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Home Equity

HELOCs for Retirees

If you’re a retiree looking for a HELOC, depending on your equity and credit score, you could be in a position to get the best rates and terms possible. And it’s never been easier. 

Online lenders have simplified the process from application to closing, making the process easier and faster than ever. Here’s what to look for when it comes to finding excellent HELOC lenders, what the requirements are to qualify, and how to choose the right HELOC for you. 

3 best HELOCs for retirees

Retirees looking for the best HELOC lenders may want to consider online HELOC lenders (also called fintech lenders). Because of the financial technology online lenders use, the lending process is simpler, faster, and often cheaper. 

We recommend the following HELOC lenders for retirees with significant equity who want an easy online lending experience. They offer competitive rates, fast funding times, low fees, excellent customer service, and other features.

LenderRates (APR)Min. credit score
Figure8.60%17.25% fixed640
Hitch8.25%13.00% fixed or variable620
Bethpage FCU12-month intro rate of 6.99% for VantageScores of 720 and up; then a variable rate670

Figure – Best overall

LendEDU rating: 4.9 out of 5

  • 100% online application and appraisal
  • Borrow $20,000 – $400,000
  • Must borrow 100% of your credit line (minus fees) at closing

Figure stands out as the best overall option for retirees seeking a HELOC due to its user-friendly online platform and excellent customer reviews. The company provides a seamless experience from application to approval, which is ideal for retirees who may prefer managing financial transactions from the comfort of their homes. 

One crucial reason we recommend Figure for retirees is its flexible loan amounts and the option to lock in fixed rates, which can be appealing for those on a fixed income. Figure’s capability to disburse quick funds meets the needs of retirees who might need quick access to funds for urgent home repairs or unexpected expenses.

Because Figure requires borrowers to withdraw the full credit line at closing, this lender is best for those planning to put the full amount to work right away. Figure charges an origination fee of up to 4.99%, and it’s not available in Delaware, Hawaii, Kentucky, New York, or West Virginia.

Bethpage FCU – Best for large HELOCs

LendEDU rating: 4.7 out of 5

  • Borrow $10,000 – $1 million
  • No application, origination, or appraisal fees
  • Get rate discounts if you schedule payments from a Bethpage personal savings or checking account

Bethpage Federal Credit Union is the best credit union for retirees interested in obtaining a HELOC. It focuses on member benefits and offers competitive rates that often outperform those of traditional banks. This is advantageous for retirees looking for ways to reduce costs and maximize their financial resources.

Bethpage emphasizes personalized service and financial education, which is essential for retirees to manage their finances in a way that sustains their lifestyle throughout retirement. This approach to supporting members through tailored advice and resources makes it a top recommendation for retirees who appreciate a more personalized banking relationship and educational support to make informed financial decisions.

You can convert part of your Bethpage HELOC to a fixed-rate option. The required initial draw for borrowers who qualify for the low intro rate is $25,000. You must join the credit union when you apply, but membership requirements are easy. 

Hitch – Best for accessing 95% of equity

LendEDU rating: 4.3 out of 5

  • Assigned a dedicated loan officer
  • Borrow $25,000 – $500,000
  • Must borrow 100% of your credit line (minus fees) at closing

For retirees looking to access a significant portion of their equity, Hitch is the top choice. Its easy application process reduces the stress and complexity often associated with financial services, making it a standout for retirees who value simplicity and efficiency. When you apply, Hitch assigns a dedicated loan officer to help you navigate the process.

Similar to Figure, Hitch requires borrowers to withdraw the full line of credit at closing. Hitch doesn’t disclose much about its eligibility requirements, but we’ve gathered that applicants must have a credit score of 640 or above and reside in California, Colorado, Connecticut, Delaware, Florida, Illinois, Maryland, New Hampshire, New Jersey, New York, North Carolina, Oregon, Pennsylvania, South Carolina, Virginia, Washington, or Washington, D.C.

What are the eligibility requirements for a HELOC?

If you’re looking to obtain a HELOC, meeting the eligibility requirements is your first step. Here’s what to expect from lenders in terms of income, debt, credit history, and home equity. 

Income 

Lenders look for enough income to cover the HELOC. They’ll look at your income from the past two years, which may include Social Security, pensions, distributions from retirement accounts, investment dividends, interest earnings, and other earnings. 

Debt

Lenders want your debt-to-income ratio to be below 50% in retirement. Beyond this minimum, your level of debt will also determine how much you can qualify for on your HELOC. Lower levels of debt mean your HELOC amount could be much larger. 

Credit score and history

The lender will love it if you’ve spent years reliably paying bills on time. It will also look at how much you’re borrowing (aka credit utilization), your mix of credit accounts, and the number of new inquiries. 

Be sure to check your credit report before applying for a HELOC. Making a few adjustments, such as correcting an error or paying off a credit card, can maximize your credit score and help you get the best possible rate on your HELOC.

Home equity amount  

To qualify for a home equity line of credit, you’ll need a sufficient amount of home equity. Most lenders don’t expect to loan out more than 85% of a home’s value (aka the loan-to-value ratio [LTV]). 

Here’s a quick example of how the amount of home equity you have and how much the lender is willing to lend affects your eligible loan amount:

  • Market value of the home: $500,000. Multiply by 85% (.85) for maximum allowable loan amounts: $425,000
  • Current mortgage: $200,000
  • Possible HELOC amount: $225,000 ($425,000 – $200,000) 

Keep in mind that this can change based on your home’s current value, the percentage of your home’s value the lender is willing to loan, and how much you qualify for. If you need further help, a home equity calculator is an excellent tool for determining how much you could qualify for. 

What our expert recommends

Eric Kirste

CFP®

We recommend clients have access to their home equity in the form of a HELOC. The advantages to having one in place include: the potential tax benefits from the interest paid that can be itemized on your taxes (but we recommend you consult a tax professional), they allow for flexible use of funds in case you have an emergency or need a certain amount, and HELOCs are based on the prime rate, which tends to be an attractive short-term rate and in line with other secured debt options. Disadvantages may include: as with any variable-rate debt, the interest rate could fluctuate, if you overuse the HELOC and can’t pay off the debt, you risk your home as collateral on the HELOC, and if you are retired and depending on the lender, it will require credit underwriting to approve you.

How to choose a HELOC

With all the options you have for a HELOC, it can be overwhelming to make sure you choose the right one. Here are a few tips that can help you narrow down your choice.

  1. Zero in on your goal. You might already have this one down, but if not, it’s important to get clear on what purpose the HELOC will serve for you. This goal can affect what HELOC (or other financing method) would work best for you. 
  2. Know how much you’ll need. The amount you need can affect what HELOC you should get. Does the lender offer high enough loan amounts? Do you need a HELOC with a lender that allows for a higher LTV, such as Hitch? Are you willing to borrow less to qualify for a lower interest rate?
  3. Understand the draw period. HELOCs may offer different terms for the draw period. Some may offer a draw period where you may have interest-only payments for 10 years. Some may fully amortize the payment, which means your loan will be on a repayment schedule from the beginning. 
  4. Understand your rate type (fixed versus variable). Does the HELOC offer a fixed rate? Most HELOCs are variable-rate, but a few lenders offer fixed-rate HELOCs. What does the lender disclose about how the rate type works? Are you comfortable with a variable interest rate that could make it harder to pay off your loan if the rate goes up? Is a promotional rate acceptable?
  5. Consider different loan terms. Your loan term can affect how much you’ll pay. A shorter loan term has a higher payment but will cost less overall because you’ll pay less interest. A longer loan term will have a lower monthly payment but will cost more in interest over the course of the loan. 

Our expert’s take on alternatives

Eric Kirste

CFP®

We prefer clients to use secured debt, such as HELOCs, over unsecured debt due to better interest rates and terms. However, if you have short-term needs or, in other specific instances, a personal unsecured loan may be better suited due to the speed of access and the shorter-term nature of the loan.

Prequalify for a loan 

Once you know what you want in a loan, find the top lenders that offer what you need. Prequalifying with these lenders is one of the easiest, smartest moves you can make if the lender offers it.

The prequalification process asks for your identifying information, income, and desired loan amount. It conducts a soft credit check, and you may get a lending decision with the amount, rate, and term you’ll qualify for without a hard credit check or full appraisal. You can compare offers among lenders by using the prequalification tool with each.

Recap: HELOCs for retirees

LenderRates (APR)
Figure8.60%17.25% fixed
Hitch8.25%13.00% fixed or variable
Bethpage FCU12-month intro rate of 6.99% for VantageScores of 720 and up; then a variable rate