12 Best Home Equity Loans of 2022

Disclaimer: This post contains references to products from one or more of our advertisers. We may receive compensation (at no cost to you) when you click on links to those products. Read our Disclaimer Policy for more information.

Home equity loans are one way that homeowners can borrow against the equity in their homes. With a lump-sum loan, you can fund home improvement projects, pay for higher education costs, and consolidate higher-interest debt.

Typically, home loan lenders require you to have:

  • At least 15-20% equity in your home
  • Stable employment or income
  • A credit score of 620 or higher
  • And a maximum debt-to-income (DTI) ratio of 43%

Moreover, the best home equity lenders often boast low fixed interest rates, repayment periods spanning up to 30 years, and low fees and loan costs.

However, not every lender offers named “home equity loans.” Instead, some let you pull cash out of your home with a HELOC, or home equity line of credit, or a cash-out refinance.

In this review of the best home equity loan lenders, we’ll take a look at financiers that offer at least one of the three.

Best Home Equity Loan Lenders

  • RECOMMENDED
  • BEST FOR
  • MIN. CREDIT SCORE

Best Home Equity Loans: Rates, Terms, & Fees

Best Overall Home Equity Lender
Lower.com Home Equity Loans
APPLY NOW
On Lower.com's Secure Website
Rates & Fees
Lower.com
  • NMLS#
    1124061
  • Min. Credit Score
    620
  • Learn More
  • Mortgage Details

Lower.com doesn’t provide information about its home equity loans online, though it does talk about its HELOCs. Qualifying borrowers can get approved for up to 95% of their home’s value or a maximum of $350,000. The lender offers 10-year loan terms with interest-only payments until the draw period ends.

Interested borrowers can apply online or contact the lender directly for more information. There’s no hard credit pull to get preapproved, and Lower.com customers qualify for their “Free Refi for Life” program.

>> More: Lower Mortgage Review

Best for Cash-Out Refinance
GuaranteedRate Home Equity Loans
APPLY NOW
On GuranteedRate's Secure Website
Rates & Fees
GuaranteedRate
  • NMLS#
    2611
  • Min. Credit Score
    620
  • Learn More
  • Mortgage Details

Guaranteed Rate doesn’t offer home equity products, but borrowers can apply for a cash-out refinance to pull equity from their home. The lender boasts competitive interest rates, excellent customer service, and an online, streamlined application process. You can get prequalified in under an hour and receive your letter of preapproval within 48.

Guaranteed Rate does offer showcase rates for some products online, but the best way to get a personalized quote is applying or calling. There’s also an option to view sample estimates by answering questions about your home and finances.

>> More: GuaranteedRate Mortgage Review

Best for Cash-Out Refinance Loans
LoanDepot Home Equity Loans
APPLY NOW
On LoanDepot's Secure Website
Rates & Fees
LoanDepot
  • NMLS#
    174457
  • Min. Credit Score
    620
  • Learn More
  • Mortgage Details

According to a 2015 press release, LoanDepot began offering fixed-rate home equity loans that year. Borrowers could receive loans up to $250,000 or 95% of their home’s equity with no prepayment penalties for early payoff.

But the lender’s website currently makes no mention about their home equity programs. Instead, LoanDepot redirects borrowers to cash-out refinances, touting their “low refinance rates” and fast approvals. Borrowers can apply from the online portal or one of its 200 nationwide branches.

>> More: LoanDepot Mortgage Review

Best for Cash-Out Refinance
Reali Home Equity Loans
APPLY NOW
On Reali's Secure Website
Rates & Fees
Reali Loans
  • NMLS#
    991397
  • Min. Credit Score
    620
  • Learn More
  • Mortgage Details

Reali Loans is another lender that offers cash-out refinances in lieu of home equity products. Borrowers can use the Reali Loans calculator to get an estimated interest rate quote using generalized information.

With inputs of a $500,000 mortgage and $50,000 cash-out, we found rate quotes as low as 2.888% to over 4.75% for low-credit borrowers. But the lender does note that rates are subject to change based on location and your credit and financial information. For a more accurate view, you’ll need to sign up or speak to a loan officer.

Flagstar Bank

Best Home Equity Loans for Flexible Terms
Flagstar Home Equity Loans
APPLY NOW
On Flagstar Bank's Secure Website
Rates & Fees
  • NMLS#
    417490
  • Min. Credit Score
    620
  • Learn More
  • Mortgage Details

Flagstar is a full-service bank that offers checking, savings, and retirement accounts in addition to mortgage and home equity products. This hybrid online and brick-and-mortar lender boasts competitive rates and fees, a quick online experience, and mortgage rate transparency.

Moreover, borrowers can choose between variable-rate HELOCs and fixed-rate home equity loans. HELOC limits range from $10,000-$500,000 and no bank-imposed costs if you keep your account open for at least 3 years. However, its home equity loans are primarily limited to the Michigan area and are only available for residential properties.

>> More: Flagstar Bank Mortgage Review

Best for HELOCs
PenFed HELOC
APPLY NOW
On PenFed's Secure Website
Rates & Fees
PenFed
  • NMLS#
    401822
  • Min. Credit Score
    Varies
  • Learn More
  • Mortgage Details

PenFed Credit Union primarily serves the military and government communities, but membership isn’t limited based on those criteria. This lender offers HELOCs for up to 90% of your combined equity for a limit of $500,000 per loan ($400,000 for non-owner occupied homes). There’s only one HELOC period available with a 10-year draw and 20-year repayment.

PenFed’s HELOCs require a 660 credit score, though other eligibility requirements are unclear. PenFed also covers most of its own closing costs (unless you close your account within 3 years).

Best for Home Equity Lines of Credit
SunTrust Home Equity Loan Rates
APPLY NOW
On SunTrust's Secure Website
Rates & Fees
SunTrust
  • NMLS#
    2915
  • Min. Credit Score
    620
  • Learn More
  • Mortgage Details

SunTrust – now Truist – is a full-service bank with checking, savings, and a variety of loans on the menu. Borrowers who want to tap their equity can opt for a cash-out refinance with rates starting at 3.2%. HELOCs are also available starting at the Prime Rate + 1.39%.

SunTrust lets borrowers take out up to $500,000 in variable-rate HELOCs with a ten-year draw period. You can also “buy” a fixed-rate draw (minimum $5,000) for an upfront $15 fee. To get started, you can apply online, call a loan officer, or drop in at a branch.

Best Home Equity Loans
Connexus Home Equity Loans
APPLY NOW
On Connexus Credit Union's Secure Website
Rates & Fees
Connexus Credit Union
  • NMLS#
    649316
  • Min. Credit Score
    620
  • Learn More
  • Mortgage Details

Connexus Credit Union offers a full range of home equity products to qualifying members in all 50 states. Home equity loan borrowers can take out up to 90% of their home’s value and receive funds at signing. The minimum loan amount is $5,000 with terms up to 180 months available.

Connexus also offers both traditional and interest-only HELOCs with 15-year draw and 15-year repayment periods. Borrowers can apply online or over the phone – and there are no home appraisals required!

>> More: Connexus Credit Union Mortgage Review

Best for Home Equity Lines of Credit
PNC Bank Home Equity Lines of Credit Loans
APPLY NOW
On PNC Bank's Secure Website
Rates & Fees
PNC Bank
  • NMLS#
    446303
  • Min. Credit Score
    620
  • Learn More
  • Mortgage Details

PNC Bank is another full-service operation that offers HELOCs to qualifying borrowers. These come in both variable- and fixed-rate plans, with rate locking and unlocking available at any point during the draw period. PNC Bank also boasts a number of discounts on their loans.

You can get a loan estimate by answering a quick questionnaire about your home and finances. Alternatively, you can opt for a cash-out refinance and borrow up to 84.9% of your home’s fair market value. Moreover, PNC’s loans come with no lender fees or closing costs.

Best for Traditional Home Equity Loans
BoA Home Equity Loans
APPLY NOW
On Bank of America's Secure Website
Rates & Fees
Bank of America
  • NMLS#
    399802
  • Min. Credit Score
    620
  • Learn More
  • Mortgage Details

Bank of America is the second-largest bank in the United States with over 4,300 branches available nationwide. The lender offers HELOCs with introductory rates as low as 1.990% for 6 months, after which rates climb to 4.400%.

This lender’s HELOCs also only come in one term option, a 10-year draw period followed by a 20-year repayment period. But you can convert up to 90% of your balance to a fixed-rate loan at any time. Qualifying borrowers can borrow up to $1 million, though the lender requires a minimum loan of $25,000.

>> More: Bank of America Mortgage Review

Best for Online Home Equity Line of Credit
Figure Home Equity Line
APPLY NOW
On Figure's Secure Website
Rates & Fees
Figure Mortgage
  • NMLS#
    1717824
  • Min. Credit Score
    620
  • Learn More
  • Mortgage Details

Figure is a newer lender that uses blockchain technology, AI, and automated valuations for an entirely digital application and funding process. The financier offers HELOCs in 41 states and Washington, D.C. Loans range from $15,000 to $250,000 and repayment terms up to 30 years.

Figure doesn’t charge appraisal, annual, late, or prepayment fees. But unlike most HELOC lenders, you’re required to borrow your full loan amount upfront, with additional credit available as you repay your loan. Moreover, each draw receives a fixed interest rate for the life of that particular loan, though your rate may vary between draws.

Best Overall Home Equity Loans
US Bank Home Equity Loan Rates
APPLY NOW
On US Bank's Secure Website
Rates & Fees
US Bank
  • NMLS#
    402761
  • Min. Credit Score
    620
  • Learn More
  • Mortgage Details

U.S. Bank offers HELOCs to qualifying borrowers in all 50 states, with loan limits up to $1 million in California and $750,000 elsewhere. Qualified borrowers can get repayment terms up to 30 years, and both fixed-rate and interest-only loan options.

Unfortunately, U.S. Bank doesn’t disclose its credit or income requirements for home equity products. But it does note that scores of at least 730 get the best APRs available. Moreover, lines of credit come with a $90 annual fee that can only be waived in your first year by opening a U.S. Bank Platinum Checking Package.

How to Compare the Best Home Equity Loan Lenders

#1. Preapproval Times

Many home equity loan lenders now offer mortgage preapproval times within one or two days, but a few take more than a week. If you’re looking for a loan in a hurry, receiving a same-day conditional preapproval can make all the difference.

#2. Customer Service Availability

Loans are a hefty responsibility, and doubly so when you’re putting your house on the line as collateral. Having access to friendly, knowledgeable customer service reps at reasonable (or all) hours of the day is a must for home equity loan shoppers.

#3. Online Application

The modern era moves quickly. If your home equity loan lender doesn’t offer an online application, that raises a few questions (and eyebrows). From speeding up the application process to letting you pause and return later, the convenience of an online application is hard to match.

#4. Associated Loan Fees

Before you sign for any loan, you should know what it’s going to cost you to borrow. Home equity loans often come with costs outside the interest rate, such as appraisal fees, origination fees, and even prepayment penalties. You may also have to pay application and credit check fees, depending on the lender.

#5. Eligibility Requirements

Typically, better credit scores both raise your approval odds and net you a better interest rate. But if you have a lower score, more debt, or unusual income and need a loan, it’s important to find a lender that will work with you without gouging you for all you’re worth.

#6. Interest Rates

Because home equity loans are secured against your home, they often carry lower fixed interest rates than unsecured personal loans. But mortgage lenders vary widely, and you don’t want to get stuck with one that charges above-market rates if you can get the same loan elsewhere for less.

How to Apply for a Home Equity Loan

Before you go rate shopping, you should prepare for your home equity loan application by checking your credit, calculating your home’s value and equity, and taking stock of your income and debts. Then, when you’ve found your preferred lender, you’ll be ready to answer questions about your financial situation and property.

Most lenders now let you begin your application online. Be prepared to scan, upload, or share documents and data like your:

  • Social Security Number
  • Income and debts
  • Incoming or outgoing child support and alimony payments
  • Employment history with employer’s contact information
  • Tax returns and W-2 statements from the past two years
  • Appraisal or valuation of your property
  • Proof of homeownership and home insurance
  • Evidence of any existing liens or debts against your home aside from your mortgage

Moreover, you may need to front application or credit check fees at this time. And if the lender requires an appraisal, you’ll probably have to cover that cost, too.

Best Uses of a Home Equity Loan

#1. Home Improvements

Home improvements are expensive, but the cost can easily be worth it if your upgrades and repairs increase the value of your home. But due to the upfront cost, many people can’t afford them without taking out a loan.

And if you take out a HELOC or home equity loan to make “substantial” improvements, you may even be able to write off your interest payments on your taxes!

#2. Paying Off Debt

Consolidating higher-interest debt, such as credit card or student loan debt, is another common reason to take out a home equity loan. Depending on the loan terms, you may be able to lower both your monthly and long-term payment obligations and free up your finances.

#3. Investments

It’s a risky move, but if you’re invested in the market or private equity ventures, sometimes you need more capital than you have on hand. This move can increase your financial portfolio over time and help you afford investments you otherwise would miss out on. But before you put your house on the line for a gamble, you may want to consult with a financial advisor.

#4. Emergency Expenses

Home equity loans can take over a month to close, which means they’re not always the best way to access emergency funds. But if your lender can close quickly, they let you access a hefty lump sum of cash at once.

What Are the Alternatives to Home Equity Loans?

Cash-Out Refinancing

A cash-out refinance replaces your current mortgage with a bigger one by pulling cash out of your house. This mortgage replaces your old debt and hands you the extra money to spend as you please. Then, you pay off your mortgage and new loan in a single monthly mortgage payment.

Typically, cash-out refinances carry higher interest rates than rate-and-term refinances and first mortgages, but lower rates than home equity products. Lenders also may loosen requirements for cash-out refinances and offer more favorable terms compared to other loans. That said, you may pay more in fees and closing costs than with a home equity loan.

>> More: Best Cash-Out Refinance Lenders

Traditional Mortgage Refinance

A traditional mortgage refinance is just a mortgage that pays off your first loan to (hopefully) get a better interest rate or more favorable loan terms.

While a regular refinance can’t pull cash out of your home, you may be able to free up additional cash without taking out debt simply by lowering your monthly payment.

>> More: Best Mortgage Refinance Lenders

Home Equity Line of Credit (HELOC)

A home equity line of credit is a revolving credit line that you can access anytime and repay as needed. After your initial draw period, which usually lasts 10 years, you enter your repayment period, during which you repay what you’ve borrowed.

HELOCs are useful as a backdrop emergency fund or when you’re not sure how much you need, such as during home renovations. But due to their adjustable interest rates, your payments can fluctuate, which makes it hard to budget for your monthly obligation.

>> More: Best HELOC Lenders

Reverse Mortgage

A reverse mortgage pays you an advance on your home equity that you don’t have to repay until you leave the home or pass away. They’re commonly marketed to those in retirement but can also benefit homeowners who need cash now. That said, reverse mortgages usually come packed with fees and constantly accruing variable interest.

Personal Loan

Like equity loans, a personal loan carries a fixed interest rate and comes in a lump sum disbursement. And though they don’t require you to put up your house as collateral in case of default, they charge higher interest for the privilege.

Home Equity Loan FAQs

Is It Worth Getting a Home Equity Loan?

If you need a large sum of cash, a home equity loan may come with lower interest rates than a credit card or personal loan. Plus, you can deduct your interest payments on your taxes if you use the money to make substantial home improvements.

What Credit Score Do You Need to Get a Home Equity Loan?

Many home equity loan lenders require a credit score of at least 620, though some require scores in the 640-660 range. But if you want the best rates, you should aim for a credit score of 740 or higher.

What Documents Do You Need to Apply for a Home Equity Loan?

The best home equity loan lenders require a detailed outline of your financial situation, including your:

  • Social Security Number
  • Tax returns
  • W-2 statements
  • Proof of homeownership and home insurance
  • Appraisal or valuation of your property
  • Evidence of any existing liens or debts against your home
  • Evidence of child support or alimony payments

How Much Does a Home Equity Loan Cost?

Depending on the lender, you may have to pay an origination fee, closing costs, taxes, mortgage insurance, home appraisal fees, and other fees. Additionally, some lenders charge extra for paying by card, making late payments, or even paying off your loan early. These charges can add up to thousands of dollars on top of your interest payments.

Are Home Equity Rates Higher than Mortgage Rates?

Home equity loan rates can range from around 3% up to 18%, depending on the lender, loan amount, your creditworthiness, and state regulations. Home equity loan rates typically trend higher than mortgage rates due to their status as “second mortgages,” which means the lender may not receive their money in full if your house goes into foreclosure.

What Is the Three-Day Cancellation Rule?

The three-day cancellation rule is a federal credit law that gives you the right to cancel your signed debt agreement by midnight of the third day without penalty. Day “one” begins after all three of the following occur:

  • You sign your credit contract
  • You receive a Truth in Lending disclosure form outlining your APR, finance charges, loan amount, and payment schedule
  • You receive two copies of a Truth in Lending notice explaining your right to rescind

During this period, your lender can’t deliver your funds or take actions related to your contract. But the three-day cancellation rule only applies to instances in which you use your primary residence as collateral. Additionally, you must notify your creditor in writing.

Summary: Best Home Equity Loan Lenders

  • Lower.com: Best Overall Home Equity Loans
  • GuaranteedRate: Best for Cash-Out Refinance
  • LoanDepot: Best for Cash-Out Refinance Loans
  • Reali Loans: Best Cash-Out Refinance
  • Flagstar: Best Home Equity Loans for Flexible Terms
  • PenFed: Best for HELOCs
  • SunTrust (Truist): Best for HELOCs
  • Connexus Credit Union: Best for Home Equity Loans
  • PNC Bank: Best for Home Equity Line of Credit
  • Bank of America: Best for Traditional Home Equity Loans
  • Figure Mortgage: Best for Online Home Equity Loans
  • US Bank Mortgage: Best Home Equity Loans

Bottom Line: Best Home Equity Loans

Home equity loans provide an easy way to pull low-interest equity from your home to fund renovations, your education, or emergencies. They tend to come with better interest rates and more favorable terms than personal loans or credit cards, which makes them valuable if you need a lot of cash. And while some lenders don’t offer home equity loans by name, cash-out refinancing works similarly (and may even get you a lower interest rate!).

But given the large number of home equity loan, HELOC, and cash-out refinance lenders available, it’s up to you to determine what matters most. Most homeowners should balance rates, fees, terms, and customer service against the opportunity to take out a loan.

Methodology

To select the best home equity loan lenders, we reviewed and analyzed 40+ lenders that operate online and offer in-person experience throughout the United States. Our evaluation includes reviewing rate transparency, refinancing fees and requirements, industry reputation, online experience, customer support, and security. Read our strict editorial guidelines and mortgage loan rating methodologies for more information.

Keep Reading:

 

Jordan Blansit
Jordan Blansit

Jordan Blansit is a Senior Writer, Researcher, & Product Analyst for SimpleMoneyLyfe with an inexplicable predilection for mortgages, investing, and personal finance. When she’s not click-clacketing from the comfort of her living room, you can find her in the California Redwoods or Oregon Siskiyous. Jordan’s areas of expertise are mortgages, personal loans, credit cards, and investing.