Small Home Equity Loans: What’s the Minimum Amount You Can Borrow?

A home equity loan or line of credit (HELOC) lets you access cash for home improvements, debt consolidation, or other financial needs. You may be able to borrow a large amount if your income and equity amount allow for it, but you might not need that much.

A small home equity loan helps you tackle smaller financial goals. When you don’t borrow more than you need, you get to keep monthly payments low and avoid overspending on unnecessary interest. The following lenders offer home equity loan minimums of $15,000 or less.

Lender	Product	Min. loan amount
Figure	HELOC	$15,000
Bethpage	HELOC	$10,000
Navy Federal	Home equity loan/HELOC	$10,000
Regions	Home equity loan/HELOC	$10,000

Reviews of lenders offering small home equity loans

If you’re considering a smaller home equity loan, be sure you understand how the minimum borrowing limits work. We’ve researched five borrowing options for small home equity loans and HELOCs. Here’s what to consider in your decision-making.

Figure

Bethpage FCU

Navy Federal Credit Union

Regions Bank

Why do lenders set home equity loan minimum amounts?

Lenders set minimum limits on home equity loans to ensure they recoup their investment in the loan. The lender incurs upfront costs to grant a home equity loan. They earn back those costs plus a rate of return as you repay the loan with interest.

Lenders enforce minimums because a home equity loan that’s too small could prevent them from recovering those costs or making a profit. 

The minimum loan amount may be your primary consideration when comparing small home equity loans. Still, we urge you to consider the bigger picture and weigh the following:

• Interest rates and the lowest rate you can qualify for
• Loan repayment terms
• Loan fees you’ll pay
• What you’ll need to qualify

Remember: If you opt for a shorter repayment term, you can save money on total interest paid. It’s worth noting that home equity loan or HELOC interest may be tax deductible if it’s used to improve your home and if you itemize deductions.

What is the minimum amount for home equity loans?

The minimum amount for home equity loans varies by lender. Three of the lenders above—Bethpage, Navy Federal, and Regions—offer home equity loans of HELOCs for as low as $10,000. Figure’s minimum for its HELOC is $15,000.

The amount you can borrow depends on several factors:

• Your equity in the home: This is the difference between what you owe on the house and its appraised value.
• Your overall creditworthiness: Higher credit scores can qualify you for better loan terms.
• Your debt-to-income ratio (DTI): This ratio determines how much additional debt you can afford to repay.
• Lender requirements: Each lender sets its own minimum loan amounts and criteria.

Many lenders require a combined loan-to-value (LTV) ratio of 80% or 85%. Combined LTV is the ratio of all loans securing the home (including the primary mortgage and home equity loans) to the property value.

Here’s an example of how this might work.

• Appraised home value: $350,000
• Outstanding mortgage balance: $255,000
• Desired home equity loan: $25,000

To calculate the combined LTV:

• Sum of loans: $255,000 (mortgage) + $25,000 (home equity loan) = $280,000
• Combined LTV: $280,000 / $350,000 = 0.8 (or 80%)

In this example, your combined LTV would be 80%, which is acceptable for many lenders.

Risks of small home equity loans

With a home equity loan, you can get cash to pay unexpected expenses, make necessary repairs, or finance other costs. Interest rates are often lower than personal loans or credit cards. 

You should be aware of one crucial “catch.” When you take out a home equity loan, you agree the lender will use your home as collateral. Suppose you fail to keep up with your home equity loan payments. In that case, the lender could initiate a foreclosure proceeding against you. 

In other words, you could lose your home. It’s essential to consider whether a smaller home equity loan is worth the risk. Weigh the following pros and cons as part of your decision-making process.

Pros

• Home improvements could increase your property value

  Investing in home improvements can enhance your investment.

• Interest rates could make payments more affordable than other financing options

  Home equity loans and HELOCs tend to offer lower interest rates than personal loans or credit cards.

• Interest payments could be tax-deductible

  If you use the funds to improve your home and itemize your taxes, you may be able to deduct the interest payments, reducing your tax burden.

Cons

• Payments may create hardship in the event of a job loss

  If you lose your job, maintaining loan payments could become difficult, leading to financial strain.

• Extra payments could affect your retirement plans

  Allocating funds to loan payments might limit your ability to save for retirement, delaying your long-term financial goals.

• Loan default could result in foreclosure

  Failing to make payments on your home equity loan could lead to foreclosure, putting your home at risk.

These factors can help you gauge your risk tolerance. If you’re uncomfortable with the risk of getting a home equity loan, you can explore other lending options. 

Alternatives to home equity loans for less than $15,000

Because your home secures a home equity loan, using the proceeds to pay for expenses with no tangible return might not make sense. For example, your lender might not prohibit you from using a home equity loan to pay for a dream vacation, but is it worth risking your house? 

Home equity loans are just one way to borrow. Consider credit cards or a personal loan to meet your funding needs. Every option has pros and cons, and one may be more appropriate based on your situation. 

Credit cards

Credit cards can be a solution for short-term financing. 

Pros

• No collateral required

  Credit cards are unsecured, so you don’t need to put your home or other assets at risk.

• Quick approval decisions

  Approval processes are typically fast, allowing you to access funds in an emergency.

• Few restrictions on the use of funds

  You can use a credit card for a variety of purposes, such as consolidating debt, funding home improvements, or covering unexpected expenses.

• May earn rewards

  Some credit cards come with rewards programs, offering points or cash back on certain types of spending.

Cons

• High interest rates

  Credit cards often have higher interest rates than secured loans, increasing the cost of borrowing.

• Easy to overspend

  The flexibility of credit cards can lead to overspending and can result in more debt.

• May come with extra costs

  Additional costs associated with credit cards, such as annual fees, balance transfer fees, and late fees, can add up over time.

• No set repayment term

  Unlike structured loans, credit cards may lack fixed repayment terms, which can make it harder to plan and manage payments.

A credit card might be better than a small home equity loan, particularly if you can repay the balance in a few months or get approved for a low-interest card. Paying off credit card balances sooner can reduce the total interest you pay, which is crucial if your card has a high annual percentage rate (APR).

Credit card APRs in the double digits are typical, making them much more expensive than a home equity loan. You can avoid owing interest altogether if you can pay your balance in full during your card’s grace period, i.e., after the statement is issued but before the payment due date. 

Personal loans

Personal loans can be secured by a bank account or other collateral, but unsecured personal loans are more common. 

Pros

• Easy online application

  The application process is simple, and you can often apply online, providing convenience and accessibility.

• Quick funding times

  Funds are typically disbursed within a few days, allowing you to access the money when you need it.

• Fixed rates

  With fixed interest rates, your monthly payments remain consistent throughout the loan term, making budgeting easier.

• Fixed repayment term

  Having a fixed repayment term helps you plan your finances and know when you’ll pay off the loan.

Cons

• High interest rates

  Online personal loans may have higher rates than secured loans, increasing the overall cost of borrowing.

• Origination fee could reduce the amount of disbursed funds

  If your lender deducts an origination fee from the loan amount, it will reduce your total funds.

• May get approved for less than you would with a home equity loan

  The loan amount you qualify for might be lower than you could get with a home equity loan.

• May have shorter repayment terms than a home equity loan or HELOC

  Repayment terms might be shorter than those offered for home equity loans, resulting in higher monthly payments.

Lenders may offer personal loans for as little as $500 and as much as $100,000. Most personal loans have terms between two and seven years, but shorter terms are sometimes an option. 

If you only need to borrow $1,500, for instance, you might be able to get a six-month repayment term. Like a credit card, paying off a personal loan faster could save on interest charges.

Buy now, pay later

For smaller purchases, buy now, pay later (BNPL) financing could be faster and easier than applying for other types of financing. BNPL is a type of installment loan available in some online shopping platforms or brick-and-mortar stores.

Pros

• No interest

  You can make purchases without paying interest, saving you money compared to traditional financing options.

• No credit check required

  BNPL options often don’t require a credit check, making them accessible to more people, regardless of credit history.

• Split up purchase costs over time

  Allows you to divide the cost of a purchase into smaller, more manageable payments over a set period.

Cons

• Expensive late fees

  Missing a payment can result in high late fees, increasing the overall cost of the purchase.

• Automatic payments could overdraft your bank account

  Automatic deductions can lead to overdrafts if you don’t have sufficient funds in your account, resulting in additional fees.

• No rewards

  Unlike some credit cards, BNPL options don’t offer rewards or cash back.

• Easy to overextend your budget

  The ease of splitting payments can lead to overspending and accumulating debt beyond your means.

• Complicated returns process

  Returning items purchased with BNPL can be complex and may require coordination between the retailer and the financing provider.

BNPL options make it quick and easy to finance purchases, especially compared to getting a small home equity loan. But it’s important to make intentional decisions about BNPL financing instead of signing up just because it’s available. 

FAQ

Is a HELOC a good option for emergency funds?

You can use a HELOC as your emergency fund. It’s better than having nothing, but it may not be the best option. Most financial experts recommend saving up at least three months’ worth of expenses instead, so you earn interest and don’t need to worry about making payments. 

Be sure to inquire whether your lender requires a minimum draw if you’re thinking about securing a HELOC as an emergency fund. For example, Figure requires borrowers to withdraw 100% of their credit line at closing, so it wouldn’t be a good option for an emergency fund.

How do rate changes affect a HELOC?

Rate changes affect your HELOC minimum payment and the amount of interest you pay. Lenders are required to set lifetime caps for your HELOC, but they may also have lifetime rate minimums. There may also be periodic rate adjustment caps limiting how much a rate can change. 

How long does it take to get approved for a HELOC?

On average, it takes two to six weeks to get approved for a HELOC. Some lenders process applications faster than others. If you need a full home appraisal or apply with a co-borrower or cosigner, this can slow the process down. 

How we selected the best small 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 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 small home equity loans

Lender	Product	Min. loan amount
Figure	HELOC	$15,000
Bethpage	HELOC	$10,000
Navy Federal	Home equity loan/HELOC	$10,000
Regions	Home equity loan/HELOC	$10,000