Choosing the right lender is important to get the best home equity loan rates and terms, so we reviewed 14 home equity lenders to narrow down the top lenders.
Spring EQ is our top-rated home equity loan lender. Figure is our top-rated HELOC lender.
Home equity loans can provide ready cash to cover home improvements, debt consolidation, or other expenses.
Keep reading to learn more about our top three picks for the best home equity loans.
Compare the three best home equity loans
- Best home equity loan: Spring EQ
- Best HELOC: Figure
- Best for military members: Navy Federal Credit Union
We created a rating system for getting a home equity loan that considers key factors, such as interest rates, eligibility requirements, loan-to-value ratios, loan amounts, repayment terms, fees, and minimum credit score requirements.
| Lender | Best for | Rates (APR) | Our Rating |
| Spring EQ | Best home equity loan | Starting at 9.50% | 4.6 stars |
| Figure | Best HELOC | 6.55% – 15.54% | 4.9 stars |
| Navy Federal | Best for military members | Starting at 6.64% | 4.1 stars |
Reviews of the best home equity loans
To find the best companies for home equity loans, we considered factors such as interest rates, loan amounts, funding speed, and credit score requirements. We’ve broken down the best lenders for home equity loans below, with specific details about each of their loan products.
Spring EQ
Why it’s one of the best
Home equity loans allow you to borrow a lump sum, and a home equity line of credit (HELOC) gives you access to a revolving credit line. Spring EQ rates as one of the best home equity loan lenders because you can apply for both using the same application.
Spring EQ home equity loans allow you to borrow up to $500,000 against your equity. The company accepts a higher loan-to-value (LTV) ratio of 95% for borrowers with a 700 or better credit score. Repayment terms for home equity loans extend up to 30 years, with a 20-year term for HELOCs.
Home equity loan and HELOC rates are not listed on Spring EQ’s website. You’ll need to start a prequalification application to see your estimated rates. You must have a minimum 640 credit score to get approved for a home equity loan with Spring EQ.
What you should know |
|
|---|---|
| Rates (APR) | Starting at 9.50% |
| Loan amounts | $25,000 – $500,000 |
| Repayment terms | 5 – 30 years |
Eligibility requirements
Key takeaways
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Access up to 95% of your home’s equity
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Shows you rates for a home equity loan and HELOC
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Not available nationwide
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Limited information about the application process
Figure
Why it’s one of the best
Figure is our top pick overall for borrowers who are interested in a HELOC. HELOCs feature fixed rates, which can allow for predictability when planning your budget around monthly payments. It also eliminates concerns about potential 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. Choose from multiple repayment terms, which allows for flexibility. Once approved, funding is fast. It’s possible to access your line of credit in as little as five days.
An origination fee applies for Figure HELOCs. It maxes out at 4.99%. However, Figure offers among the lowest average HELOC rates. You can check your rates online without affecting your credit scores.
What you should know |
|
|---|---|
| Rates (APR) | 8.80% – 16.95%, fixed |
| Loan amounts | $15,000 – $400,000 |
| Repayment terms | 5-year draw period, followed by repayment for 5, 10, 15, or 30 years |
Eligibility requirements
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.
Key takeaways
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Fixed rate on all HELOCs
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Funds available in as little as 5 days
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Redraw up to 100% of your funds
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Unclear origination fee may be included
Check your rate without impacting your credit. Click here.
Navy Federal Credit Union
Why it’s one of the best
Navy Federal Credit Union offers home equity loans and lines of credit for military members and their families. If you’re not yet a member, Navy Federal offers several good reasons to consider joining if you plan to apply for a home equity loan. Benefits include high loan limits and low interest rates.
Borrow up to 100% of your equity with a Navy Federal Credit Union home equity loan. Interest rates for loans are competitive, compared to other home equity lenders. Pay no origination or application fees to get a home equity loan here.
Membership is open to members of the armed forces, Department of Defense, and National Guard, as well as their family members. You’ll need a $5 minimum deposit to open a Membership Savings Account. Once your account is open, take the next step to check your rates and apply for a home equity loan.
What you should know |
|
|---|---|
| Rates (APR) | Starting at 6.64% |
| Loan amounts | $10,000 – $500,000 |
| Repayment terms | 5, 10, 15, or 20 years |
Eligibility requirements
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.
Key takeaways
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Borrow up to 100% of your home’s equity
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No closing costs
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Doesn’t disclose the full rate range
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No details on eligibility requirements
See if you’re eligible. Click here.
How we chose the best home equity loan lenders
LendEDU has evaluated lenders since 2019 to help our readers find the best HELOCs. Our most recent evaluation consisted of 14 lenders and 22 data points for each, resulting in 308 data points in our analysis.
These data points fell under 12 categories: transparency, eligibility requirements, rates, repayment terms, loan amounts, appraisal process, fees, customer experience, company history, benefits, funding time, and limitations on received funds.
Each company was assigned a score of one to five per category, depending on how it compared to others. We determine the weight of each category based on how important we believe the information is to consumers. We total the weighted scores to determine a final editorial rating for each company. The star ratings range from poor (one star) to excellent (five stars). We round our ratings to the nearest half-star.
These star ratings help us determine which companies are the best for different borrowers. We don’t believe two companies can be the best for the same purpose, so we only show each “best for” designation once.
How to get the best home equity loan rates
Finding the best home equity loan rates starts with understanding what lenders are looking for. Typical considerations for a home equity loan include:
- Credit scores
- Income
- Debt-to-income ratio (amount you owe to creditors each month divided by how much you earn)
Lenders also consider how much equity you have and what you’d like to borrow.
Shopping around to compare rates at different lenders can help you find the best home equity loans that align with your needs. When considering loan options, it helps to weigh the following:
- How much equity do you have?
- How much do you need to borrow?
- Are you looking for a fixed- or variable-rate loan?
- Are you comfortable paying origination or other fees?
- How fast do you need funding?
You may also consider appraisal requirements for a home equity loan. Some lenders require an in-person appraisal, but others may use a digital or drive-by appraisal. Those options could shorten the underwriting period and allow faster access to cash.
Do I qualify for the best home equity loans?
As we mentioned, home equity lenders often focus on credit scores, income, and debt when determining whether to approve you for a loan and what rates you’ll pay. Minimum qualification requirements may be online, but if not, you might need to contact the lender to find out what credit score or income you’ll need for approval.
There’s no single minimum credit score, but many lenders may require a score of 620 or better. The higher your score, the easier it may be to get approved and qualify for the lowest home equity loan rates. If you’re applying for a joint home equity loan with a spouse, both your scores will come under scrutiny.
Loan-to-value ratio is also a consideration because lenders may cap the amount of equity you can borrow against. A typical maximum LTV is 85%, but some lenders might allow a higher threshold. You can use a home equity loan calculator to estimate your LTV and how much of your equity you can borrow.
Is a home equity loan my best option?
A home equity loan is just one way to borrow money when you need cash. It may be beneficial to consider other options for getting funds if you’re unsure whether a home equity loan is right for you.
The best home equity loan alternatives include:
- HELOCs. A HELOC could be a better option if you’re not sure how much you need to borrow. Many HELOCs have variable interest rates, but you only pay interest on the amount of your credit line you use.
- Personal loans. A personal loan is an unsecured loan that allows you to borrow a lump sum, which you repay with interest. The main difference between a personal loan and home equity loan is that personal loans don’t require you to offer your home as collateral.
- Credit cards. You might consider using a credit card to cover expenses if you’re not interested in applying for a new loan. Using a credit card for large purchases could allow you to earn substantial rewards back, but it’s important to consider the APR if you plan to carry a balance.
Comparing rates for different loan types against the best home equity loan rates can give you a better idea of what you might pay to borrow. You can also estimate monthly payments to see which is the best fit for your budget.
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 go more smoothly.
These are the steps to apply with most lenders.
- Compare rates. Before you submit a home equity loan application, it’s wise to shop around and see what kind of rates lenders are offering. Look for lenders that allow you to get a rate quote without affecting your credit score.
- 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, keep in mind that online lenders may offer a streamlined application process and faster funding.
- 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.
- 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 is true if you’re applying for a home equity loan in person at a bank.
- Complete the appraisal if necessary. Your lender will let you know if 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.
- Review loan terms. Assuming that you’re approved for a home equity loan, you’ll have a chance to review the loan terms before signing off. That’s your opportunity to ask questions or get clarification before committing to the loan.
- Close on the loan. If all the loan terms are acceptable, 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.
FAQ
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 pay back the loan with interest according to a schedule your lender sets. Home equity loans are also known as second mortgages.
What’s the average home equity loan rate today?
Pinning down the average home equity loan rate is difficult because rates can vary from lender to lender. A rule of thumb when comparing home equity loan rates 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 got 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 on the range.
Do interest-rate hikes affect my home equity loan rate?
Interest rate hikes can affect variable rate loan products. If your home equity loan has a fixed interest rate, a rate hike won’t trigger an increase. 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 how you can use 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 from one lender to the next. Online lenders, for example, may provide funding in a few business days. At traditional banks and credit unions, on the other hand, you might wait a few weeks for loan funds to be disbursed.
How do home equity loan rates compare to HELOCs or personal loans?
Home equity loan rates tend to be fixed, while HELOC rates are often variable.
A variable-rate HELOC could appear cheaper at first glance if the rate is less than the fixed rate for a home equity loan.
However, that HELOC could be more expensive over time if the variable rate increases. Personal loan rates can be as low as home equity loan rates, but it’s not unusual to see APRs in the 10% to 30% range.