loanDepot Home Equity Review

LoanDepot’s HELOC operates in a competitive market, which is why it hasn’t earned a best-for designation in any specific category. The company offers a streamlined online application process and automated appraisal methods, which can simplify and expedite the approval process. 

One potential downside is the lack of detailed public information regarding eligibility criteria, which can make it challenging for potential borrowers to compare loanDepot’s product with those of other companies, such as Figure, Hitch, SpringEQ, and Bethpage Federal Credit Union.

LoanDepot’s HELOC doesn’t stand out in any one category, but it might suit homeowners who value convenience and efficiency. However, the lack of detailed information could be a limitation for those looking to make an informed decision by comparing multiple options.

About loanDepot

Founded with a mission to help homeowners tap into their home equity, loanDepot offers quick funding for HELOCs that usually don’t require an appraisal and a fully online application. 

It caters to a broad range of customers, particularly those looking to blend online convenience and traditional lending practices.

loanDepot HELOC at a glance

Here’s a quick overview of loanDepot’s HELOC terms. We’ll dive into the details further below.

Terms	Details
Eligible properties	Primary and secondary properties
Eligible states	Not available in every state, but the eligible states are not disclosed; contact loanDepot for more information
Rates (APR)	Variable, based on the Wall Street Journal prime rate plus margin, capped at 18%
Loan amounts	$35,000 – $250,000
Draw period	3 years
Repayment period	30 years (varies by state)
Fees	Origination fee (up to 5% or state law limit), no third-party fees
Unique features	Online application, fast funding, in-person notary required

How does a loanDepot HELOC work?

LoanDepot’s HELOC offers homeowners a flexible and adaptable way to access the equity in their homes. Here’s a closer look at how the process works, from application to accessing funds:

• Online application process: Start by applying online, filling in details about yourself and your property. During this stage, it’s essential to have all relevant financial documents handy, such as proof of income, property details, and mortgage information.
• Property valuation: LoanDepot typically uses automated valuation models (AVM)— software to assess your property’s value—which is a key factor in determining your credit line. The equity in your home (the difference between its market value and any outstanding mortgage balance) dictates how much you can borrow.
• Approval and credit line determination: LoanDepot evaluates your credit score, income, debt-to-income ratio, and other financial factors. Then, based on your home’s value and your financial health, loanDepot determines the maximum amount you can borrow.
• Interest rates: The interest rates are variable, based on the Wall Street Journal prime rate plus a margin. This means your rate can fluctuate over time, influenced by market trends and economic factors. LoanDepot does not publish the rates on its website.
• Finalize the process: Despite the online process, finalizing your HELOC requires meeting with an in-person notary. This step ensures all legalities are properly addressed.
• Access funds: Once finalized, you’ll enter the draw period, typically lasting three years, during which you can borrow funds up to your credit limit as needed. A minimum draw amount of 75% or 100% of the requested line amount (minus the origination fee) will be drawn at the time of origination. Funds are accessed via ACH or wire transfer.
• Interest-only repayment: During the three-year draw period and seven years after (in all states but Texas), interest-only payments are required on the HELOC balance. In Texas, interest-only payments end when the draw period ends.
• Full HELOC repayment: For most states, the remaining 20-year repayment period involves full principal and interest payments to repay your HELOC balance in full. In Texas, these full payments kick in after three years and last 27 years.

Who’s eligible for a loanDepot HELOC?

Eligibility for loanDepot’s HELOC depends on various factors, including property type and state of residence. However, the lender doesn’t specify many requirements, including minimum credit score, income requirements, debt-to-income ratio, and loan-to-value ratio.

LoanDepot also does not disclose the eligible states it lends to. You can check to see whether your property is eligible by checking your rate on the website or contacting the company at 866-790-3940.

Requirement	Details
Properties	Primary and secondary homes
State of residence	Not available in all states, but eligible states are not disclosed.

What are the costs and fees of a loanDepot HELOC?

Understanding the costs and fees associated with loanDepot’s HELOC is crucial for making an informed financial decision. Here’s a breakdown of these expenses, with an example to illustrate how they might affect a typical borrower:

Variable interest rates

The rates are tied to the Wall Street Journal prime rate plus a margin, meaning they can fluctuate over time. As the market conditions change, so will your monthly interest payments.

Origination fee

This fee is either up to 5% of the line of credit or the maximum allowed by state law, whichever is less. This amount is taken from your funds upon your first draw. LoanDepot does not charge third-party fees.

Example

Suppose a borrower, Alex, is approved for a $100,000 HELOC with loanDepot:

• Origination fee: Assuming an origination fee of 5%, Alex is charged $5,000, which is taken out of the funds of his first draw.
• Initial draw: Alex is required to draw $75,000 initially. Minus the origination fee, that is a total balance of $70,000.
• Interest rate: The variable rate at the time of the draw is 6% (this is hypothetical).
• Monthly interest payments: Alex would pay interest only on the amount drawn for the three-year draw period and up to seven years after the draw period ends. With a 6% annual rate, the monthly interest on $70,000 would be approximately $350 ([$70,000 x 0.06] ÷ 12 months).
• Full repayment begins: 10 years after opening the HELOC, Alex begins full principal + interest payments for 20 years. His monthly payments would be approximately $501.50, and that is not accounting for changes in the variable rate, for simplicity’s sake. 

This example shows how the costs and fees of a loanDepot HELOC can play out in a real-life scenario. However, it’s important to note that the actual rates and fees will vary based on individual circumstances and market conditions at the time of the HELOC agreement.

How do you repay a HELOC from loanDepot?

Repaying a HELOC from loanDepot involves several stages. It’s different from a standard loan or a home equity loan, where you receive a lump sum upfront and make fixed monthly payments of principal and interest.

During the draw period

When you first get your loanDepot HELOC, you enter what’s known as the draw period. This is a three-year span where you can borrow as much as you need up to your credit limit. During this phase, you only pay interest on the amount you draw, not on the entire credit line.

Note that upon HELOC origination, you are required to draw 75% or 100% of the funds in your initial draw. HELOCs less than $50,000 are required to draw 100% of the funds. After the closing date, you must wait 90 days before taking any additional draws. 

Transition to repayment

After the draw period ends, you can continue making interest-only payments for seven years, meaning for 10 years of the 30-year repayment term, only interest is required to be repaid. You will pay principal and interest for the remaining 20 years of the repayment period.

This is the repayment structure in all states except Texas. In that state, interest-only payments end at the conclusion of the three-year draw period. You then enter full principal and interest payments for 27 years. 

Make payments

You have various payment options, including online, by phone, or by mail. LoanDepot sets the terms of your HELOC, including the interest rate and the repayment structure, but you have some control over how much you choose to repay each month, as long as you meet the minimum payment requirements.

Early repayment

If your financial situation allows, you can pay off your HELOC early without a prepayment penalty. This can be a strategic move, especially if market interest rates are volatile or trending upward.

Managing a HELOC requires understanding its phases and how your actions during the draw period can affect your later payments. It’s a flexible financial tool, but it also demands careful planning and consideration, especially as you transition from paying interest only to handling the full burden of interest and principal.

How does your home’s value affect your terms?

One of the most crucial factors when considering a HELOC from loanDepot is the value of your home. Because your home secures a HELOC, this value affects your eligibility for the credit line and the terms you receive.

The amount you can borrow through a HELOC largely depends on the equity you have in your home. Equity is the difference between the market value of your property and any outstanding mortgage balance. The higher your home’s value, the more credit you may be eligible for, assuming other financial factors—such as income and credit score—meet the lender’s criteria.

LoanDepot doesn’t disclose its minimum loan-to-value ratio (LTV)—your current mortgage balance divided by your home’s appraised value—required to qualify for its HELOC. Many lenders allow a combined loan-to-value ratio (CLTV) of around 75% to 85%. The CLTV includes your primary mortgage plus the HELOC.

What happens if your home’s value changes?

If the value of your home increases over time, you might be able to borrow more or refinance your HELOC under more favorable terms. A decrease in home value could reduce the amount you can borrow and affect the terms of your HELOC. 

LoanDepot doesn’t disclose many details about this, so it’s best to contact the lender before applying.

loanDepot’s appraisal process

To determine the value of your home for a HELOC, loanDepot primarily relies on AVM for appraisals. This method uses computer algorithms and market data to estimate your home’s value and aligns with modern lending practices.

The advantage of AVMs is their speed and efficiency. They can analyze various data points to provide an estimated value in a matter of days, which is beneficial if you’re looking to secure your HELOC quickly. This virtual method means there’s no need for physical inspections of your property, streamlining the process.

As an applicant, you might need to provide detailed information about your home, including its size, age, condition, and any improvements or renovations you’ve made. This information helps ensure the AVM provides a more accurate assessment of your home’s value. 

Pros and cons of loanDepot

Before pursuing a HELOC from loanDepot, it’s critical to consider the pros and cons.

Pros

• Online application

  Streamlined process, but an in-person notary is required.

• Fast funding

  Funds can be available in as little as three weeks.

• Appraisal process

  Uses automated valuation models, which can reduce complexity.

Cons

• Variable interest rate

  Multiple draws could lead to higher rates over time.

• Origination fee

  Additional cost affecting the total loan expense.

• Lack of eligibility information

  Uncertainty around minimum requirements.

LoanDepot explains that its HELOC rates are variable based on the Wall Street prime rate, but it does not publish specific rates. Additionally, loanDepot’s draw period is just three years—other HELOC companies offer a 10-year draw period.

LoanDepot’s HELOC offers a mix of modern convenience and traditional lending, suitable for homeowners comfortable with variable rates and online processes. However, you might consider prequalifying with these competitors as well, which address some of the downsides associated with loanDepot’s HELOC:

• Figure has fixed rates and funds in as little as five days.
• Spring EQ has a 10-year draw period and funds in as little as 11 days.
• Bethpage also has a 10-year draw period, and you can borrow up to $1 million.

Check out our best HELOC page for more options as well as our full listing of home equity companies.

Is loanDepot a reputable lender?

Customer feedback about loanDepot is largely positive, focusing on customer service quality and the transparency of loanDepot’s practices. While not specific to the HELOC product, these reviews offer insights into the company’s overall reputation.

Source	Customer rating	Number of reviews
Trustpilot	3.9 out of 5	4,047
Better Business Bureau	4.19 out of 5	3,562
Google	4.4 out of 5	12,918

On the above platforms, loanDepot has garnered feedback that points to a positive customer experience, underscored by an emphasis on customer service quality.

Trustpilot’s broad user base and open feedback system offer a diverse range of opinions. The Better Business Bureau, renowned for its focus on ethical business practices and complaint resolution, grants loanDepot an A+ accreditation, suggesting responsiveness and reliability. Google reviews, accessible and widely used, further affirm loanDepot’s reputation.

These reviews are not just about the HELOC product, but they offer valuable insights into loanDepot’s overall practices, particularly regarding customer service and transparency. 

However, the predominance of positive ratings across these platforms suggests a level of satisfaction that potential customers can find reassuring. These reviews inform about the lender’s past performance and what new customers can expect regarding service quality and support.

Does loanDepot have a customer service team?

LoanDepot provides comprehensive customer support through various channels to assist with inquiries related to its products, including HELOCs. You can contact loanDepot’s customer service team in the following ways:

• Email: [email protected] 
• Phone: 888-337-6888 ext. 6789 (Monday through Friday, 10 a.m. to 9 p.m. Eastern)

How to apply for a loanDepot HELOC

Applying for a loanDepot HELOC is an all-online process, with the exception of an in-person notary at the final stages. Here are the steps involved:

• Prequalify: Start with an online prequalification to check your rates without affecting your credit score. This step involves providing basic information about your financial situation.
• Formal application: If you’re satisfied with the prequalification offer, proceed with the formal application. This step requires more detailed personal and financial information.
• Documentation: Gather and submit necessary documents, which may include proof of income, mortgage statements, property tax bills, and identification documents. The specific documents required can vary based on individual circumstances.
• Property appraisal: LoanDepot will conduct a property appraisal using AVMs to determine your home’s value and your available equity.
• Final review and approval: After reviewing your application and appraisal results, loanDepot will make a decision. This stage includes the credit check and final loan terms determination.
• Closing: If approved, you’ll go through the closing process, which involves reviewing and signing various loan documents. This step often requires meeting with an in-person notary.
• Access funds: Once the closing is complete, you can access the funds from your HELOC based on the agreed terms.

The time each step takes can vary, but loanDepot is known for its quick process, with the possibility of receiving funds in as little as three weeks after application. 

What if I’m denied a HELOC from loanDepot?

If your application for a loanDepot home equity line of credit (HELOC) is denied, it’s important to understand the reasons behind the decision and the steps you can take afterward. 

Common reason for denial	Potential solution
Low credit score	Work on improving your credit score by paying down debts and ensuring on-time payments.
High debt-to-income ratio	Focus on reducing your debts or finding ways to increase your income.
Insufficient home equity	Wait for your home value to appreciate, or pay down more of your mortgage balance.
Unstable employment history	Establish a stable and verifiable income source.
Property-related issues	Address specific property concerns, such as condition or location, if possible.

After making improvements, you can consider reapplying once you have addressed the issues that led to your initial denial. If reapplying isn’t viable, look into different lenders with varying criteria or alternative financing methods, such as personal loans.

Be mindful of the credit impact. Each application involves a credit check, so it’s crucial to apply strategically to avoid unnecessary damage to your credit score.

How do other home equity products compare to loanDepot?

LoanDepot’s HELOC stands out for its flexibility, allowing homeowners to draw funds, unlike a home equity loan, which provides a one-time lump sum. The variable rate of a HELOC, however, means less predictability in payments and budgeting.

Reverse mortgages—designed for homeowners over the age of 62—convert equity into cash without monthly repayments, unlike HELOCs, which require regular payments. This makes reverse mortgages suitable for those seeking income without selling their home.

Cash-out refinances replace your mortgage with a larger one, giving you the difference in cash. This differs from a HELOC, where your original mortgage remains and you get a separate credit line. Cash-out refinances often have fixed rates and are ideal for those looking to refinance at lower rates while accessing equity.

loanDepot HELOC FAQ

How long does it take to receive funds from loanDepot?

Approval and funding can take as little as three weeks, depending on the application details and required verifications.

Are there any insurance requirements?

LoanDepot doesn’t specify insurance requirements, but these are common in home equity lending practices.

How we rated loanDepot

We designed LendEDU’s editorial rating system to help consumers identify companies that offer the best financial products. Our experts spend hours researching these companies each year to ensure our ratings are fresh and accurate.

Our most recent evaluation compared loanDepot to several HELOC lenders across a number of factors, including rates, loan amounts, customer reviews, repayment details, and eligibility requirements. We weighted, scored, and combined these factors to produce a final editorial rating. This rating is expressed on a scale from 1 to 5, with 5 being the highest possible score. We round all ratings to the nearest tenth decimal place.

Product	Best for	Our rating
HELOC	No best-for designation	3.4 out of 5