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Home Equity Home Equity Investments

What Is a Home Equity Investment?

If you’re considering tapping your home equity, there are various ways to do it. However, your options may be limited if your credit score is low or your earnings are inconsistent. In these scenarios, a home equity investment is an option.

These investments allow you to sell a portion of your home’s future value in exchange for a lump-sum payment today.

It is not a loan or form of debt, so you won’t make monthly payments or pay interest, and the eligibility requirements are more lenient. Instead, you’ll buy out the investor’s equity share before the end of the term.

You can receive estimates from the companies below with a soft credit check to compare offers or learn more about these investments below the table.

Company Best for… Rating (0-5)
Best overall
4.8
Free Quote
Up to $600,000
Best for longer terms
4.6
Free Quote
Up to $500,000
Best for partial payments
4.5
Free Quote
Up to $500,000
Table of Contents

What is a home equity investment?

A home equity investment is a strategy for turning your home’s equity into cash. Also called home equity sharing agreements, or home equity agreements, these allow you to sell a portion of your home’s future value in exchange for a lump-sum payment today.

While the investor will take claim to the portion of equity you’ve exchanged, they won’t hold any ownership stake, nor will they be added to your home’s title. You’ll eventually buy them out in cash after a certain period or when you sell the home or refinance.

The major benefit of a home equity investment is that it comes with no monthly payment or interest costs, while home equity loans (HEL) and home equity lines of credit (HELOCs) do. These investments also have less stringent credit and income standards than other home equity products.

Here’s how these three home equity products measure up:

HEAHELHELOC
Min. credit score500620Mid-600s
Min. incomeNoneYes, variesYes, varies
Monthly paymentsNoneYesYes
Interest ratesNoneYes, usually fixedYes, usually variable
Terms10 – 30 years5 – 30 years10 – 20 years

See more in our guide: HEI vs. HELOC.

How it works

The basic premise of a home equity investment is simple: An investor gives you a set amount of cash today—say $30,000—in exchange for a percentage of your home’s equity in a set number of years—say 20%. 

This typically means paying more for quick access to cash in the long run because you’ll likely pay more than $30,000 back once your home appreciates. Still, it offers a way of accessing your home equity without increasing your debt load.

Essentially, a home equity investment limits how much money you stand to gain from your equity, which increases as your home’s value rises and as you pay off your mortgage loan.

Here’s a general look at the home equity investment process:

Step 1: The HEI company will send out a third-party appraiser to determine the current value of your home.

Typically, the investment company will make a valuation adjustment (i.e., lower the appraised value of your home) to protect themselves in the event of depreciation. In some cases, they may also place a cap on how much you would owe if the home appreciates significantly.

Step 2: The HEI company makes an offer.

The company’s offer should include how much cash you qualify for upfront, how much of your equity will be shared, and the repayment terms. You can typically expect to buy out the investor within 10 to 30 years.

Step 3: You enter the agreement and pay closing costs.

You will typically need to cover the costs of the appraisal, an origination fee, and various third-party expenses. 

Step 4: You get a lump-sum cash payment.

You’re free to spend this money however you like.

Step 5: At the end of your term (or earlier if you choose), you will pay the investor their share of your equity, based on the home’s current value at that time.

This effectively buys them out and returns all your home equity to you.

Depending on which investor you go with, you may pay back the initial cash amount plus a predetermined percentage of equity, or you may simply pay the company only the predetermined percentage.

Home equity investment example

See below for an example of how a home equity investment would work if your home gained value or lost value over time. Keep in mind: The exact numbers will vary depending on your home, location, equity, and the investor you choose to go with.

Gained valueLost value
Starting value$500,000$500,000
Valuation adjustment2.50%2.50%
Adjusted value$487,500$487,500
Value at repayment$587,500$387,500
Equity shared20%20%
Principal funding amount$25,000$25,000
Amount owed$45,000$5,000

In most cases, you’ll need to pay the amount owed at the end of your repayment term or when you sell or refinance your house. One home equity sharing company—Unlock—actually allows you to make partial buyout payments, which lets you spread out your repayment over time.

Reviews of home equity investment companies

Check out our reviews of highly-rated home equity investment companies to find the best terms.

Best Overall

4.8 /5

Hometap

Hometap has a quick and simple application process. It provides flexible qualification criteria that broaden its reach. Its efficiency in disbursing funds makes it a top choice for those looking for timely equity investments.

  • Features a quick, simple application process
  • Offers flexible qualification criteria
  • Provides prompt investments
Rates (APR)None
Funding$15,000 – $600,000
Term length10 years

Best for Longer Terms

4.6 /5

Point

Point’s home equity investment is more widely available than most of its competitors but is still only available in 23 states. Its minimum credit score requirement of 500 is the lowest of all the companies we reviewed, making it accessible to more homeowners. There are no limits on how you use your funds and Point doesn’t dictate what you can do with your home during the term.

  • Borrow $25,000 to $500,000
  • Accepts credit scores as low as 500
  • Check your offer with a soft credit check
Rates (APR)None
Funding$30,000 – $500,000
Term length30 years

Best for Partial Payments

4.5 /5

Unlock

Unlock stands out due to its exceptional services in the home equity investment space. It provides a transparent and efficient process that helps homeowners access their equity with minimal hassle. The company is also popular for its flexible repayment options, making it the best option for those who want to make partial payments during the term.

  • Provides transparent and efficient process
  • Helps homeowners access equity with minimal hassle
  • Offers flexible repayment options
Rates (APR)None
Funding$0 – $500,000
Term length10 years

Pros of a home equity investment

Home equity investments can offer flexibility and accessibility that traditional loans don’t. Here are some of the key benefits:

Lower credit score requirements

You don’t need excellent credit to qualify—these products are more accessible than traditional home equity loans or HELOCs.

No monthly payments

There are no ongoing payments to worry about, which can free up monthly cash flow.

No interest charges

Since this isn’t a loan, you won’t pay interest on the money you receive.

No minimum income requirements

Many investors don’t require proof of income, which is helpful for self-employed or variable-income individuals.

Upfront lump sum

You receive a cash payment upfront that you can use for any purpose—home improvements, debt consolidation, or other expenses.

Shared downside risk

If your home loses value, the investor shares in the depreciation, potentially reducing what you owe.

Cons of a home equity investment

While these agreements offer some appealing features, they also come with trade-offs. Here are the biggest drawbacks to consider:

You give up future home appreciation

If your home’s value increases significantly, you may owe the investor a much larger repayment than the original cash received.

High equity requirements

You usually need a substantial amount of equity in your home to qualify for an investment.

Closing costs and fees

Upfront fees, including appraisal and origination charges, can add to your out-of-pocket costs.

Limited availability

These products aren’t yet offered in every state, which may limit your eligibility depending on where you live.

A home equity investment has a lot of unknown variables in terms of the true cost. One of the benefits of purchasing a home is letting that home equity grow over time simply through just holding onto the property. A home equity investment would eat into that time you spent, and if you’re using the funds to make improvements, those improvements will just make your equity grow.

Crystal Rau, CFP®
Crystal Rau , CFP®

Is a home equity investment a good idea?

There’s no hard-and-fast answer to this question. While a home equity investment can be a wise move for some homeowners, it may not be the best choice for others. The right strategy really depends on your finances, goals, property, and long-term plan as a homeowner.

For example, a home equity investment might be smart if you need cash but can’t handle the monthly payments that come with a home equity loan or your credit score won’t qualify you for a HELOC.

On the other hand, it might not be the wisest move if you’re in a particularly high-value housing market. Should your home appreciate significantly, you may pay the investor much more than you’d spend on other financial products—particularly low-interest options like home equity loans or cash-out refinances.

The only instance in which I would consider a home equity investment is when funds are needed for an exceptional need, like medical, disability, or basic living expenses. However, the homeowner must understand that nothing may be left when they sell or pass away.

Crystal Rau, CFP®
Crystal Rau , CFP®

How to get a home equity investment

There are many home equity investors to choose from, so shop around before deciding who to sign your agreement with. You should consider customer ratings, fees, eligibility requirements, repayment terms, and geographic eligibility.

Our team compared several of these companies based on these factors to determine which were the best for different homeowners. Check out the best home equity sharing companies based on our research.

FAQ

Are equity investments risky?

Yes, home equity investments carry certain risks—though they’re different from traditional loans. You’re not taking on debt, but you are trading a share of your future home value. If your home appreciates significantly, you could end up owing far more than you received upfront.

Additionally, if you sell or refinance earlier than expected, you may face early exit fees or less favorable terms. As with any financial decision, it’s important to weigh the potential costs against the flexibility and immediate access to funds these agreements offer.

What is the difference between a HELOC and a home equity investment?

A HELOC (home equity line of credit) is a loan secured by your home, typically with a variable interest rate and monthly payments during both the draw and repayment periods. You’re borrowing money and required to pay it back—with interest.

A home equity investment, on the other hand, is not a loan. Instead, you receive a lump sum of cash in exchange for a share of your home’s future value. There are no monthly payments or interest charges, but when you sell your home—or reach the end of the agreement term—you’ll repay the investor based on your home’s appreciated value.

How do you make money from an equity investment?

If you’re the investor, you profit when the home appreciates in value. Once the homeowner sells, refinances, or reaches the end of the term, you receive your share of the increased value—based on the terms of the agreement.

If you’re the homeowner, you’re not making money from the equity investment itself, but you are unlocking cash without taking on debt or monthly payments. It’s a way to access funds without a loan, which can be useful in specific situations—like inconsistent income or a low credit score.

What are the qualifications for a home equity investment?

Requirements vary by company, but generally, homeowners need:

  • A strong equity position: Many providers require at least 25%–30% equity.
  • Owner-occupied, single-family homes: Most programs exclude rental or vacation properties.
  • Fair or better credit: While lower than for a HELOC, credit score minimums often fall between 500–640.
  • Stable property value and location: The home should be in a market with reliable appreciation trends, and availability is limited to certain states.

Unlike loans, income requirements tend to be relaxed, making these investments more accessible for self-employed or retired homeowners.