualify for a home equity loan. Typically, lenders require a minimum of 20% equity. An equity of at least 20% also means an LTV ratio of at least 80%.
  • Good credit: Lenders will consider your credit score when determining your eligibility for a home equity loan. Generally, a credit score of 620 or higher is required to qualify.
  • Stable income: You must have a stable income and be able to demonstrate your ability to repay the loan. Lenders will require proof of income, such as pay stubs, W-2s, or tax returns.
  • Low debt-to-income ratio: Your debt-to-income ratio (DTI) is the amount of debt you have relative to your income. Lenders typically prefer a DTI of 43% or lower.
  • Property value: The value of your property is a factor in determining your eligibility for a home equity loan. Lenders will typically require an appraisal to determine the current value of your home.
  • Clear title: Lenders will perform a title search to ensure that there are no outstanding liens or other issues with the property that could affect their security interest.

Home Equity Loan Uses

People take home equity loans for a variety of reasons, including:

  1. Home improvements: Homeowners often use home equity loans to finance home improvements, such as remodeling a kitchen or adding a new room to their home.
  2. Debt consolidation: Home equity loans can be used to consolidate high-interest debt, such as credit card debt, into one lower-interest loan, making it easier to manage monthly payments.
  3. Education expenses: Some homeowners use home equity loans to pay for college tuition, either for themselves or for their children.
  4. Medical expenses: Home equity loans can help cover medical expenses, such as unexpected medical bills or costly procedures.
  5. Starting a business: Home equity loans can be used to finance a new business venture or to expand an existing business.
  6. Emergency expenses: Homeowners may take out a home equity loan to cover unexpected expenses, such as emergency home repairs or damage caused by a natural disaster.

Conclusion

A home equity loan can be a good option for borrowers who need a large sum of money and have built up home equity. However, it's important to carefully consider the risks and benefits of a home equity loan before applying, as failure to repay the loan could result in foreclosure on your home.