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6 Best Home Equity Loans of 2024
By Taylor DeJesus MONEY RESEARCH COLLECTIVE
- Unlock cash from within your home
- Online loan application process
- Save time on documents & paperwork
- Pay down debt, buy an investment property, or renovate your home
- Lower your monthly payments. Competitive rates.
- Pre-qualify in minutes. Flexible terms with fast funding.
- Mortgage Advisors ready to help find the best solution.
-
Recommended FICO Score of 640+
- Cash-Out Refinance For Any Need
- Take Advantage of No Appraisal Fee for Heloc & Cash-Out Refi
- Home Improvement, Buy a Vacation Home, Consolidate Debt
- 311k+ positive reviews, A rating from the BBB
Access Home Equity Without a Loan
- No Interest Charges
- Fast and Easy Application Process
- Flexible Terms & No Monthly Payments
- Access up to $500K with a Home Equity Agreement (HEA)
Home Equity Sharing
- No cash due at closing
- No monthly payments necessary
- Borrow up to $600,000
- Only 25% equity required and no prepayment penalties
Cash-Out Refinance
- Only pay interest on what you borrow
- Ideal for any borrower considering a cash-out refi
- More than $1 billion in annual home closings
- $100K minimun loan amount, $0 in origination fees
If you’re a homeowner in need of extra money, you might be considering a home equity loan or a home equity line of credit (HELOC). These products tap into your home’s equity and use it as collateral to secure the funds you’re borrowing. Homeowners have many ways to use home equity, and interest rates for these products are usually lower than those of a credit card or personal loan, which makes tapping home equity an attractive option for people in need of cash.
That being said, there are risks involved if you fall behind on payments, including additional fees, a negative mark on your credit report or even foreclosure. To help you navigate this, and find the best lender for your specific needs, we looked at various lenders and compiled our top picks for best home equity loans.
As you study the results of our analysis, keep in mind that interest rates and offerings change from time to time (ours reflected offerings as of June 2023). You’ll want to look at the most up-to-date rates offered by each lender before making a decision.
Read on for our top picks for the best home equity loans.
Our Top Picks for Home Equity Loans for 2023
- Discover– Best for No Fees
- Regions Bank – Best for Competitive Rates
- Truist – Best Fixed-Rate HELOC
- U.S. Bank – Best for Large Loans
- Citizens Bank – Best for Flexible Loan Amounts
- PenFed – Best for Non Owner Occupied Properties
Best Home Equity Loans Reviews
Best for No Fees: Discover
- Loan terms
- 10, 15, 20 or 30 years
- Loan amounts
- $35,000 to $300,000
- Minimum credit score
- 620
Why we chose it: Unlike its competitors, Discover doesn’t charge any application fees, appraisal fees, mortgage taxes or origination fees. Discover also features a high loan-to-value maximum compared with other top lenders.
- No application, appraisal or origination fees, and no cash required at closing
- Competitive interest rates
- No HELOC option
- High minimum loan amount may deter some borrowers
The company offers low fixed rates. It also allows customers to apply for a loan online or over the phone, making it an excellent option for homeowners who need an expedited process.
Discover allows borrowers to have a total debt (i.e., mortgage balance plus home equity loan balance) of up to 90% of their property’s value. Loan amounts range from $35,000 to $300,000 — which are higher amounts than many other lenders require and so may not work for some borrowers. To qualify for a Discover home equity loan, you’ll need a FICO score of at least 620, along with verifiable employment and proof of income.
Discover also requires that borrowers maintain a debt-to-income ratio of less than 43%. Also, if you pay back the loan within the first 36 months, you’ll need to reimburse some of the closing costs (up to $500). Currently, Discover only offers home equity loans, so if you’re looking for a HELOC, you’ll need to choose a different lender.
Best for Competitive Rates: Regions Bank
- Loan terms
- 10, 15 or 20 years for loans, 30 years for HELOCs
- Loan amounts
- $10,000 to $250,000 for loans, up to $500,000 for HELOCs
- Minimum credit score
- Not specified
Why we chose it: Regions Bank has the best interest rates of all the lenders we considered, with a fixed rate as low as 6.75% for home equity loans.
- Home equity loan rates start at 6.75% APR with auto-pay
- HELOC rates start at 9%
- No closing cost HELOC options
- Only available to customers in 15 states
Borrowing amounts for HELOCs and Regions home equity loans (HELOANS) start at $10,000. HELOANS are available for up to $250,000 with terms of 10, 15 or 20 years, and HELOCs max out at $500,000 with a 10-year draw period and a 20-year repayment period. While Regions Bank does charge other fees, there are no closing costs for home equity products up to $250,000.
To qualify for a Regions Bank home equity loan or HELOC, you must have a minimum of $10,000 in equity in your property. In addition, your home must be a primary or secondary residence in one of the 15 states in which Regions has a branch. These states currently include Texas, Tennessee, South Carolina, North Carolina, Louisiana, Mississippi, Missouri, Kentucky, Illinois, Indiana, Iowa, Georgia, Florida, Arkansas and Alabama.
Best Fixed-Rate HELOC: Truist
- Loan terms
- 5, 10, 15, 20 or 30 years
- Loan amounts
- Starts at $15,000
- Minimum credit score
- Not specified
Why we chose it: Truist specializes in HELOCs and offers three repayment options: interest-only, fixed interest rate, and variable interest rate repayments with zero-cost closing options. The company doesn’t offer traditional home equity loans.
- Three flexible repayment options
- $5,000 minimum HELOC loan amount
- Annual fees in certain states
Truist’s variable-rate HELOC has a 10-year draw (the amount of time within which a borrower can access additional funds) and a 20-year repayment period. During the 10-year draw, you can choose to make interest-only payments or pay 1.5% of the outstanding balance.
With Truist’s fixed-rate option, borrowers can choose a repayment term between five and 20 years. The repayment term determines the monthly payment (plus interest and other fees). The minimum draw amount for either type of HELOC is $5,000, which means that borrowers aren’t forced to borrow (and pay interest on) more money than they need at the time.
It’s worth noting that Truist charges additional fees in certain states. In Alabama, Arkansas, California, Florida, Georgia, Indiana, Kentucky, New Jersey and Ohio, Truist charges a $50 annual fee on HELOCs. There are additional setup fees and potential origination fees. These fees vary by state and can be as high as $10,000.
Learn more about the lender’s home equity products by reading our full Truist home equity loans review.
Best for Large Loans: US Bank
- Loan terms
- Up to 30 years
- Loan amounts
- $15,000 to $750,000 (Up to $1 million in California)
- Minimum credit score
- 660
Why we chose it: U.S. Bank covers all closing costs for both home equity loans and HELOCs. Further discounts are available for those who have checking accounts with U.S. Bank.
- No closing costs for home equity loans or HELOCs
- Borrowing amounts of up to $1 million
- High costs during the HELOC draw period
U.S. Bank offers some of the largest loans around — as low as $15,000 and as much as $750,000, depending on your credit score and your home’s equity, with California residents able to borrow up to a million dollars. Borrowers can convert all or part of their HELOC to a fixed-rate loan. With this arrangement, you can have up to three fixed-rate loans at any time.
To qualify for the best rates with U.S. Bank (as low as 8.40% for a 10-year term), you’ll need a FICO credit score of 730 or higher. HELOCs have a 1% early termination fee (up to $500) if the account is closed within 30 months.
While other lenders only require interest payments during a HELOC draw period, U.S. Bank also requires most borrowers to pay as much as 2% of their balance each month, applied to both interest and principal. That said, some borrowers with qualifying credit scores can opt for interest-only payments.
Read our full U.S. Bank home equity loans review.
Best for Flexible Loan Amounts: Citizens Bank
- Loan terms
- 15 years
- Loan Amounts
- $5,000 to $25,000 for the GoalBuilder HELOC
- Minimum credit score
- Not specified
Why we chose it: Citizens Bank offers a variety of loan options, with loan amounts starting as low as $5,000 for its GoalBuilder HELOC with no closing costs or application fees.
- No closing costs or application fees
- Loan amounts start low at $5,000
- Annual HELOC fee after the first year
- Limited availability in 15 states
Citizens Bank offers two flexible home equity options: a regular HELOC and Citizens GoalBuilder HELOC. With the standard HELOC, loan amounts start at $17,500 with a 10-year draw and a 15-year repayment term. Citizens’ interest rate minimum is 8.50% but can run as high as 21%. While there are no application fees or closing costs, the bank charges late fees and a $50 annual fee after the first year.
The bank’s GoalBuilder HELOC offers loans between $5,000 and $25,000. When you sign up for autopay from a Citizens checking account, the APR is Prime plus 3% (in contrast to Prime plus 3.25%). Unlike the bank’s regular HELOC, this product has no annual fees or prepayment penalties. You have ten years to use the money and 15 years to repay it.
You’ll need a good FICO score, an LTV of 80% or less, and a low debt-to-income ratio to be eligible for a HELOC with Citizens Bank.
Best for Non-Owner Occupied Properties: PenFed
- Loan terms
- 20 years
- Loan amounts
- $25,000 to $500,000
- Minimum credit score
- 680
Why we chose it: PenFed offers special pricing options for borrowers with equity in a second home or rental property. For non-owner-occupied homes, loan amounts start at $25,000 but can go as high as $500,000 depending on credit scores and the property’s combined loan-to-value (CLTV) ratio.
- No lender or closing fees
- High credit line up to $500,000
- Penalties for early termination
HELOCs from PenFed include a 10-year draw and a 20-year repayment period. Rates start at 8.625% APR.
PenFed charges no lender or closing fees. But they will charge an early termination fee if you close your account within 36 months; there is also technically a $99 annual fee. However, PenFed waives that charge if you’ve paid at least $99 in interest within the preceding 12-month period.
Only PenFed credit union members qualify for a HELOC. Further, they require a minimum credit score of 680, a favorable debt-to-income ratio, proof of income, one year of W2s and other financial documentation.
Read our full PenFed home equity loans review.
Other companies we considered
In addition to the banks and credit unions that made our list, we considered others that didn’t quite make the cut. Though they weren’t our top picks, they may still be good options for some homeowners.
PNC
PNC Bank offers two ways to access the equity in your home: cash-out refinance and a HELOC, which we discuss in our PNC home equity loans review. At present, the company isn’t offering traditional home equity loans, but it offers two HELOC options: fixed-rate and variable-rate.
- Flexible borrowing options up to 89.9% of your home's value
- Offers low rates in both variable and fixed categories
- PNC's website isn't upfront about rates, terms or eligibility requirements
- Not available in Alaska, Hawaii, Louisiana, Mississippi, Nevada or South Dakota
Bank of America
Bank of America is the second-largest banking institution in the U.S. The company offers a wide range of purchase mortgages, including government-backed VA and FHA loans and two refinancing solutions: cash-out refinancing and HELOCs. See our Bank of America home equity line of credit review for more information.
- No application fees, closing costs (on lines of credit up to $1 million) or annual fees
- No fee to convert your variable rate balance to a fixed-rate option
- $450 early termination fee and closing fees
- $25,000 minimum line amount might be too high for some
Figure
Figure offers HELOCs and is one of a growing number of financial institutions to offer crypto-backed mortgages (launching in early 2024). So, if you’re sitting on a pile of Bitcoin, you may be able to put it to work for you when funding home renovations or other large projects. Learn more by visiting our Figure home equity line of credit review.
- Receive money in as little as five days
- Entirely online application process
- HELOC loan cap of $400,000
- Origination fee can range of up to 4.99% of your first draw amount
KeyBank
KeyBank offers fixed-rate home equity loans and HELOCs with terms available from five to 30 years. You can borrow between $25,000 and $500,000 against your home, so long as your combined LTV ratio is 80% or below. Borrowers who have a savings or checking account with the institution are eligible for a 0.25% interest rate reduction.
- Borrow up to 80% of your home's appraised value
- Get a 0.25% interest rate discount when you have a checking and savings account with KeyBank
- Early termination fee if you close a HELOC or home equity loan within 36 months
- HELOC is unavailable in Alabama, Arizona, California, Nevada, Texas or Washington, D.C.
Navy Federal Credit Union
Navy Federal provides home equity loans and HELOCs for current and former military members, their family members and Department of Defense employees. You can borrow up to 100% of your home equity with a home equity loan or up to 95% with a HELOC. There are no application or origination fees. However, the minimum HELOC amount is $10,000.
- No application or origination fee
- Borrow up to 100% of your home equity for loans and 95% of your home equity for HELOCs
- Minimum HELOC draw of $10,000
BMO Harris Bank
BMO Harris allows you to lock in your rate with a fixed-interest loan anytime during the draw period. Fixed-rate home equity loan terms are between five and 20 years. Read our full BMO home equity loans review.
- No application fees and low-to-no closing costs
- Wide range of terms from 5 to 20 years
- High credit score requirements (700 for home equity loans) compared to other banks
- $75 fee each time you convert HELOC from a variable to a fixed rate
Guide to Home Equity Loans
Main things to know before choosing a home equity loan
Home equity loans offer the opportunity to get access to cash for whatever purpose suits you. But that’s not to say it’s a good idea to withdraw equity from your home for a frivolous reason. Start by asking yourself whether you truly need to spend the money you’re withdrawing. Next, ask yourself whether you’ll be spending the equity you withdraw to save money and improve your financial situation in the long run. Finally, consider whether the money you plan to spend will significantly improve your home’s value, such as completing home renovations.
Which type of loan is right for you? That depends on a number of factors, including your current financial situation, the financial future you anticipate, your overall goals and the interest rate you’re paying on your current mortgage. If you got a great rate on your original mortgage and want to keep it, a home equity loan might make the most sense. Suppose you’re not sure how much money you need to achieve your goals and aren’t in the position currently to begin paying off a new loan, the flexibility to borrow only what you need from day to day and defer payments for a period of years. In that case, a HELOC might be a better choice for you.
How do home equity loans work?
Home equity loans and HELOCs are second mortgages you must pay off in installments while making your primary mortgage payment. Home equity loans are for fixed amounts, and payments become due as soon as you take one out. HELOCs allow borrowers to access their home equity in increments as needed. The years you’re allowed to take money out of your home is known as the draw period.
HELOCs differ from home equity loans in that they typically allow you to defer payments for a period of years: ten years is standard. When your draw period ends, you must make monthly payments until you paid off all the borrowed money. With refinance and home equity loans, you will typically pay a fixed interest rate for the life of the loan. HELOCs are typically adjustable-rate loans.
Both home equity loans and HELOCs can be used for various expenses ranging from general living expenses to wedding expenses or debt consolidation. Refinancing a home equity loan is also possible if you want to try finding better loan terms. Learn more about HELOC vs. home equity.
What is the process of getting a home equity loan?
Getting a home equity loan is similar to getting traditional mortgage loans, personal loans and other types of borrowing. Learn more about how to get a home equity loan below.
1. Get your home appraised and determine your home equity
Home equity is the amount of your home’s value versus what you still owe to your mortgage lender. To determine your equity amount, you need to get your home appraised. Then, you can subtract your mortgage’s outstanding balance from its appraised value. Many home equity loan lenders require you to have equity of at least 20% of your home’s appraised value to be eligible.
Lenders will also consider the loan-to-value (LTV) ratio to assess the risk of your loan or credit limit amount. A lower LTV ratio indicates that you have more equity than debt in your home, and it can get you more favorable loan offers and rates. You can calculate your LTV ratio by dividing your current loan balance by the appraised home value.
Also, take some time to evaluate your overall credit score and history. Though getting home equity with bad credit is possible, it’s more difficult and costly. The earlier you can improve your credit, the more likely you’ll be approved for a home equity loan.
2. Research lenders
Start by researching home equity lenders, including a mix of traditional banks, credit unions and online lenders. Shop around for the best home equity rates. Many lenders allow you to view personalized rates without submitting a formal application. Before choosing a lender, learn about additional fees, such as application fees, origination fees, closing costs, annual fees, cancellation fees and early repayment fees. Consider factors such as loan terms and loan amount offerings to see if you can customize your loan to your needs.
3. Submit an application
When you submit a formal application, you’ll be required to submit a substantial amount of information, including income verification and past tax returns. Lenders thoroughly examine your financial portfolio before they agree to loan you any money. Once you complete your application, the amount of time it takes before a lender approves or rejects it can vary from a few weeks to more than a month. Similarly, once you sign on the dotted line, your loan can take days or weeks to be funded.
What are the pros and cons of home equity loans?
- Lower interest rates compared with other types of loans or credit cards
- Repayment terms may be longer than other consumer loans
- Immediate access to funds in lump sum payments
- Monthly loan payments are fixed, which makes it easier to predict spending and budget
- Can be used for a variety of purposes, including debt consolidation, home improvement projects, education costs and living expenses
- You must make payments on top of your existing mortgage payments
- May require you to pay closing costs upon finalization
- Missed payments can put you at risk of foreclosure
- If you sell your home before paying back your loan, the remainder will be due
Home Equity Loans FAQs
Are home equity loans tax-deductible?
How long does it take to get a home equity loan?
Most lenders allow you to apply online or over the phone. Once you've applied, approval can take anywhere from a week to several months, with an average of two to six weeks.
Before applying, you should spend a fair amount of time educating yourself on home equity loans and shopping for the best deals. That investment will pay you back by helping you choose the right one with the best rate.
How much money can you borrow on a home equity loan?
The amount of money you can borrow with a home equity loan depends on the market value of your home, how much you owe on your first mortgage and your lender's specific rules. Home equity loan lenders will compare the amount you want to borrow to the equity you have in your home. Your equity equals the amount your home would fetch in the market minus what you owe on it, which is your LTV.
Lenders may limit you to borrowing a certain percentage of your home equity — usually 70% to 90%. Higher loan limits usually have higher interest rates attached. If you have bad credit, the rate you're offered may also be higher.
What is the difference between HELOC and a home equity loan?
How we found the best home equity loans
To identify the best home equity loans and HELOCs, we evaluated each lender based on the following factors:
- Loan features: What types of loans are offered? What loan amounts are offered? We also looked at interest rates, loan terms, fees and the credit score requirements for each lender.
- Price transparency: We gave extra weight to mortgage lenders whose websites clearly disclosed their interest rates, fees, discounts and other charges.
- Application process: We considered eligibility requirements and the time period for approval. Further, we studied application and evaluation fees and determined whether loan application services were available online, by phone or in person.
- Reputation and customer satisfaction: To determine the top lenders for customer satisfaction, we looked at two primary data sources: J.D. Power’s 2021 U.S. Primary Mortgage Servicer Satisfaction Study and complaint data reported by the Consumer Financial Protection Bureau (CFPB).
Summary of the Best Home Equity Loans of 2024
- Discover– Best for No Fees
- Regions Bank – Best for Competitive Rates
- Truist – Best Fixed-Rate HELOC
- U.S. Bank – Best for Large Loans
- Citizens Bank – Best for Flexible Loan Amounts
- PenFed – Best for Non Owner Occupied Properties