Best Home Equity Loans

Home equity loans and fixed-rate home equity lines of credit (HELOCs) can provide ready cash to cover home improvements, debt consolidation, and other expenses. Home equity loans provide a hefty lump sum, and HELOCs offer access to a revolving credit line.

We reviewed home equity lenders to narrow down the top choices. Keep reading for the best home equity loans and fixed-rate HELOCs on the market.

Reviews of the 4 best home equity loans

We considered interest rates, loan amounts, funding speed, credit score requirements, and more to find the best home equity loans. Read more about our picks below.

• Best overall: Figure
• Best for comparison shopping: LendingTree
• Best for accessing 95% of your equity: Spring EQ
• Best for military members: Navy Federal

Figure

Best Overall

4.9 _/5

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Why Figure is one of the best

Figure is our top pick for home equity financing. Its HELOCs come with fixed rates, which allows for predictable monthly payments and easy budgeting. Fixed rates also eliminate concerns about potential future rate hikes, making your loan more expensive.

You can borrow up to $400,000 with a Figure HELOC and draw from your credit line for five years. Once approved, you could access your line of credit in as little as five days.

Figure charges origination fees up to 4.99%, and it requires a 100% initial draw. However, Figure offers among the lowest average HELOC rates. You can also check your rates without affecting your credit score.

• All HELOCs come with a fixed rate
• 100% online application and appraisal
• Receive funds in as little as five days
• Redraw up to 100% of your funds
• Check your rate without affecting your credit score

• Charges an origination fee
• Requires an initial draw of 100% of the credit line (minus fees)

Rates (APR)	7.55% – 16.25%
Loan amounts	$20,000 – $400,000
Repayment terms	Draw: 5 years / Repayment: 5, 10, 15, or 30 years

Eligibility requirements

Figure’s requirements to be approved for a HELOC include:

Applicants:

• Have a credit score of 680 or above.
• Name must appear in the country records as the property owner.
• Must be employed, self-employed, or retired.

Properties:

• Be a single-family residence, townhouse, planned urban development (PUD), or condo.
• Can be the applicant’s primary or secondary residence.
• No title change in the preceding 90 days.

LendingTree

Best for Comparison Shopping

4.5 _/5

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Why LendingTree is one of the best

LendingTree stands out as a top choice for home equity loans due to its extensive network of lenders, which allows borrowers to receive multiple loan offers by filling out a single application.

Borrowers can choose from various loan amounts, from $10,000 to $2 million, and various repayment terms that suit their financial needs. Whether looking for a HELOC with a draw period or a traditional home equity loan for a lump sum, LendingTree provides options to meet diverse financial goals and circumstances.

• Compare multiple lenders with one form
• No costs
• No impact on your credit for checking offers

• Only includes offers from its partners

Rates (APR)	Vary by lender
Loan amounts	$10,000 – $2 million
Repayment terms	Vary by lender

Eligibility requirements

LendingTree itself doesn’t have any set eligibility requirements. However, it says most lenders require a minimum credit score of 620, a debt-to-income ratio below 43%, and a loan-to-value ratio below 95%.

Navy Federal Credit Union

Best for Military Members

3.9 _/5

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Why Navy Federal is one of the best

Navy Federal Credit Union offers home equity loans and lines of credit for military servicepeople, Department of Defense civilian personnel, and their families. If you’re not yet a Navy Federal member, you can join by opening a savings account and maintaining a $5 balance.

When you join the credit union, you’ll enjoy exclusive benefits like high loan limits and competitive rates on home equity financing. Navy Federal lets you borrow up to 100% of your equity, and you won’t pay origination fees, application fees, or closing costs.

Navy Federal HELOCs have a 20-year draw period, letting you access your credit line for a longer period. Funding can take 45 to 55 calendar days, however.

• No closing costs
• Borrow up to 100% of your home’s equity
• No application or origination fees

• Only available to military members and family members
• Doesn’t disclose the highest possible interest rate

Rates (APR)	Starting at 7.34%
Loan amounts	$10,000 – $500,000
Repayment terms	5, 10, 15, or 20 years

Eligibility requirements

Because Navy Federal is a credit union, you must become a member before applying for any product it offers. To become a member, you must be a veteran, retired service member, or Active Duty. Immediate family of current members are also eligible to join.

Navy Federal doesn’t disclose any eligibility details for its home equity loan, so you’ll need to speak to a representative or submit an application to find out more.

Spring EQ

Best for Accessing 95% of Equity

4.1 _/5

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Why Spring EQ is one of the best

Spring EQ offers home equity loans and HELOCs—and you can apply for both using the same application. 

Repayment terms extend to 30 years, and the lender accepts a 95% loan-to-value ratio (LTV) for borrowers with a 700 or better credit score. This allows you to borrow up to $500,000 against your equity, making Spring EQ one of the best places for home equity loans.

Spring EQ doesn’t list its home equity loan or HELOC rates on its website, so you’ll need to start a prequalification application to see your estimated rates. You must have a minimum 640 credit score and debt-to-income ratio (DTI) under 50% to get approved.

• Access up to 95% of your home’s equity
• Check your eligibility for both a home equity loan and HELOC

• Limited information available outside of its online application
• Funds take 21 business days, on average

Rates (APR)	Starting at 9.50%
Loan amounts	$25,000 – $500,000
Repayment terms	5 – 30 years

Eligibility requirements

Spring EQ doesn’t provide much eligibility information on its website, but we’ve confirmed that applicants need a minimum credit score of 640, and the property can be owner-occupied or a secondary home.

What are the different types of home equity loans?

The two main types of home equity loans are fixed-rate home equity loans and home equity lines of credit. Both types have unique benefits.

Fixed-rate home equity loan

With a fixed-rate home equity loan, you’ll get a stable rate for the term of your loan. Your monthly payments are the same each month, which makes it easier to budget.

A fixed-rate home equity loan may be ideal for large expenses, such as renovating a home, paying a major medical bill, or consolidating high-interest debt. You might be able to deduct the interest on your home equity loan when you file taxes if you use the money to improve your house.

Home equity line of credit (HELOC)

A HELOC differs from a home equity loan because instead of a lump sum, you get a line of credit similar to a credit card. You can use money as needed and pay down the balance to create more space for other expenses. 

Remember that most HELOCs have variable rates, so your payments are inconsistent. 

Many HELOCs allow interest-only payments during the draw period, typically lasting five to 10 years. So you can complete a long renovation project and make small interest-only payments at first. Once the draw period is over, your monthly payments will be larger.

How to get the best rates for home equity loans

Finding the best home equity loan rates involves improving your financial picture before applying and applying strategically. Try to wait to apply for a home equity loan until you’ve done the following:

• Reviewed your credit reports: You can pull your credit reports for free once a week. When you do, check for errors and dispute any you find. Make note of high balances, and work to reduce those as soon as possible.
• Lowered your DTI: Paying down your debt will reduce your overall DTI. Showing lenders that you manage debt well and don’t carry much debt can boost your approval odds.
• Monitored your credit score: Ask your bank or credit card issuer whether it offers free credit score reporting. Check your score as often as possible, and start prequalifying when it’s high enough to qualify for decent rates (often 640 or above).
• Checked your rates with multiple lenders: You should compare rates with at least four lenders. Many let you see your rates with a soft credit check. Hold off on a full application until you’ve found rates that suit your budget.

If you’re unhappy with the rates you see during the prequalification process, wait a few weeks and try again. Home equity loans aren’t funded overnight anyway, so there’s no harm in extending the process to ensure the most savings.

Your LTV is also a consideration. Use our home equity loan calculator to estimate your LTV and how much of your equity you can borrow. If your LTV is above 85%, work on reducing your mortgage balance or increasing your property value before you apply for a home equity loan.

Do I qualify for the best home equity loans?

Home equity loan limits and rates vary by lender and by borrower. The best home equity loan is the one that gives you the lowest rate, best repayment terms, and highest borrowing amount for your credit profile.

Lenders determine your eligibility and interest rate by reviewing your credit score, income requirements, property types, and your desired LTV limit.

Credit scores

The higher your credit score, the easier it may be to get approved and qualify for the lowest rates. However, some lenders won’t approve borrowers below a certain minimum credit score. For example, Figure requires a credit score of 680 or above, and Spring EQ requires a minimum credit score of 640.

If you want to improve your credit score, the two largest contributors are your payment history and your debt-to-credit ratio. Your payment history makes up 35% of your score, so it’s crucial to ensure you make all of your payments on time.

Paying down your debt will lower your debt-to-credit ratio, which is 30% of your score, and you’ll see your score improve. This part of your score shows you have enough financial restraint to not use all the available credit, which indicates to lenders that you’re a responsible borrower.

Home equity

Home equity lenders typically allow borrowers to take out a loan up to 80% of their loan-to-value (LTV).

To access more cash, you can work on building your home equity before applying for financing. You build equity every time you make a mortgage payment and whenever you make home improvements.

Some home improvements increase your home equity more than others, so before you decide which project to tackle next, make sure to choose one that will benefit your home’s overall value.

Prequalify and compare

Another way to ensure you get the best home equity loan rates is to prequalify with three to five different lenders. Prequalifying enables you to review several different offers from lenders. Once you receive offers, compare rates, terms, fees, and other costs.

Other considerations

In addition to considering rates and fees, it also helps to weigh the following when trying to get the best possible home equity loan.

• Property type: Some lenders only allow you to take out home equity loans for specific property types.
• Borrowing amounts: Do you need a small home equity loan or a larger one? Does your lender have a set minimum loan limit? Prioritize loans that let you borrow enough without forcing you to take on more debt than necessary.
• Added fees: Will you need to pay origination fees or annual fees? What about closing costs? Home equity loan fees can increase your borrowing cost, so prioritize lenders that minimize these extra charges.
• Funding times: How soon do you need your loan? Are you willing to sacrifice a lower rate for faster funding? If not, can lenders offer digital or drive-by appraisals that shorten the underwriting period and allow faster access to cash?
• Income: Potential lenders like to see that you have a steady income and have been in your job for at least one year.

Because loan offers are subjective, the best home equity loan for you may not be the best for someone else. Wait to apply until your credit and DTI are healthy, and then prioritize home equity loans and HELOCs that best meet your individual needs.

Is a home equity loan my best option?

To decide whether a home equity loan is your best option, consider your reason for withdrawing money, the tax implications, and your personal risk tolerance.

What is the money for?

Most people use a home equity loan for major expenses, including renovations, educational expenses, or debt consolidation. This is often advantageous because interest rates tend to be lower than other options, such as credit cards.

The main drawback of using a home equity loan for major expenses is that it comes with the risk of foreclosure if you can’t make your payments. Therefore, only take out a home equity loan if you’re confident you can repay it.

Tax implications

According to the IRS, you can deduct the interest on your home equity loan if you use it to “buy, build, or substantially improve” your home. This works for borrowers who itemize deductions, not those who take the standard deduction. So if you plan to use your loan to improve your house, consider the potential tax benefits.

As a precaution, always check with a certified financial planner or accountant first to make sure you avoid common pitfalls and maximize all potential tax advantages. 

How do home equity loan rates compare to HELOCs?

Home equity loans and HELOCs both turn your home equity into cash. The primary difference between them is that home equity loan funding is one and done, while HELOCs give you ongoing access to credit.

Interest rates vary between each financing product. Home equity loan rates tend to be fixed, and HELOC rates are often variable. Every now and then, you’ll find a lender—Figure, for example—that offers borrowers the best of both worlds with fixed-rate HELOCs.

Home equity loan and HELOC alternatives

Home equity loans and fixed-rate HELOCs aren’t the only ways to borrow money when you need it. If you’re unsure which is right for you, it may be beneficial to compare these financing tools to variable-rate HELOCs, personal loans, or credit cards. 

• Cash-out refinance: With a cash-out refinance, you replace your first mortgage with a larger one and pocket the difference in cash. The upside to cash-out refinancing is that you only make one payment instead of two, as you would with a home equity loan or HELOC. The downside is that you extend your mortgage term.
• Personal loan: Like home equity loans, personal loans allow you to borrow a lump sum, but personal loans don’t require you to offer your home as collateral. Personal loan rates can be as low as home equity loan rates, but it’s not unusual to see rates in the 10% to 30% range.
• Credit card: If you don’t need to borrow much, you might consider using a credit card to cover expenses. Credit cards could allow you to earn substantial rewards or cash back, but rates can be much higher than those on home equity loans and HELOCs. Be careful if you don’t think you can pay down your balance quickly.

Responsible debt management

Regardless of your financing option, aim to manage your debt responsibly. You can do that by minimizing the amount of debt you take on and comparing interest rates to ensure you get the best possible rate. Estimate your monthly payments before choosing your financing type.

Consider the pros and cons before taking out a loan or line of credit using your home as collateral. Some expenses, such as renovating your home and improving its value, can be worthwhile, especially considering the tax advantages. 

However, if you’re concerned about your ability to make payments, it’s best to wait until you’re ready. This will help you avoid losing your home to foreclosure.

How does a home equity loan work?

A home equity loan works by allowing you to borrow a lump sum using your home’s equity as collateral. You can calculate your home equity by taking the current market value of your house and subtracting the amount of money you still owe on your mortgage. 

According to the Federal Trade Commission, most lenders will let you borrow up to 80% of this number. Once you choose a lender, apply for a home equity loan, and get approved, you’ll get the money as a lump sum in your bank account. Then you’ll pay back the loan with interest in equal monthly payments for the term of your loan. 

Home equity loans are also known as second mortgages. Like a primary mortgage, a lender can foreclose on your home if you don’t make your monthly payments on time. 

How to apply for a home equity loan

Applying for a home loan isn’t much different from applying for a primary mortgage. Knowing what to expect can make the process smooth. 

These are the steps to apply with most lenders.

1. Compare rates. Before submitting a home equity loan application, it’s wise to shop around and see what rates lenders offer. Look for lenders that allow you to get a rate quote without affecting your credit score.
2. Choose a lender. Once you’ve compared rates and loan terms, it’s time to choose a lender. If you’re weighing a bank against an online lender, remember that online lenders may offer a streamlined application process and faster funding. 
3. Organize your documents. You’ll need certain documents to apply for a home equity loan, including recent pay stubs, bank statements, and last year’s tax forms. Getting these together before you apply can save time later. 
4. Submit the application. Many lenders will allow you to apply for a home equity loan online. You must include information about your home, mortgage, income, debts, and assets. The same applies if you’re applying for a home equity loan in person at a bank.
5. Complete the appraisal if necessary. Your lender will let you know whether it requires an appraisal for a home equity loan. If so, the lender will tell you what kind of appraisal it wants, when the appraiser will schedule it, and what you’ll pay for it. 
6. Review loan terms. If you’re approved for a home equity loan, you’ll have a chance to review the terms before signing off. This is your opportunity to ask questions or get clarification before committing to the loan. 
7. Close on the loan. If you accept the loan terms, the final step is signing the closing paperwork. Once your paperwork is complete, the lender can release the loan funds to you. If you’re looking for a fast home equity loan, it’s wise to check funding speeds before choosing a lender.

How have lenders used new technology to offer the best home equity loans?

The home equity loan industry has transformed in recent years. Now, many online lenders use technology and apps that make the loan process easier and more streamlined for consumers.

A benefit of using online lenders and digital applications is its convenience. Online lenders tend to distribute funds faster than traditional banks, and because they don’t have significant overhead, rates are competitive too.

The drawbacks include not getting the same personal interaction you would get at your local bank. If you value a longstanding reputation in your lenders, some online lenders are brand-new without the established reputations of many major banks.

Other new technologies

Other new technology includes blockchain, which helps to improve the speed of loan approvals and disbursements. It’s also much more secure and keeps borrowers’ private information safe.

With the emergence of AI in recent years, algorithms can instantly process consumer data to approve loans. AI can help lenders make more personalized offers than ever before.

FAQ

What’s the average home equity loan rate today?

As of July 2024, home equity loan rates averaged 8.59%, and HELOC rates around 9.71%. Pinning down an apples-to-apples comparison to your home equity loan rate is difficult because rates vary from lender to lender, loan to loan, and state to state.

When comparing home equity loan rates, a rule of thumb is to look at 30-year fixed-rate mortgages. Home equity loan rates are often higher than primary mortgage rates because they present more risk to lenders.  

How do I know whether I got a good home equity loan rate?

The easiest way to gauge whether you have a good home equity loan rate is to shop around. Reviewing rates for home equity loans with similar terms at other lenders can give you a framework for understanding where your rate falls in the range. 

Do interest-rate hikes affect my home equity loan rate?

Interest rate hikes can affect variable-rate loan products. A rate hike won’t trigger an increase if your home equity loan has a fixed interest rate. However, if you choose a variable-rate home equity loan or HELOC, rate hikes could make your loan more expensive. 

Are there limitations to how I use a home equity loan?

Most lenders allow for flexibility in using a home equity loan or line of credit. Common uses for home equity loans include debt consolidation, home repairs or improvements, emergencies, large purchases, and major expenses, such as a wedding. 

How long does it take to get funds from a home equity loan?

The waiting period to get funding once approved for a home equity loan can vary by lender. Online lenders, for example, may provide funding in a few business days. At traditional banks and credit unions, you might wait a few weeks for loan funds to be disbursed. 

What bank has the best home equity loan?

Choosing where to borrow a home equity loan is personal, so you must first determine which qualities or features you deem most important. Potential evaluation factors include customer service accessibility, the appraisal process, product options, and funding speed.

These elements work together to cultivate your lending experience, and they all play a role in helping you select the right bank or lender. You’ll also want to consider these standout features from our recommendations to help you decide:

Lender	Features
Figure	Digital appraisal process
Spring EQ	95% LTV limit
Navy Federal Credit Union	Exclusive member perks and discounts

How we chose the best companies for home equity loans

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 data points are organized into broader categories, which our editorial team weights and scores based on their relative importance to readers. 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.

Higher star ratings are ultimately awarded to companies that create an excellent borrower experience. This includes offering online eligibility checks, cost transparency, competitive interest rates with no fees, flexible repayment plans, and unique benefits that support borrowers throughout repayment.

Recap of the best lenders for home equity loans