Best Home Equity Lenders

Below are some of the best home equity lenders. Compare rates, terms and amounts.

Editor's Choice

Quicken Loans Award-Winning Client Service

• 35 years of experience
• Fully automated, online process
• Pre-approval available
• Credit score: 620

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Key Facts

• Mortgage Types: Purchase, Refinance, Jumbo, Fixed, Adjustable, FHA, VA, USDA
• Min. Credit Score: 620
• APR set by lender
• NMLS#: 3030

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Pros:

• Rate Lock
• Online application process
• Good reputation for customer satisfaction
• Pre-approval available

Cons:

• Fees could potentially be high
• No physical branches available

LendingTree Pre-Qualify in 3 Minutes

• Offers free credit score check
• 26+ years in the lending business
• SSN needed to pre-qualify

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Key Facts

• Mortgage Types: Home purchase, equity, or refinance
• Min. Credit Score: 500
• APR set by lender
• NMLS#: 1136

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Pros:

• Lenders in the LendingTree network uniquely offer manufactured or mobile home loans and multi-family home loans
• You can apply for a mortgage through LendingTree as a primary home, secondary home, or rental property
• Getting several offers with a single application makes it easier to negotiate for the best possible rates

Cons:

• Customers receive many emails and phone calls from various companies
• Each lender runs a hard credit check, which could reduce credit scores by a few points

Rocket Mortgage 35+ Years of Affordable Mortgages

• RateShield® locks current rate for 90 days
• Offer that’ll cover 1% of your rate for a year
• Unique support for first-time homebuyers
• Credit score: 600

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Key Facts

• Mortgage Types: finance, refinance, adjustable-rate, fixed-rate
• Min. Credit Score: 600
• APR dependent on credit score
• NMLS#: 3030

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Pros

• Closing costs rolled into loan automatically
• Smartphone app
• Syncs with your bank account for easy application process
• 98% of financial institutions supported for digital asset verification

Cons 

• Can’t have face-to-face interaction with loan officer; online only
• No alternative credit data considered

AmeriSave Mortgage Get a customized quote in 3 minutes

• Lower rate for 90 days with “Lock & Shop”
• AmeriSave Certified Approval has your back
• 20+ years of experience with A+ BBB rating
• Credit score: 620

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Key Facts

• Mortgage types: Purchase, refinance, adjustable, fixed, jumbo, FHA, VA, and USD.
• Minimum credit score: 620.
• NMLS#: 1168

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Pros

• Easy online application process
• Diverse loan options available
• Transparent information on their website
• 3% minimum down payment available
• Accurate quotes, not estimates

Cons

• $500 application fee
• Offers no program for first-time homebuyers

Figure Home Equity Line Approval in 5 Minutes, Funding in 5 Days

• Mortgage Types: HELOCs
• Min. Credit Score: 640
• Rate discounts available
• NMLS#: 1717824

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Key Facts

• Mortgage Types: HELOCs
• Min. Credit Score: 640
• Rate discounts available
• NMLS#: 1717824

Read Figure Home Equity Line Review »

Pros

• Fast funding times
• Speedy digital application with eNotary
• Low fixed rates

Cons

• An origination fee
• Not available in all 50 states

A home equity loan is a loan that allows homeowners to borrow money using the equity in their home as collateral. The loan amount is based on the difference between the current value of the home and the amount owed on mortgages or liens. Homeowners typically use home equity loans for big expenses like home renovations or big expenses.

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.

In this loan structure, the borrower’s home equity is used as collateral for the lender. Securing a loan against home equity helps protect the lender since the home can be sold if the loan cannot be repaid. This structure also means lenders often provide more favorable rates than other types of loans.

Borrowers build equity in one of two ways:

• When paying down their mortgage.
• When their home’s value increases. Of course, the opposite is also true. If your house value falls, your equity will be negatively impacted.

Like a traditional mortgage, a home equity loan will have a repayment schedule dictating recurring payments. Also, like a conventional mortgage, these repayments will be composed of principal and interest.

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).

There are several elements to consider when deciding on a lender, including:

• What size of home equity loans does the lender offer?
• Will you be eligible for a loan with this lender?
• What terms are offered?
• What is the current interest rate range (APR range)?
• What is the quality of customer service?
• How have other borrowers reviewed the lender?

Borrowers will need to assess a myriad of factors when choosing a lender. For most borrowers, a low-interest rate will be one of the main drivers of their decision. For others, quality customer service is essential and may trump another lender with a slightly lower rate.

Ultimately, the appropriate lender will depend on the factors important to the borrower.

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

• Perform a credit check

Before applying for a home equity loan, consider checking your credit score to confirm if you’re likely to qualify. This step will also help determine the interest rate you might expect to receive. Typically, lenders require credit scores of 620 and up.

• Shop around

Compare available options before deciding on a lender to ensure you can find the institution that can best fulfill your needs.

• Complete the application

Lenders require several documents to be completed and provided, like pay stubs and tax returns.

• 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.

The requirements for eligibility 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.

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.

In general, a home equity loan can be a good option for borrowers who need a large sum of money and have built up equity in their homes. 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.