Best HELOCs for Fair Credit

If you have fair credit—meaning a FICO score between 580 and 669—it’s typically easier to be approved for a HELOC than an unsecured personal loan because your home is collateral, giving lenders more security if you default. 

Still, a lower credit score means you’ll pay higher interest rates than borrowers with good or excellent credit, which makes shopping around to find the best rates and terms critical. Below, we’ll break down the top HELOC options for fair credit and provide tips on how to boost your approval odds.

3 best HELOCs for fair credit

We recommend these three home equity lines of credit if you have fair credit because they have lower starting interest rates and more lenient credit requirements than other HELOC lenders.

Figure

Best overall

4.9 _/5

LendEDU Rating

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Why it’s one of the best

Figure’s HELOC is an excellent option for individuals with fair credit looking for comprehensive and accessible financing options. Figure demonstrates exceptional customer satisfaction and reliability. 

Its initial draw requirement simplifies the funding process and makes Figure an excellent choice for those with immediate large-scale financing needs.

We like Figure for its competitive rates, user-friendly platform, and the speed at which it processes applications and disburses funds. Borrowers with fair credit looking to leverage the full value of their home equity from the outset will find Figure’s approach appealing.

• Fixed interest rates
• No in-person appraisal is needed
• Option to redraw up to 100% of funds
• Funding can be available in as few as 5 days
• Check your rate without affecting your credit score

• 100% of funds are drawn at origination
• Origination fee of up to 4.99%
• Unavailable in Hawaii, Kentucky, New York, or West Virginia

HELOC terms

Rates (APR)	7.20% – 15.80%
Funding amount	$15,000 – $400,000
Repayment terms	5, 10, 15, or 30 years

Bethpage FCU

Best credit union

4.7 _/5

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Why it’s one of the best

Bethpage Federal Credit Union (FCU) offers a unique blend of personal touch and competitive advantages. The initial draw requirement of $25,000 to qualify for its low introductory rate makes it an attractive option for those who need a significant amount but prefer not to draw their entire credit line at once.

Bethpage is committed to serving its members’ best interests, offering lower rates and fees compared to many for-profit banking institutions. The initial draw requirement is a threshold that ensures borrowers are serious and prepared to use their HELOC for substantial projects or debt consolidation efforts while still offering flexibility not found in lenders requiring a full draw. 

For homeowners with fair credit who value the credit union difference—including lower costs, community focus, and exceptional customer service—Bethpage FCU offers an appealing HELOC option that balances immediate financial needs with long-term financial health.

• 12-month fixed introductory rate for qualified borrowers
• $0 application, origination, and appraisal fees
• $0 closing costs
• Convert some or all of your HELOC into a fixed-rate loan at no cost

• Closing can take 6 to 10 weeks, on average
• Initial draw requirement of $25,000 (for low intro rate)

HELOC terms

Rates (APR)	12-month introductory rate starting at 6.99% for VantageScores of 720 and up, with variable post-introductory rates starting at 8.50%
Funding amount	$10,000 – $1 million
Repayment terms	20 years

LendingTree

Best marketplace

4.5 _/5

LendEDU Rating

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Why it’s one of the best

LendingTree is a marketplace that lets you check your eligibility with its partners with a quick online prequalification form. This form doesn’t affect your credit score and has no costs. You have no obligation to continue with a matched lender, but you can do so from your results page within the LendingTree application.

• Compare prequalified offers from multiple lenders
• See results for home equity loans and HELOCs
• No costs
• Doesn’t affect your credit score

• Only shows offers from lenders in its network
• Doesn’t disclose the full interest rate range

HELOC terms

Rates (APR)	Starting at 6.99%
Funding amount	$10,000 – $2 million
Repayment terms	5 – 30 years

Stay away from hard credit inquiries—they should only be necessary when you apply for a HELOC. Hard credit checks can lower your score fast. 

Eric Kirste

CFP®

What are the eligibility requirements for a HELOC?

Your credit score is important, but lenders look at several other factors when deciding if you qualify for a HELOC. If your application is strong in these areas, it may help offset a fair credit score.

Criteria	Requirement
Equity	15% – 20% equity remaining after HELOC
DTI ratio	Less than 43%
Income	Stable and sufficient

Equity

One of the biggest eligibility requirements for a HELOC is how much equity you have built up in your home. Equity is calculated by taking the current market value of your home and subtracting how much you still owe on the mortgage.

Lenders typically want you to have at least 15% to 20% equity after getting the HELOC based on your home’s appraised value. 

For example, if you have a home valued at $400,000 and your mortgage balance is $250,000, your equity is $150,000 or 37.5%. Many lenders will extend a HELOC in this scenario.

Debt-to-income ratio

HELOC lenders also look closely at your debt-to-income ratio (DTI), which measures how much of your monthly gross income goes towards minimum debt payments like credit cards, loans, and mortgages. Generally, lenders want your DTI to be 43% or less with the new HELOC payment included.

Income stability

Your income and job history matter as well. Lenders want stable employment and sufficient income to comfortably cover the new HELOC payment on top of existing debts. They’ll ask for recent W2s, pay stubs, and job info to verify your income stability.

How to choose a HELOC when you have fair credit

As you shop for a HELOC with fair credit, the goal is to find the most affordable loan for your situation. Here are some tips:

Shop around

Get pre-qualified with online HELOC lenders, banks, and credit unions. Look at the interest rates and annual percentage rates (APRs) offered for your credit profile. Rates can vary quite a bit from one lender to the next, so this step pays off.

Understand all the fees involved

HELOCs may come with an application fee, annual fee, inactivity fee, early closure fee, and other charges that can add up quickly. Look for a HELOC with minimal fees.

Check if there is an initial draw requirement

If the lender says you must withdraw a certain minimum the first time you use your HELOC, ensure this minimum is in line with how much you need to borrow. If not, you’ll be forced to take out a large lump sum upfront that you may not need immediately.

Look at the HELOC’s maximum loan-to-value (LTV) ratio allowed for your credit tier

Many lenders have maximum LTVs of 85%, but the cap may be even lower if you have fair credit.

Read all the fine print and policies carefully

For example, some HELOCs only allow interest-only payments for a set period. Consider getting a HELOC from the same lender that services your primary mortgage if they offer a better rate or are more flexible.

How does fair credit affect my HELOC repayment?

Your credit score has a significant impact on the overall interest you’ll pay on a HELOC. Those with fair credit in the 580 to 669 range typically pay higher interest rates than borrowers with good or excellent credit scores above 670.

For example, let’s say you want to take out a $50,000 HELOC with a 10-year repayment period. A slightly lower interest rate for a better credit score could equate to $10,000 saved in interest paid, as shown in the table below.

	660 credit score	720 credit score
Rate	10%	8%
Total interest paid	$30,000	$20,000

The better your credit score, the lower the interest rate lenders will offer. This can translate into huge savings over the life of the loan, especially for larger loan amounts or longer repayment periods.

If your credit score is borderline between fair and good ranges, it can be worth it to improve your score before applying for a HELOC. 

Paying down revolving debt, removing errors from credit reports, and avoiding new credit applications can help. Even a 20 to 30-point boost could qualify you for a better rate.

But if you need HELOC funds relatively soon, apply with your current fair credit score. You can potentially refinance later at a lower rate if your credit improves.

A quick way to raise your credit score is by increasing your credit limit or paying down debt. Try not to use more than 30% of your overall credit limit.

Eric Kirste

CFP®

How to apply for a HELOC with fair credit

You’ll follow these steps to apply for a HELOC when you have fair credit:

1. Prequalify with multiple lenders to see estimated rates and terms without a hard credit pull. The three fair-credit HELOC lenders above are an excellent place to start your search.
2. Gather all required documentation, including W-2s, pay stubs, bank statements, tax returns, and an estimate of your home’s current value. The lender will need to verify your income and home equity amount.
3. Select the lender with the best offer for your credit profile and apply. This will trigger a hard credit check.
4. The lender will order an official home appraisal to confirm the value and equity position. At this point, be ready to provide any additional documentation your lender requests.
5. If approved, the closing process begins, where you can review and sign the final fees, interest rate, repayment schedule, and other legal disclosures.

The full application to approval process can take two to six weeks if everything goes smoothly. Underwriting and appraisal times can vary based on how busy the lender is.

Having ayour paperwork ready upfront will help expedite the process. The lender will also let you know if it needs any additional paperwork.

Review your credit report for any inaccuracies or incorrect information. Fixing information may lead to increased credit scores.

Eric Kirste

CFP®

FAQ 

What is considered fair credit for a HELOC application?

According to FICO, fair credit often falls within 580 to 669. Your credit score matters when applying for a HELOC because it is crucial in the lender’s decision-making process. You can still qualify for a HELOC with a fair credit score, but the interest rates could be higher.

How much equity do I need in my home to qualify for a HELOC?

Many lenders require homeowners to have at least 15% home equity to qualify for a HELOC. This represents your ownership stake in your property. The percentage required can vary based on your credit score, income, and other financial factors.

Can I still get a HELOC with a high debt-to-income ratio?

While a high debt-to-income ratio can make it harder to qualify for a HELOC, it’s not impossible. Some lenders have more flexible criteria and are willing to consider applicants with higher ratios, especially if they have strong credit and substantial home equity. 

However, a high ratio may result in higher interest rates or lower loan limits.

What are the typical fees associated with applying for a HELOC?

When applying for a HELOC, you might encounter an application fee, appraisal fee, title search fee, and closing costs. These costs can add up, so it’s crucial to factor them into your decision when comparing HELOC options.

How does a HELOC affect my credit score?

A HELOC can affect your credit score in several ways. Initially, applying for a HELOC may cause a slight dip in your score due to the lender’s hard inquiry. Over time, responsible use and on-time payments can build your credit history and improve your score.

Can I refinance my HELOC into a fixed-rate loan?

Yes, it’s possible to refinance your HELOC into a fixed-rate loan. The process involves replacing your variable-rate HELOC with a new loan with a fixed interest rate. This strategy can bring predictability to your repayments but may result in closing costs.

Are HELOC interest payments tax-deductible?

Sometimes, the interest you pay on your HELOC may be tax-deductible. However, it depends on how you use the funds. 

You may be eligible for a tax deduction if you use the money to purchase, build, or make substantial improvements to your primary or secondary home and itemize—rather than claiming the standard—deductions when you file. We recommend consulting a tax professional to understand your eligibility.

How we selected the best HELOCs for fair credit

Since 2018, LendEDU has evaluated home equity companies to help readers find the best home equity loans and HELOCs. Our latest analysis reviewed 850 data points from 34 lenders and financial institutions, with 25 data points collected from each. This information is gathered from company websites, online applications, public disclosures, customer reviews, and direct communication with company representatives.

These star ratings help us determine which companies are best for different situations. We don’t believe two companies can be the best for the same purpose, so we only show each best-for designation once.

Recap of the best HELOCs for fair credit