Can You Take Equity Out of Your Home Without Refinancing?

If you’re a homeowner who needs money and has equity in your home, you may be able to tap into your equity for cash to pay for major renovations, large purchases, and more. But can you take equity out of your home without refinancing?

The answer is yes: You can access your home equity without refinancing. Here, you’ll learn how a home equity line of credit (HELOC), home equity loan, home equity sharing agreement, or a home lease-back can turn your home’s equity into cash and the risks and benefits of each product.

How to get equity out of your home without refinancing 

Product	How it works
Home equity line of credit (HELOC)	Revolving credit line with a draw and repayment period
Home equity loan	Loan with fixed monthly payments
Home equity sharing agreement	Loan from an investor who shares partial equity in your home
Home sale-leaseback	Sell your home for accrued equity and rent it from the new owner

Home equity line of credit (HELOC) 

A home equity line of credit (HELOC) is a revolving line of credit, much like a credit card, based on the equity you have in your home. With a HELOC, you borrow funds during a designated draw period and pay them back before or during the repayment period at the end of the HELOC agreement. 

You can use HELOC cash for nearly anything, including major purchases, large expenses, home renovations, and debt consolidation.

Figure

Best HELOC

4.9 _/5

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Why it’s one of the best

Figure is a top-rated HELOC due to its speedy approval and funding process. Some HELOC lenders can take weeks to decide and might require you to sign in person, but with Figure, you can complete the application online and get approved in minutes.

• All HELOCs come with a fixed rate
• 100% online application and appraisal
• Get funds in as little as five days
• Redraw up to 100% of your funds
• Check your rate without affecting your credit score
• Figure offers online and video notary support, with an average response time of less than 45 seconds.
• No closing costs 
• Available in most states
• No out-of-pocket costs
• Borrow against a primary home, second home, or investment property

HELOC details

Rates (APR)	6.80% – 15.40%
Loan amounts	$20,000 – $400,000
Repayment terms	Draw: 5 years / Repayment: 5, 10, 15, or 20 years

Aven

Best HELOC for Customer Reviews

4.8 _/5

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Why it’s one of the best

Aven’s HELOC offers several unique benefits you won’t find with other lenders. It features a fixed interest rate throughout the life of the loan, a Lowest Rate Guarantee, and the ability to check your rate without affecting your credit score. The 100% digital application process allows for approval in as little as 15 minutes.

Aven offers an optional protection program through Securian that will cover your minimum payment for up to six months if you lose your job. With over 3,450 positive Trustpilot reviews, Aven’s customers are fans of the product.

• Lowest Rate Guarantee
• Optional debt protection program through Securian
• Approval in as little as 15 minutes
• 100% digital application process
• Check your rate without affecting your credit score

HELOC details

Rates (APR)	6.99% – 15.49%
Loan amounts	$5,000 – $250,000
Repayment terms	Draw: 5 years / Repayment: 5, 10, 15, or 30 years

Who is a HELOC best for?

A HELOC may be a good option for homeowners who have at least 10% to 20% equity in their home and want access to cash whenever they need it. Homeowners who don’t want to take on a long-term home equity loan may prefer the flexibility of a HELOC. If you have a credit score of at least 620 or higher, a HELOC could be a good fit for tapping into your home equity.

How it works

With a HELOC, you borrow money when needed and typically make monthly interest-only payments during the draw period, which ranges from 5 to 10 years or longer. During the draw period, you can make payments towards the principal to reduce the balance before the repayment period if you wish.

You start making full payments during the repayment period, ranging from five to 30 years. A HELOC can be a fixed-rate or variable-rate loan, but variable rates are more common. 

Pros and cons

Pros

• Flexibility

  Withdraw cash up to your credit limit whenever you need it during the draw period.

• Use cash for nearly any purpose

  Pay for unexpected expenses, medical bills, major renovations, and more.

• Interest may be tax-deductible

  You may be able to deduct interest on a HELOC from your income taxes.

• Lower interest rates

  You may get a lower interest rate on a HELOC because your home serves as collateral.

Cons

• You could lose your home

  Because your home is collateral, you could lose your home if you default.

• Appraisal required

  You may need an appraisal of your home, which averages $400 to $500.

• Variable rates

  If your interest rate goes up, monthly payments could become unaffordable.

• Taking on more debt

  Borrowing more than you can afford could saddle you with too much debt.

Read More

Best HELOC Lenders and Rates 

Home equity loan 

With a home equity loan, you receive a lump sum payment based on how much equity you have in your home and repay the loan with monthly payments over the loan term. A home equity loan is a second mortgage on your home. You must typically pay closing costs and other fees on a home equity loan.

Who is a home equity loan best for?

If you need a large amount of money for major home renovations, college tuition, debt consolidation, or other expenses, a home equity loan may be a good option for tapping into equity in your home. 

Your chances of approval for a home equity loan are better if you have a credit score of at least 620 and a low percentage of consumer debt to available credit.

How it works

A home equity loan is a second mortgage on your home based on the amount of equity you have. Your home serves as collateral. The lender determines the amount of your loan based on the loan-to-value ratio (LTV), the percentage of the loan compared to the value of your home. 

Depending on your LTV, you may qualify for up to 85% of your home’s value. Here’s how that works: Let’s say your home is worth $300,000, and you still owe $150,000 on your mortgage. If the lender sets the LTV at 85%, here’s how to calculate how much you may qualify to borrow:

$300,000 (value) x 0.85 (LTV) = $240,000 amount available to borrow

$240,000 – $150,000 (remaining mortgage amount) = $90,000

$90,0000 is the maximum amount you could borrow.

Home equity loans typically have a fixed interest rate.  You’ll likely pay closing costs and additional fees on a home equity loan. After closing, you make monthly payments for the length of the loan term, which can range from five to 30 years.

Pros and cons

Pros

• Fixed interest rate and consistent payments

  Home equity loans typically have a fixed interest rate and monthly payment amount.

• May be tax-deductible

  You may be able to deduct the interest on a home equity loan on your income taxes.

• Lower interest rates

  Home equity loans often have lower interest rates than other types of loans.

• Longer repayment periods

  Home equity loan repayment periods range from five to 30 years.

• Larger loan amount

  You may qualify for a higher loan amount if you have a significant amount of equity.

Cons

• Risk losing your home

  If you default on a home equity loan, you could lose your home, which is collateral.

• Closing costs

  Home equity loans typically have closing costs of 2% to 5% and origination fees.

• Appraisal fee

  You typically must have your home appraised, which averages $400 to $500.

• Additional debt

  With a home equity loan, you now owe money on something you once owned.

Read More

Best Home Equity Loans 

Home equity sharing agreement 

With a home equity sharing agreement, you receive a lump-sum cash payment from an investment company in exchange for part of your home equity. A home equity sharing agreement isn’t a loan, so there are no monthly payments. After the agreement ends, you repay the lump sum amount plus a percentage of your home’s appreciation.

Hometap

Best Home Equity Sharing Agreement

4.8 _/5

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Why it’s one of the best

Founded in 2017, Hometap wants to make homeownership less stressful and more accessible. It’s our choice as the best home equity sharing agreement because it can provide a financing solution to homeowners with credit scores as low as 500 in as little as three weeks.

• Excellent customer reviews
• No monthly payments
• Can use funds for any purpose
• Shares in future depreciation
• Lenient financial requirements

Home equity sharing agreement details

Funding	$15,000 – $600,000
Term length	10 years
Credit score	500+

Who is a home equity sharing agreement best for?

If you have poor or fair credit and can’t qualify for a HELOC or home equity loan, a home equity sharing agreement could be an option. Home equity sharing agreements have less stringent rules for minimum credit score requirements. You may qualify if you have a credit score of at least 500. 

How it works

When you enter a home equity sharing agreement, an investment company owns a portion of your equity in exchange for a lump-sum cash payment. Since this isn’t a loan, you don’t make payments during the agreement term. Repayment terms range from 10 to 30 years. 

When the agreement ends, you pay back the lump sum, plus a percentage of the home’s appreciated value with a single payment. This arrangement can work to your advantage if your home value decreases. But if your home value goes up, you could end up paying a lot more. 

Here’s how that works if your home is worth $475,000 after a value adjustment when you receive a lump sum of $25,000 from the investment company. 

• Adjusted home value: $475,000
• Home value at repayment: $575,000
• Equity being shared: 20%
• Principal funding amount: 25,000
• Amount you owe: $45,000 ($25,000 principal + 20% (20,000) of the $100,000 appreciation)

On the other hand, if your home value decreased to $375,000 at the end of the agreement, you’d owe only $5,000 ($25,000 principal – 20% ($20,000) of the $100,000 depreciation). 

Pros and cons

Pros

• No additional debt

  Receive a lump-sum cash payment without taking out a loan

• No monthly payments

  Make only a single payment at the end of the agreement.

• Shared risk

  If your home depreciates, the investment company shares that loss and you owe less.

• Easier to qualify with poor credit

  Even if your credit score is as low as 500, you may still qualify.

• Low income isn’t a barrier

  There are generally no income requirements, so even low-income homeowners may qualify.

• No debt-to-income requirements

  If you have too much debt to qualify for a home equity loan or HELOC, you may still qualify for the agreement.

Cons

• May pay more than expected

  If your home appreciates greatly, you may pay a greater amount.

• Appraisal fees

  Many investment companies require an appraisal on your home.

• Must repay the entire amount at the end

  If you aren’t able to repay the entire amount owed once, you may have to sell your home to make one large payment.

Read More

Best Home Equity Sharing Agreements 

Home sale-leaseback 

With a home-sale leaseback, you sell your home to an investor and rent the home from them. This allows you to access cash from the equity in your home to avoid taking on more debt. 

Truehold

Best Home-Sale Leaseback

4.8 _/5

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Why it’s one of the best

Truehold offers a comprehensive sale-leaseback service, taking responsibility for home repairs, taxes, and insurance, which eases the burden on homeowners. 

Residents also enjoy benefits such as discounts on meal delivery and groceries, enhancing the overall living experience. With Truehold, you can stay in your home while accessing its equity, making it an excellent choice for those seeking a balanced, supportive solution.

• Get a cash offer within 48 hours
• No limits on how long you can lease your home
• Truehold covers the costs of major repairs, property taxes, and HOA fees

Home sale-leaseback details

Closing time	30 days or less
Eligible homes	Single-family homes
Eligible markets	Select cities in Georgia, Indiana, Kentucky, Missouri, New Mexico, North Carolina, Ohio, Oklahoma, Pennsylvania, Tennessee, and Texas

Who is a home sale-leaseback best for?

A home sale-leaseback can be a good option if you’re struggling with a large amount of debt or having trouble making mortgage payments. You can use the cash to improve your financial situation while you remain home. 

How it works

With a home sale-leaseback, an investor buys your home for cash and allows you to remain in the home as a renter with a rental agreement. This arrangement frees up cash to pay off debt, make large purchases, or put the money to work in other investments.

Once you sell your home, you won’t have to pay for home repairs and upkeep, property taxes, and homeowner’s insurance. However, the investor can raise your rent over time, and you may pay much more than your previous mortgage payment. You also won’t benefit from having more equity if the home value appreciates.

Pros and cons

Pros

• Receive a large cash payment without taking out a loan.

  Use the money from selling your home for whatever you like.

• Stay in your home

  You can keep living in the home as a renter.

• No property taxes

  You’ll no longer have to pay a big tax bill annually.

• No paying for major repairs

  As a renter, you won’t have to buy a new furnace or pay for home repairs.

Cons

• You have a landlord

  Once you sell, you must answer to the investor and comply with a rental agreement.

• No building equity

  When an investor owns your home, you no longer benefit if your home goes up in value.

• Fees could apply

  You may pay closing costs, processing fees or real estate commissions on the sale.

• Rent can go up

  Your rent could go up substantially over time.

When choosing a method for taking equity out of your home without refinancing, we always start by understanding why you need the money, how much you need, and how soon. From there, it’s imperative to look at your balance sheet (assets and debts) and your cash flow. It’s also important to understand your spending habits to ensure whatever solution is recommended doesn’t end up being a bailout, and you find yourself in the same financial situation a year later.

Michael Menninger, CFP®

How do these home equity options compare to refinancing?

While refinancing replaces your existing mortgage with a new loan, these alternatives offer different ways to tap into your home’s value. Here’s how each compares directly to refinancing.

HELOC vs. refinancing

Feature	HELOC	Refinancing
Loan type	Line of credit; borrow as needed	New mortgage loan replaces the original loan
Interest rate	Typically variable	Usually fixed (can also be variable)
Monthly payments	Interest-only during draw period; principal later	Fixed principal and interest payments
Closing costs	Lower than refinancing	Higher closing costs
Draw period	Yes (borrow when needed)	N/A (entire amount borrowed upfront)
Best for	Ongoing or unexpected expenses	Locking in a new rate or consolidating debt

Home equity loan vs. refinancing

Feature	Home equity loan	Refinancing
Loan type	Second mortgage; lump sum borrowed	Replaces original mortgage with a new one
Interest rate	Fixed	Fixed or variable
Monthly payments	Fixed payments on both original and new loans	Single payment on new loan
Equity requirement	Must have equity in the home	May not require equity unless cash-out refinance
Lump sum	Lump sum is principal of new loan	Cash lump sum is added to new loan’s principal
Closing costs	Yes (similar to refinancing)	Yes (includes origination and other fees)
Best for	Homeowners needing a one-time lump sum without changing their existing mortgage	Locking in a lower interest rate, changing loan terms, or consolidating debt

Home equity sharing agreement vs. refinancing

Feature	Home equity sharing agreement	Refinancing
Loan type	Not a loan; equity sharing contract	New loan replaces original mortgage
Payments	One lump sum at end based on home appreciation	Monthly principal and interest payments
Interest costs	None	Yes, over the life of the loan
Closing costs	None	Yes
Risk	Amount owed depends on home value changes	Fixed payment schedule regardless of appreciation
Best for	Homeowners looking for cash with no debt	Reducing rate, changing term, or consolidating loans

Home sale-leaseback vs. refinancing

Feature	Home sale-leaseback	Refinancing
Loan type	No loan; property sold to an investor	New loan replaces original mortgage
Ownership	Investor owns the home	Homeowner retains ownership
Payments	Lease payments to new owner	Monthly loan payments
Closing costs	May involve property sale fees	Yes (loan origination fees, title insurance, etc.)
Debt	None	Debt created with the new mortgage
Best for	Homeowners needing liquidity without debt	Those looking to adjust loan terms or rates

There are two good reasons to refinance over these other options: 

1. To lower your interest rate
2. To lower your payment by stretching the mortgage over a longer period of time.

However, it must really be worthwhile to offset the closing costs.

Michael Menninger, CFP®

What is the best option to take equity out of my home? 

Product	Best for	Benefits
HELOC	Those with a good credit score who like flexibility	Interest-only payments during draw period
Home equity loan	Those with a good credit score who want a cash lump-sum payment	Longer repayment period, fixed interest rate, consistent payments
Home equity sharing agreement	Those with a poor or fair credit history who aren’t risk-averse	Cash lump-sum cash payment
Home sale lease-back	Those who need a large amount of cash	Cash lump-sum payment without taking on debt

Alternatives that don’t involve taking equity out of your home

When evaluating ways to access home equity, you have several options if a HELOC, home equity loan, refinance, and home equity investment aren’t right for you.

Personal loans

Unlike equity-based products, a personal loan is unsecured, meaning you won’t have to use your home as collateral. Because of this, it often carries a higher interest rate.

Sell and downsize

Selling and downsizing are other options for extracting equity. This is perfect if the home no longer suits your needs or is overly spacious. It provides a lump sum payment, but it also involves moving, which isn’t ideal for everyone.

Reverse mortgage

A reverse mortgage lets you tap into your home equity without selling the house. It’s easier for homeowners age 62 and up who want a steady income source. However, high upfront costs can be a disadvantage.

Rent out all or part of the property

Renting part or all of your home is another way to use your home’s value. It generates income but also introduces responsibilities as a landlord.

Government programs and grants

Depending on your situation, state and local governments, along with nonprofit organizations, offer programs and grants to help with home costs. These programs can provide financial relief without adding to your debt, but they often have strict qualification requirements.

Peer-to-peer lending

Peer-to-peer lending platforms can also be an avenue to get funds without going through a traditional financial institution. This online lending form often offers faster processing time but may come with higher interest rates.

FAQ 

Does refinancing—or do any alternatives to home refinance—have tax implications? 

Yes, refinancing and its alternatives can carry tax implications. For instance, when you refinance, the mortgage interest may be tax-deductible. Other options, including home equity loans, offer the benefit of potentially deductible interest. 

Tax laws frequently change, and deductions may vary depending on specific situations. We recommend consulting with a tax professional to understand these implications.

Do refinancing, a HELOC, a home equity loan, and a home equity investment all affect your credit score similarly?

Refinancing and obtaining a home equity line of credit (HELOC), a home equity loan, or a home equity investment requires a hard credit inquiry, which might lower your credit score for a few months. 

However, each can have a different effect on your credit score because of unique repayment terms, the amount borrowed, and the timeliness of payments. Keep your credit utilization low and make on-time payments to maintain a healthy credit score.

What are common eligibility requirements for a HELOC, home equity loan, home equity investment, and home refinance?

Eligibility requirements for a HELOC, home equity loan, home equity investment, and home refinance often include a satisfactory credit score, a consistent income stream, a certain amount of home equity, and a desirable debt-to-income ratio. 

The specific requirements can differ depending on the financial institution and the product you’re interested in.

What hurdles could arise if I’m considering a home refinance, a HELOC, a home equity loan, or a home equity investment?

Hurdles could include an inadequate credit score, a high debt-to-income ratio, and insufficient home equity. Market volatility can also affect interest rates and change the benefits of refinancing. Some homeowners may also find it difficult to afford the closing costs.

Do market conditions change which products might be best for me?

Yes. For instance, when market interest rates are downward, you might benefit from a refinance or a home equity loan. However, keeping a flexible option, such as a HELOC, may be beneficial in a rising market. Home equity investments depend on how much your home appreciates in value.

Recap of taking equity out of your home without refinancing