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Best Home Equity Loans July 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: 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

pros iconExcellent TrustPilot rating

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 7.45% – 16.15%*, which includes the payment of a higher origination fee in exchange for a reduced interest rate, which is not available to all applicants or in all states. (The advertised APR includes a combined 0.60% discount for opting into a credit union membership (0.35%) 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 9.85%. The total loan amount would be $54,925. Alternatively, a borrower with the same credit profile who pays a 3.99% origination fee would have an APR of 10.15% and a total loan amount of $55,075. 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. You will be responsible for an origination fee of up to 4.99% of your initial draw, depending on the state in which your property is located and your credit profile. You may also be responsible for paying the costs of valuation if an AVM is not available for your property ($180), manual notarization if your county doesn’t permit eNotary ($380), and recording fees ($0 – $315) and recording taxes, which vary by state and county ($0-$1,400 per one hundred thousand dollars borrowed). 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 Excellent rating 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
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Key Facts

  • No Hard Credit Check With AmeriValue
  • AmeriValue Compares Hundreds of Reputable Lenders
  • Find Options In Minutes
  • NMLS # 3175 - 2045

Pros

pros iconAccess to a long list of reputable lenders

pros iconQuick process to see the available options

pros iconNo hard credit check on the marketplace

pros iconAbility to get a wide range of loan terms

Cons

cons iconNot a direct lender

cons iconDoesn't have the best customer support

Amerivalue is an online news and information service providing editorial content and directory information about mortgages and loans. Amerivalue is not a lender or mortgage broker and does not offer loans or mortgages directly or indirectly through representatives or agents.

  • check mark Quickly Compare Hundreds of Reputable Lenders
  • check mark Find A Wide Range of Loan Types in Minutes
  • check mark Find Terms That Fit Your Needs
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Key Facts

  • Mortgage Types: Purchase, Refinance
  • Min. Credit Score: 620
  • APR: Varies
  • NMLS#: 3175

Pros

pros iconOver 200 lending partners

pros iconA variety of home loan types

pros iconFast, intuitive, detailed questionnaire

Cons

cons iconNo loan fee information

cons iconDoesn’t always find you a loan

HomeEquityQuiz is an online news and information service providing editorial content and directory information about mortgages and loans. HomeEquityQuiz is not a lender or mortgage broker and does not offer loans or mortgages directly or indirectly through representatives or agents. HomeEquityQuiz does not provide an application for credit or a mortgage loan. HomeEquityQuiz is not responsible for the accuracy of information or responsible for the accuracy of the rates, APR or loan information posted by brokers, lenders or advertisers. All trademarks and logos appearing on this site are the property of their respective owners. Their appearance on this site does not indicate or imply an endorsement of our product.

  • check mark Marketplace with over 200 lending partners
  • check mark Fast and intuitive questionnaire
  • check mark Application with no hard credit pull
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Key Facts

  • CashOutEquity.com is a marketplace that works with 100s of lenders
  • Parent company has been operating since 2001
  • Not subject to a hard credit check

Pros

pros iconAllows people to quickly compare options

pros iconLow barrier to entry

pros iconNo initial hard credit check

pros iconOnly works with trustworthy lenders

Cons

cons iconNot a ton of information on the website

The actual interest rate, APR and payment you are offered may vary based on the specific terms of the loan selected, verification of information, your credit history, the location and type of property, and other factors as determined by Lenders.

  • check mark Quickly compare 100+ lenders
  • check mark Online form takes just minutes to complete
  • check mark CashOutEquity.com doesn't do a hard credit check
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Key Facts

  • Mortgage Types: Purchase, Refinance, FHA, and VA loans.
  • Min. Credit Score: 620, 580 if applying for VA or FHA
  • APR: 6.087%-6.365%
  • NMLS#: 330511

Pros

pros icon100% online-based

pros iconCustomer support available 24/7

pros iconOnline application process

Cons

cons iconTypically need credit score above 620 or 580 for VA & FHA loans.

cons iconIf applying for a loan with a co-borrower, underwriters use the lowest credit score for qualification purposes

© 2024 Better Home & Finance Holding Company and/or its affiliates. Better is a family of companies. Better Mortgage Corporation provides home loans; Better Real Estate, LLC and Better Real Estate California Inc License # 02164055 provides real estate services; Better Cover, LLC sells insurance products; and Better Settlement Services provides title insurance services; and Better Inspect, LLC provides home inspection services. All rights reserved.

Home lending products offered by Better Mortgage Corporation. Better Mortgage Corporation is a direct lender. NMLS #330511. 3 World Trade Center, 175 Greenwich Street, 57th Floor, New York, NY 10007. Loans made or arranged pursuant to a California Finance Lenders Law License. Not available in all states. Equal Housing Lender. NMLS Consumer Access

Better Real Estate, LLC dba BRE, Better Home Services, BRE Services, LLC and Better Real Estate, and operating in the State of California through its wholly owned subsidiary Better Real Estate California Inc., is a licensed real estate brokerage and maintains its corporate headquarters at 325-41 Chestnut Street, Suite 826, Philadelphia, PA 19106. Here is a full listing of Better Real Estate, LLC’s license numbers. Better Real Estate, LLC provides access to real estate brokerage services via its nationwide network of partner brokerages and real estate agents (“Better Real Estate Partner Agents”). Equal Housing Opportunity. All rights reserved.

New York State Fair Housing Notice

New York Standard Operating Procedures

Texas Real Estate Commission: Information About Brokerage Services | Consumer Protection Notice

Better Settlement Services, LLC. 325-41 Chestnut Street, Suite 803, Philadelphia, PA 19106.

Homeowners insurance policies are offered through Better Cover, LLC, a Pennsylvania Resident Producer Agency. License #881593. 325-41 Chestnut Street, Suite 807, Philadelphia, PA 19106.

Insurance quotes and policies are offered through Better Cover, LLC. A Pennsylvania Resident Producer Agency. License #881593. Here is a full listing of Better Cover, LLC’s license numbers.

Better Inspect, LLC maintains its corporate headquarters at 325-41 Chestnut Street, Suite 846, Philadelphia, PA 19106.

Better Mortgage Corporation, Better Real Estate, LLC, Better Settlement Services, LLC, Better Cover, LLC, Better Connect, and Better Inspect, LLC are separate operating subsidiaries of Better Home & Finance Holding Company. 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 and legal and regulatory requirements. Products not available in all states.

Any unauthorized use of any proprietary or intellectual property is strictly prohibited. All trademarks, service marks, trade names, logos, icons, and domain names are proprietary to Better Home & Finance Holding Company. Better Home & Finance Holding Company trademarks are federally registered with the U. S. Patent and Trademark Office. Better Cover is a registered trademark with the U.S. Patent and Trademark Office and is owned by Better Cover, LLC.

  • check mark Tap into up to 90% of your home's equity
  • check mark New digital HELOC for secondary and investment homes
  • check mark Better Mortgage cuts out unnecessary fees, only pay interest on what you withdraw

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: Quick 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

New American Funding (NAF)
New American Funding
  • Offers a manual underwriting service
  • Customized quotes for home equity loans
View rates
Figure_nmls_L
Figure Home Equity Line
  • Borrow up to $400k, flexible HELOC terms
  • 100% digital app & online appraisal
View rates
Unlock Logo
Unlock
  • Minimum credit score as low as 550
  • No obligation; quote within a few minutes
View rates
Quicken Loans Logo
Quicken Loans
  • Powerful home equity solutions
  • Free loan calculators
View rates
AmeriValue Logo
AmeriValue
  • Quickly Compare Hundreds of Reputable Lenders
  • Find A Wide Range of Loan Types in Minutes
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.