Home equity loans allow you to borrow funds against the existing equity on your property. The equity balance is the difference between the market value of your home and the amount owed on your mortgage. Homeowners use these loans to fund home renovations, student loans, and high-value purchases or consolidate high-interest debt. When you take out this type of loan, you receive a lump sum that you pay back, typically at a fixed interest rate, over a period of 5 to 30 years.
If you’re considering a home equity loan, check out our pick of the best loan providers below. We’ve sourced reputable lenders offering competitive interest rates and flexible payment periods so you can make wise financial decisions for your future.
3.75% to 18%
660
30 years
$25,000 to $1,000,000
Starts at 3.09%
620
5, 10, 15, 20, or 30 years
$1,000 to $150,000
4.5% to 16.0%
620
5, 10, 15, or 20 years
$15,000 to $500,000
3.99% to 11.99%
620
10, 15, 20, or 30 years
$35,000 to $200,000
Starts at 3.80%
730
10, 15, or 30 years
$15,000 to $750,000
3.0% to 11.625%
Not disclosed
7, 10, 15, or 20 years
$10,000 to $250,000
The Most Important Factors when Applying for Home Equity Loans
If you’re thinking about applying for a home equity loan, keep the following points in mind:
Minimum credit score
Most lenders require a minimum credit score of 620 to qualify you for a home equity loan. A lower score will affect the amount you can borrow, the interest you have to pay, and the length of time you have to pay the loan back.
Available equity
Typically, you’ll need to have at least 15–20% available equity in your home to secure a loan. Lenders also consider your debt-to-income and loan-to-value ratios to determine your overall eligibility.
Interest rates
Home equity loans can be a good financing option because they offer lower rates than most lines of credit. You should compare different lenders to find the best home equity loan rates so you can comfortably pay off the extra funds while still settling your other debts and expenses.
The amount you need to borrow
Whether it’s for home improvements, college tuition, or consolidating debt, there are limitations on how much you can borrow. Lenders will typically offer you a loan amount somewhere between 80% and 85% of the equity in your property. If you need an unusually large loan, you may not be able to borrow the full amount you’re looking for.
Payment history
You’re essentially taking out a second mortgage on your property. Therefore, how you’ve paid off other debt, including your current mortgage, matters. Lenders will consider your payment history and your current employment status when deciding whether to offer you a loan.
Loan terms
There are a lot of lenders to choose from. All offer varying terms and conditions, so select wisely based on your budget needs. Think about how much time it will take you to settle the debt without putting your finances under strain. Consider whether an adjustable-rate loan—where the interest rate changes over the loan term—or a fixed-rate one works best. Review these important factors before making a final decision.
Costs
Many lending institutions charge levies and penalties if you pay off the loan earlier than planned. You can also expect yearly account charges, processing, and ad hoc fees. Think about how these extra costs fit into your budget before taking out a home equity loan.
The 6 Best Home Equity Loan Providers
Best for Non-Owner-Occupied Properties: PenFed
PenFed Credit Union has operated since 1935 and now has 2.5 million members worldwide. It operates in all 50 states and provides 24/7 online assistance to its customers. PenFed has financed over 4,000 homes and offers a wide range of mortgage products with competitively low interest rates.
The credit union boasts a preapproval period of just three days for online applications and doesn’t charge lender fees. Borrowers can expect to pay an annual fee of $99 and any other third-party fees they incur during the loan approval process.
PenFed also offers a unique Mortgage Member Benefits Program through which you accumulate lender credit based on your loan amount. PenFed’s low APRs and fees, variety of borrowing options, and swift approval times make it, in our opinion, one of the best lenders for home equity loans.
Best for Discounts: PNC Bank
With 160 years of experience in providing financial solutions to customers, PNC Bank is widely thought of as one of the best banks for home equity loans. It offers a significant range of mortgage products to cater to borrowers of all income levels. Headquartered in Pittsburgh, PNC Bank operates in all 50 states, servicing 12 million customers throughout the United States.
Customers can obtain preapprovals, submit their financial documents, and complete loan applications online. On PNC Bank’s site, you’ll find details of local mortgage loan officers who can assist you if you encounter any issues. PNC Bank’s fees range from 3% to 5% of the amount you borrow.
A $5,000 PNC Grant is available to customers who meet specific income requirements or live in qualifying communities. The purpose of this grant is to lower closing costs and other fees associated with the mortgaging process.
Best for Variety of Home Equity Loans: Truist
Truist has been providing home equity loans to consumers since 2019. Its headquarters are in Charlotte, North Carolina, and it has more than 2,000 branches spanning 15 states. Truist is a byproduct of the merger between SunTrust Banks and BB&T and is one of the largest banks in the United States.
This lender offers an extensive range of mortgage products and solutions to help you make your money go further. It also boasts a 24-hour turnaround time for loan approvals.
Best for Fees and Closing Costs: Discover
Discover started in 1985 and officially became a public company trading on the NYSE in 2007. Its headquarters are in Riverwoods, Illinois, although it typically conducts most of its business online. Discover’s mortgage offerings include fixed-rate home equity loans and mortgage refinancing.
It lends money to consumers with high loan-to-value ratios of up to 90%, making it a more accessible borrowing option for many people. Customers can complete their applications, submit supporting documents, and sign their paperwork online.
Best for Consumers with Good Credit: US Bank
Previously known as First National Bank of Cincinnati, operating since 1863, U.S. Bank offers customers innovative mortgage solutions backed by years of experience. Its headquarters are in Minnesota, and it has 3,000 branches operating across 25 states.
U.S. Bank caters to digital clientele with online preapprovals, loan applications, and a convenient mobile app. Alternatively, you can search for locally-based mortgage loan officers on the bank’s website to help you navigate the online process.
Best for Low APRs: Regions
Founded in 1971, with its headquarters in Alabama, Regions is one of the largest banks in the United States. It has nearly 1,500 branches in 16 states spread across the South and Midwest.
Regions offers home equity loans at fixed rates starting as low as 3% (on autopay) with a host of flexible repayment periods. Customers with existing Regions checking accounts benefit from further rate discounts if they set up direct debit for their monthly payments.
Other Home Equity Lenders We Considered
Figure
Founded in 2018, Figure uses blockchain technology to provide innovative financial solutions to individuals and businesses. It offers home equity loans at APRs starting from 3.25%, with repayment periods ranging from 5 to 30 years. Customers can complete the entire loan process online and expect speedy approvals.
Quicken Loans
Quicken Loans is one of the largest mortgage providers in the United States. After a name change in May 2021, it began operating as Rocket Mortgage. It has 37 years of experience offering a variety of mortgage products to customers.
Rocket Mortgage helps borrowers access the equity value of their homes through the cash-out mortgage refinancing option. Customers receive the cash instead of taking out an additional mortgage like with traditional home equity loans.
Veterans United
Founded in 2002, Veterans United operates in all 50 states, with its headquarters in Columbia, Missouri. It’s a mortgage provider specializing in VA loans. These are mortgages that military members, veterans, and spouses can qualify for, which require no down payment or monthly insurance payments.
Veterans United allows customers to tap into the equity of their home through the VA cash-out refinancing option. This differs from the conventional home equity loan since the new VA cash-out refinance loan replaces your existing mortgage.
How We Found the Best Home Equity Loan Providers
When compiling our list of the best lenders, these were the most important attributes we evaluated:
Annual percentage rate (APR)
We selected companies that provide affordable interest rates since, with a home equity loan, you’re adding debt onto your current mortgage.
Loan terms
We focused on lenders that offer a wide range of loan repayment periods, with low fees and discounts or savings programs.
Credit scores
We included firms that provide loans to customers with average credit scores, so you can borrow money even if your score isn’t in the highest range.
Application process and turnaround time
We added lending institutions that offer online applications with swift approval times to make the borrowing experience easier.
Best Home Equity Loans FAQs
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