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Home Equity

Flagstar Bank Home Equity Review

Flagstar Bank is a full-service bank with branches in California, Indiana, Michigan, Ohio, and Wisconsin. It offers personal and commercial banking. 

We researched Flagstar Bank’s home equity loan and home equity line of credit (HELOC) offerings. Here’s what you need to know.

In this review:

How does Flagstar Bank help me access my home equity?

Flagstar Bank offers both home equity loans and home equity lines of credit (HELOC). As of November 2022, its HELOCs seem to be available in more locations than home equity loans. You can input your zip code on Flagstar’s website to see which product is available in your area.

Both HELOCs and home equity loans allow borrowers to use the built-up equity in their homes for many reasons. Because HELOCs and home equity loans are secured by the residence, they often have lower interest rates than other types of loans.

Flagstar Bank home equity line of credit

A HELOC is a flexible way to access money from your home. When you take out a HELOC, you have access to a line of credit that depends on your home’s value and remaining mortgage balance. Flagstar doesn’t have a minimum draw, so you can access as little or as much of the available money as you need. 

Flagstar HELOCs have variable interest rates, so monthly payments may change depending on market interest rates. If overall rates increase, the rate on your HELOC may also increase. 

Some homeowners prefer a HELOC to a home equity loan because they’re not sure how much money they need. For example, if you’re tackling a major renovation, it may be hard to know the final total until the project is done. A HELOC lets you borrow that amount so you don’t pay interest on more than you need.

Once you take out the funds, you must start making payments of interest only or interest plus principal. HELOCs have a specific time frame in which you can withdraw the funds—the draw period. Once the draw period ends, you enter the repayment period, during which you must repay all the funds you’ve withdrawn.

Flagstar HELOC terms
Rates (APR)Starting at 5.49% for the first 6 billing cycles, then as low as 7.74%.
Rate discounts0.50% rate discount for automatic monthly payments from a Flagstar account
Loan amounts$10,000 to $1 million
Draw period10 years. Make interest-only or interest and principal payments.
Repayment period20 years
Maximum LTV89.99%
Minimum credit scoreNot stated
Minimum incomeNot stated
FeesNo closing fees if HELOC is open for 36 months.
$75 annual fee (waived the first year).
Type of homeTake out a HELOC on a primary residence (one- to four-unit homes) or secondary residence (one-unit homes).

Flagstar Bank home equity loan

A home equity loan is more like a traditional loan than a HELOC. When you take out a home equity loan, the lender deposits a lump sum into your bank account, and you can use the funds for any reason.

You’ll start making payments on the home equity loan when the lender disburses the funds. Flagstar home equity loans have a fixed interest rate, so the monthly payment will be the same for the entire loan term. This predictability lets borrowers budget for a home equity loan with ease.

Flagstar home equity loan terms
Rates (APR)Starting at 7.79%
Rate discounts0.25% discount for automatic payments from a Flagstar account
Loan amounts$10,000 to $1 million
Repayment periods10, 15, or 20 years
Maximum LTV89.99%
Minimum credit scoreNot stated
Minimum incomeNot stated
FeesFlagstar does not impose closing costs.

Borrower is responsible for prepaid interest and all state- and government-specific fees

Pros and cons of a Flagstar Bank HELOC or home equity loan


  • Can have a higher LTV than other lenders.

  • High loan amounts.

  • No closing costs.


  • Poor customer reviews.

    See below.

  • Home equity loans are not available in many areas.

  • Shorter repayment term than other lenders.

If you’re unsure whether Flagstar is the right lender for your home equity needs, check out our list of home equity companies.

What do Flagstar Bank’s customers say about the company?

SourceRatingNumber of reviews
Better Business Bureau1.04 out 5243
Trustpilot2.1 out of 521

Ratings collected on November 20, 2022

Customer ratings are a good way to gauge a lender before you take out a loan. Flagstar’s online ratings are poor. One reviewer said Flagstar miscalculated their HELOC monthly payment and has yet to resolve the problem. 

Another reviewer said they were already a Flagstar customer when they applied for a HELOC. Flagstar changed the loan amount several times before denying the application.

Do I qualify for a HELOC or home equity loan from Flagstar Bank?

Flagstar does not state its minimum income or credit score requirements. You can get a HELOC on a primary residence with one to four units or a secondary residence with one unit.

Flagstar does not seem to offer prequalification or preapproval options. The only way to find out if you’re eligible for a home equity loan or HELOC is to apply.

How do I apply with Flagstar Bank?

If you’re applying online, you will have to provide your requested loan or line of credit, the reason for the loan, the estimated property value, and whether the property is a primary or secondary residence. You will also share information about the current mortgage.

You can also call 866-379-0270 to apply over the phone. 

How does Flagstar Bank determine how much I can borrow?

Lenders rely on many factors before approving a home equity loan or HELOC. These include your credit score, income, location, and, most important, your LTV. You can calculate your LTV by dividing the current mortgage balance by the current market value.

To qualify for a home equity loan or HELOC with Flagstar Bank, you must have 89.99% combined LTV (CLTV) or lower. 

Here’s how you can determine that ratio: Let’s say you have a $200,000 mortgage balance on a house with a $350,000 market value. You have about 57% LTV:

($200,000 mortgage balance / $350,000 market value) x 100 = 57.14% LTV

If you want to take out a HELOC or home equity loan, the maximum amount you could borrow is  $114,965. That would put you at 89.99% LTV:

$350,000 market value x 89.99% max CLTV = $314,965

$314,965 – $200,000 mortgage balance = $114,965 

What does the appraisal process look like?

Flagstar does not provide specific information on its appraisal process. In general, home equity loan or HELOC appraisals are similar to mortgage appraisals.

If the lender deems an in-person appraisal necessary, it will choose an appraiser to visit the home. They will note major improvements since you bought the property and compare your home to recently sold properties in the neighborhood. It uses that information to help calculate current market value. (The borrower often pays for the appraisal, but Flagstar might waive the appraisal fee along with other closing costs.)

If you disagree with the appraisal, you may be able to appeal the results and ask the lender to hire someone else. If the appraised value is not high enough, you may not qualify for a home equity loan or HELOC.     

Does Flagstar Bank charge any fees?

Fee typeHELOCHome equity loan
Closing costsOnly apply if HELOC is closed within 36 monthsNone
OthersNoneBorrower is responsible for prepaid interest and state- and government-specific fees

Does Flagstar Bank have a customer service team?

  • Phone. 1-800-968-7700, Monday through Friday: 7:30 a.m. to 8 p.m. Eastern time. Saturday: 7:30 a.m. to 4 p.m. Eastern.
  • Online messaging system. Flagstar customers can log in and send a secure message from their account.

Flagstar does not offer a live chat option.