LOAN AMOUNT |
APR AS LOW AS |
|
$25,000 |
7.38% |
|
$50,000 |
7.38% |
|
$100,000 |
7.38% |
|
$150,000 |
9.00% |
A home equity loan is a second mortgage that converts your home equity into cash. Home equity is the difference between how much your home is worth and the amount you owe on your outstanding mortgage balance.
You can use the cash from a home equity loan to make home improvements, pay down high-interest debt or cover any other expense you choose. You’ll receive the funds all at once and make a fixed monthly payment.
In order to get a home equity loan you’ll need to meet the following home equity loan requirements:
*This is the standard LTV ratio maximum. However, some home equity lenders let you borrow up to 100% of your home’s value.
On this page
There are a variety of different home equity loan lenders to choose from, and each of them set their own approval guidelines. Generally, the guidelines are a bit more strict than traditional mortgages, so you should strive to:
| Lender | LendingTree rating and "best of" category | Available features | Lender review |
|---|---|---|---|
|  Low credit scores | 680 minimum credit score 90% LTV with higher score $45K minimum draw | Read our review |
|  High LTV ratios | 5- to 30-year terms No-closing-cost options 100% LTV for qualified borrowers | Read our review |
|  Online experience | 5- to 30-year terms $10K to $500K loan amounts 0.25% rate discount for eligible borrowers | Read our review |
| Rate and closing cost discounts | 5- to 30-year terms 0.50% rate discount for eligible borrowers No upfront fees | Read our review |
| Fast closings | 5- to 30-year terms $500K maximum loan amount 14-day closings possible | Read our review |
| Available home equity loan terms |
|
| Home equity loan features |
|
| LendingTree rating | Read review |
| Available home equity loan terms |
|
| Home equity loan features |
|
| LendingTree rating | Read review |
Navy Federal Credit Union is the only lender we reviewed that allows qualified homeowners to borrow up to 100% of their home’s value. Military borrowers may be eligible for extra discounts and a streamlined approval process. Customer support can be contacted online, by phone or even on X (formerly Twitter). The website also provides a step-by-step guide to help you understand the timeline of your home equity loan.
| Available home equity loan terms |
|
| Special home equity loan features |
|
| LendingTree rating | Read review |
TD bank’s website is streamlined and easy to use, with a rate tool that customizes options based on your location. Terms range from five to 30 years and rate information is simple to find. TD Bank offers borrowers a 0.25% interest rate discount for its home equity loan products if you open a TD bank checking or savings account with automatic payment deductions. An added bonus: A TD Bank home equity loan can be secured by an investment property — most home equity lenders only allow you to borrow against your primary residence.
| Available home equity loan terms |
|
| Special home equity loan features |
|
| LendingTree rating | Read review |
BMO Harris offers the highest discounts on home equity loan rates of any lender we reviewed. They offer loans with terms that range from five to 20 years. You can check rates online, browse detailed information about loan programs and even watch mortgage-related videos on their website. There’s also an online application and a guide to help you through the process.
| Available home equity loan terms |
|
| Home equity loan features |
|
| LendingTree rating | Read review |
Spring EQ is the only lender we reviewed that specializes exclusively in home equity loan products. You can also borrow up to 95% of your home’s value — much more than the max 85% LTV most lenders offer. Homeowners can convert equity to cash in as little as 14 days, although 21 days is the average, according to Spring EQ’s website.
A home equity loan works much like a regular, fixed-rate first mortgage. It’s secured by your home and you’ll make regular monthly payments that cover principal and interest. The main difference is that you don’t have to use the funds to buy real estate — you can use the cash payout for anything you’d like. Here’s how the process usually goes:
Yes, if the funds from the home equity loan are used for home improvements, you can deduct the interest from your taxable income.
Learn more about how to get your home equity loan tax deductible.
It’s possible to get a home equity loan with bad credit, but you may not qualify for as much equity as you need or want. Lenders may reduce your maximum LTV ratio and charge you a significantly higher interest rate. If your scores are below 620, consider a government-backed program like an FHA cash-out refinance or VA cash-out refinance.
| Pros | Cons |
|---|---|
Lower interest rates: You’ll pay lower interest rates than those on credit cards or personal loans Fixed payments: Your payment will be the same each month Tax implications: You may be able to deduct home equity loan interest from your tax bill Lower closing costs: Your closing costs are typically lower than a cash-out refinance Very flexible: You can use the money for any purpose | Higher interest: You’ll pay a higher rate than with a cash-out refinance Reduced equity: You’ll lower the available equity in your home Another monthly payment: You’ll have two monthly house payments Collateral requirement: You could lose your home if you default on your payments Tougher guidelines: You’ll need higher scores and lower debt to qualify for the best rates |
Learn more about home equity loan pros and cons.
The easiest way to figure out how much you can borrow with a home equity loan is to let our home equity loan calculator do the math for you. You’ll just need three pieces of information:
Note: The results are based on a maximum 85% LTV ratio.
If your lender uses a different maximum LTV ratio, you may want to do the calculation by hand. Here’s how:
For example, let’s say your lender allows a 95% LTV ratio and you have a $400,000 home with a $90,000 mortgage balance. You’d multiply 0.95 by $400,000 to get $380,000. You’d then subtract $90,000 from $380,000 to arrive at your home equity loan amount of $290,000.
You can use home equity loans for just about anything, including:
Although most home equity lenders let you tap up to 85% of your home’s value, some lenders may offer high-LTV home equity loans that allow you to borrow more. Use our home equity loan calculator to estimate your home equity borrowing power.
It may take two to four weeks to close on a home equity loan. You’ll usually receive your funds following a three-business-day waiting period after your closing.
Home equity loan rates are often higher than interest rates on traditional mortgages. Usually, the more you borrow, the higher your rate will be. Your credit score and loan term also have an impact on the rate you’re offered.
Yes, a home equity loan is often called a second mortgage, since it’s usually attached to a home already secured by a first mortgage. If you default on the loans secured by the home and go into foreclosure, the home equity loan will be second in line to be repaid.