If you’re a homeowner curious about the value of your home, you might be pleasantly surprised at how much it’s currently worth. And, if you’re looking to tap the cash in your home, a home equity loan could help you take advantage of it.
During the pandemic homebuying boom, home prices appreciated dramatically. Tappable equity levels, which are linked to home price trends, increased accordingly. While home prices dipped by 3% in March, according to Redfin, homeowners still have plenty of equity in their homes.
Homeowners with mortgages have an average of $178,000 in tappable equity -- $61,000 more than three years ago -- according to a report from Black Knight.
”Since many homeowners realized substantial appreciation over the last few years, the majority will continue to have a cushion of tappable equity in their homes despite some declines in home values,” says Adam Boyd, head of home equity lending at Citizens.
If you have at least 15% to 20% of equity in your home, you can use a home equity loan to withdraw cash from it without disturbing the rate on your primary mortgage.
There are a variety of lenders -- ranging from home equity loan companies to banks and credit unions -- that can provide this funding, but you’ll need to do your due diligence to find the company that works best for your specific borrowing needs.
Here are CNET’s picks for the best home equity loan lenders of May 2023, as well as more on how these loan installments work.
Top home equity loan rates for May 2023
| Lender | APR | Loan amount | Loan terms | Max loan-to-value (LTV) ratio |
| U.S. Bank | From 7.45% | Not specified | Up to 30 years | Not specified |
| TD Bank | 6.99% (0.25% autopay discount included) | From $10,000 | 5 to 30 years | Not specified |
| Connexus Credit Union | From 8.99% | From $5,000 | 5 to 15 years | 90% |
| KeyBank | From 10.79% (0.25% autopay discount included) | From $25,000 | 1 to 30 years | 80% for standard home equity loans, 90% for high-value home equity loans |
| Spring EQ | Fill out application for personalized rates | Up to $500,000 | Not specified | 90% |
| Third Federal Savings & Loan | From 6.49% | $10,000 to $200,000 | Up to 30 years | 80% |
| Frost Bank | From 5.88% (0.25% autopay discount included) | $2,000 to $500,000 | 15 to 20 years | 90% |
| Regions Bank | From 6.375% (0.25% autopay discount included) | $10,000 to $250,000 | 7, 10, 15, 20 or 30 years | 89% |
| Discover | 6.25% for 1st liens, 7.49% for 2nd liens | $35,000 to $300,000 | 10, 15, 20 or 30 years | 90% |
| BMO Harris | From 8.04% (0.50% autopay discount not included) | From $25,000 | 5 to 20 years | Not specified |
Best home equity loan lenders for April 2023
U.S. Bank
Based in Minneapolis, U.S. Bank is the fifth largest banking institution in the US. It offers both home equity loans and HELOCs in 47 states (excludes Texas, South Carolina and Delaware). You can borrow as little as $15,000 or up to $750,000 ($1 million for properties in California) depending on the available equity in your home. The bank offers a range of payback terms up to 30 years.
There are no closing costs on home equity loans or HELOCs from U.S. Bank. Borrowers can receive a 0.50% rate discount when they set up automatic payments from a U.S. Bank checking or savings account. You can apply for a home equity loan or HELOC through an online application, by phone or by visiting a U.S. Bank branch in person.
If you want a loan estimate for a U.S. Bank home equity loan without completing an application, you can get one by speaking with a banker over the phone.
Our take: We like U.S. Bank because of its extensive nationwide availability, customer support options and price transparency. You can get a personalized rate quote and fee information by filling out some basic information, no credit check required.
Read our full lender review here.
- Rate discount for setting up autopay from a U.S. Bank checking or savings account
- Extensive availability nationwide
- Can apply online, over the phone or in-person
- Good price transparency
- No closing costs on home equity loans
- Not available in Texas, Delaware or South Carolina
- Home equity loan APR: From 7.45%
- Loan amount: Not specified
- Loan terms: Up to 30 years
- Maximum LTV ratio: Not specified
TD Bank
Primarily operating on the East Coast, TD Bank offers home equity loans and HELOCs in 15 states. Loan amounts for home equity loans start at $10,000. TD Bank offers payback terms ranging from five to 30 years.
Closing costs only apply to home equity loans or HELOCs with loan amounts greater than $500,000. However, you’ll be required to pay a $99 origination fee at closing regardless of your loan amount. Borrowers can receive a 0.25% rate discount if they enroll in auto-pay from a TD personal checking or savings account.
You can apply for a TD Bank home equity loan or HELOC online, by phone or by visiting a TD Bank in person. The online application includes a calculator that will tell you the maximum amount you can borrow based on the information you input. You can also see a full breakdown of rates, fees and monthly payments. No credit check is required for this service.
Our take: Although its nationwide availability is limited, TD Bank ranks highly for its price transparency, good online user experience and range of customer service options.
Read our full lender review here.
- 0.25% rate discount if you set up autopay from a TD account
- Options to apply in person, on the phone or online
- No credit check required to see personalized rates and fees
- Wide range of product offerings
- Only offered in 15 states: Connecticut, Delaware, Florida, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, Vermont, Virginia and the District of Columbia.
- $99 origination fee for both home equity loans and HELOCs
- Home equity loan APR: 6.99% (0.25% autopay discount included)
- Loan amount: From $10,000
- Loan terms: Five to 30 years
- Maximum LTV ratio: Not specified
Connexus Credit Union
Although Connexus Credit Union operates in all 50 states, they don’t offer home equity loans and HELOCs in Alaska, Hawaii, Maryland and Texas. Loan amounts for home equity loans and HELOCs range from $5,000 to $200,000. The credit union offers repayment periods ranging from five to 15 years. You can borrow up to 90% of your home’s value with a Connexus home equity loan.
Connexus doesn’t specify any rate discounts or introductory rates for home equity loans. You won’t have to pay an annual fee for a home equity loan or HELOC with Connexus. Closing costs can range from $175 to $2,000 depending on your loan terms and property location.
Because Connexus is a credit union, its products and services are only available to its members. Member eligibility is open to most people; you (or a family member) need to be a member of one of the credit union’s partner groups, reside in one of its communities, or counties, or become a member of the Connexus Association with a $5 donation to its partner nonprofit, Connexus Association.
To apply for a home equity loan or HELOC with Connexus, you can fill out a three-step application online. You won’t be able to see a personalized rate or product terms without a credit check.
Our take: Connexus Credit Union’s nationwide availability, easy-to-meet membership requirements and range of product offerings make this lender stand out among the competition.
Read our full lender review here.
- No annual fee
- Available in 46 states
- Excellent customer service options
- Membership requirements are relatively easy to meet
- Credit check required to get a personalized rate quote and product terms
- Not available in Alaska, Hawaii, Maryland and Texas
- Must be a member of the credit union to get a loan
- No specified rate discounts
- Home equity loan APR: From 8.99%
- Loan amount: From $5,000
- Loan terms: Five to 15 years
- Maximum LTV ratio: 90%
KeyBank
Based in Cleveland, KeyBank offers home equity loans to customers in 15 states and HELOCs to customers in 44 states (excluding Alabama, Arizona, California, Nevada, Texas and Washington DC). Aside from a standard home equity loan, KeyBank offers a few different HELOC options -- an interest-only HELOC and a rate-lock HELOC. Home equity loan amounts start from $25,000 with repayment terms up to 30 years.
Home equity loans have an origination fee of $295, but no closing costs. KeyBank offers a 0.25% rate discount for clients who have eligible checking and savings accounts with them.
The KeyBank application allows you to apply for multiple products at one time. If you’re not sure whether KeyBank loans are available in your area, the application will tell you once you input your zip code. If you’re an existing KeyBank customer, you can skim through the application and import your personal information from your account.
Our take: We like KeyBank for its wide range of product offerings and its streamlined application process.
Read our full lender review here.
- Offers home equity loans, interest-only and rate-lock HELOC options
- Streamlined application process for existing KeyBank customers
- Smooth online user experience
- $295 origination fee for home equity loans
- To be eligible for the 0.25% rate discount, borrowers must have both checking and savings accounts with KeyBank
- Home equity loans are only available in 15 states: Arkansas, Colorado, Connecticut, Idaho, Indiana, Massachusetts, Maine, Michigan, New York, Ohio, Oregon, Pennsylvania, Utah, Vermont and Washington
- Home equity loan APR: 10.79% (0.25% autopay discount included)
- Loan amount: From $25,000
- Loan terms: One to 30 years
- Maximum LTV ratio: 80% for standard home equity loans, 90% for high-value home equity loans
Spring EQ
Spring EQ was founded in 2016 and serves customers in 38 states, offering home equity loans and HELOCs with amounts ranging from $5,000 to $500,000. You can borrow up to 90% of your home’s value, but you must have a minimum credit score of 640 and a debt-to-income, or DTI, ratio of 50% or less.
Spring EQ doesn’t display rates for its home lending products online; you must complete an application to see your personalized rate. Spring EQ loans may be subject to an origination fee of $995 and an annual fee of $99 in some states. Spring EQ doesn’t specify any rate discounts.
The Spring EQ loan application process is simple. Customers can see an extensive breakdown of their loan term and rate options without needing to undergo a credit check or provide their social security number.
Our take: While it doesn’t display rates online, we rank Spring EQ highly because you don’t need to undergo a hard credit check to see personalized rates. You can get prequalified for a loan with only basic information.
Read our full lender review here.
- No credit check required to see personalized rates
- Available in 38 states
- High maximum LTV ratio -- 90% for eligible borrowers
- High origination fee of $995
- Minimum credit score of 700 required for preferred rates
- No specified rate discounts
- Home equity loan APR: Fill out application for personalized rates
- Loan amount: Up to $500,000
- Loan terms: Not specified
- Maximum LTV ratio: 90%
Third Federal Savings & Loan
Third Federal Savings & Loan first opened in 1938. Today, the bank offers home equity loans in eight states and HELOCs in 26 states. Third Federal also offers a unique product not commonly found among other lenders: a 5/1 adjustable-rate home equity loan, where the rate is fixed for the first five years and then adjusts annually (much like how an adjustable-rate mortgage works). However, you won’t be eligible for this product unless you live in one of the eight states in which Third Federal offers home equity loans. Home equity loans and HELOCs are available in amounts from $10,000 to $200,000. Repayment terms range from five to 30 years.
Home equity loans and HELOCs with Third Federal have an annual fee of $65 (waived the first year) but no application fees, closing fees or origination fees. If you set up autopay from an existing Third Federal account, you’ll be eligible for a 0.25% rate discount. Additionally, Third Federal offers a lowest rate guarantee on its HELOCs and home equity loans, meaning Third Federal will offer you the lowest interest rate relative to other similar lenders or pay you $1,000.
You can apply for a home equity loan or HELOC on the Third Federal website. You won’t have to register an account to apply, but you’re still able to save your application and return to it later.
Our take: Despite its limited nationwide availability for home equity loans, we like Third Federal for its rate match guarantee and its unique product offering of a 5/1 ARM home equity loan. However, you won’t be eligible for this product unless you live in one of the eight states in which it’s offered.
Read our full lender review here.
- No application, closing or origination fee
- Lowest rate guarantee
- 0.25% autopay discount with existing Third Federal account
- Unique product offering -- 5/1 adjustable-rate home equity loan
- Home equity loans are only available in eight states: Ohio, Florida, Kentucky, California, Pennsylvania, New Jersey, Virginia and North Carolina
- $65 annual fee (waived the first year)
- Home equity loan APR: From 6.49%
- Loan amount: $10,000 to $200,000
- Loan terms: Up to 30 years
- Maximum LTV ratio: 80%
Frost Bank
Frost Bank’s home equity loans and HELOCs are only available to Texas residents. Home equity loans come with loan amounts of $2,000 to $500,000. Frost Bank’s repayment terms range from 15 to 20 years.
The bank doesn’t require an application fee or an annual fee for home equity loans. Additionally, there are no closing costs for a borrower. Frost Bank offers a 0.25% rate discount for clients who enroll in autopay from a Frost Bank checking or savings account. However, this feature is only available for second liens.
You can apply for a home equity loan or HELOC on the Frost Bank website, but you’ll need to create an account. According to the website, the application will only take you 15 minutes.
Our take: Although Frost Bank’s nationwide availability is very limited, we like it for its price transparency and quick application process, making it a good option for Texas borrowers.
Read our full lender review here.
- No application fee or annual fee
- Benefits for new and existing Frost Bank customers
- 15-minute application process
- Only available in Texas
- 0.25% rate discount only available for second liens
- Have to create an account to apply
- Home equity loan APR: From 5.88% (0.25% autopay discount included)
- Loan amount: $2,000 to $500,000
- Loan terms: 15 to 20 years
- Maximum LTV ratio: 90%
Regions Bank
Regions Bank is one of the nation’s largest banking, mortgage and wealth management service providers. Regions offers home equity loans and HELOCs in 15 states. Home equity loans have amounts of $10,000 to $250,000 and repayment periods of either seven, 10, 15 or 20 years.
For home equity loans with Regions, there are no closing costs. Additionally, Regions offers rate discounts between 0.25% and 0.50% to those who elect to have their monthly payments automatically debited from a Regions checking account.
You can apply for a Regions home equity loan or HELOC online, in-person or over the phone. You’ll have to create an account with Regions to apply. Before you create an account, you can use the bank’s own rate calculator to estimate your rate and monthly payment.
Our take: Regions ranks highly because of its rate discounts, variety of application options and wide range of customer service options. However, Regions’ nationwide availability is fairly limited.
Read our full lender review here.
- 0.25% or 0.50% rate discounts for those who enroll in autopay from a Regions checking account
- No closing costs for home equity loans
- Apply online, in-person or over the phone with accessible customer service options
- Only available in 15 states: Alabama, Arkansas, Florida, Georgia, Illinois, Indianna, Iowa, Kentucky, Louisiana, Mississippi, Missouri, North Carolina, South Carolina, Tennessee and Texas
- You must create an account to apply
- Home equity loan APR: From 6.375% (0.25% autopay discount included)
- Loan amount: $10,000 to $250,000
- Loan terms: Seven, 10, 15, 20 or 30 years
- Maximum LTV ratio: 89%
Discover
Discover is known primarily for its credit cards, but it also offers home equity loans -- available in 48 states. The lender doesn’t offer HELOCs at all. For Discover home equity loans, amounts range from $35,000 to $300,000. Additionally, you can borrow up to 90% of your home’s value. Discover offers repayment periods between five, 10, 15, 20 and 30 years.
The lender charges no origination fees, application fees, appraisal fees or mortgage taxes
You can apply for a home equity loan from Discover online or over the phone. The application process takes approximately six to eight weeks in total, according to Discover’s website. Discover offers customer service over the phone and via email.
Our take: We like that Discover has no fees or closing costs attached to its home equity loans. Discover’s nationwide availability for its home equity loans and good price transparency also stood out to us.
Read our full lender review here.
- No fees or closing costs
- Home equity loans are available in 48 states
- Limited customer service options available
- Home equity loans not available in Iowa and Maryland
- Doesn’t offer HELOCs
- Home equity loan APR: 6.25% for 1st liens, 7.49% for 2nd liens
- Loan amount: $35,000 to $300,000
- Loan terms: Five, 10, 15, 20 or 30 years
- Maximum LTV ratio: 90%
BMO Harris
BMO Harris products and services are available in 48 states (all but New York and Texas). BMO Harris offers home equity loans and three variations of a HELOC. Loan amounts for home equity loans start at $5,000 and repayment periods range from five to 20 years.
You can borrow up to 89.99% of your home with most BMO Harris home equity loans. However, a 100% maximum CLTV -- the ratio of all secured loans on a home to the value of home -- option is available for low-to-moderate income borrowers or Low to Moderate Income Census Tract customers who need to make home improvements.
Low to Moderate Income Census Tract customers must live in areas where 50% of households have incomes below 60% of the area median income, or have a poverty rate of 25% or more.
There’s no application fee for a home equity loan or HELOC with BMO Harris. The lender will also pay closing costs for loans secured by an owner-occupied one- to four-family residence. If you enroll in autopay with a BMO Harris checking account, you’ll be eligible for a 0.50% rate discount.
You can apply for a home equity loan or HELOC online or in-person, but in order to get personalized rates, you’ll have to speak with a representative on the phone. Getting personalized rates doesn’t require a hard credit check.
Our take: BMO Harris ranks highly on our list because of its high loan-to-value ratio options and nationwide availability. But the lender falls short on price transparency. The online application requires your social security number and is less streamlined than its competitors.
Read our full lender review here.
- Available in 48 states
- No hard credit check required
- Option for 100% combined loan-to-value, or CLTV ratio for borrowers who meet certain qualifications
- Flexible product offerings
- Limited customer service options
- Can only receive personalized rates on the phone
- Online application has elements that may be confusing to customers
- Home equity loan APR: From 8.04% (0.50% autopay discount not included)
- Loan amount: From $25,000
- Loan terms: Five to 20 years
- Maximum LTV ratio: Not specified
What is a home equity loan?
A home equity loan offers you a one-time lump sum of cash, which you’ll pay back over the life of the loan. Borrowing with a home equity loan is similar to taking out a personal loan, except the loan is secured by a collateral: your home. Specifically, you take the difference between what your home is worth and what you owe on your mortgages as collateral. If you default on payments for any reason, you could lose your home.
How much you can borrow with a home equity loan is determined by how much equity you have. Most lenders cap your maximum combined loan-to-value ratio at 85%, but that number will vary from lender to lender.
The money you borrow with a home equity loan can be used for just about anything. However, the most common uses of home equity loans are for home renovation projects, like installing solar panels, or consolidating variable rate debt
Unlike a home equity line of credit, or HELOC, a home equity loan typically has a fixed interest rate. That fixed interest rate means your monthly payment will be constant over the term of your loan.
A home equity loan is best for borrowers who have fixed costs and a defined goal for your money.
Which type of home equity financing is right for you?
Home equity loans and HELOCs are similar, but there are differences. Both are secured loans that allow you to access your home’s equity without changing your primary mortgage’s interest rate. But they differ in how your funds are distributed and the rate at which you pay the loan back.
Home equity loan
When you borrow with a home equity loan, on the other hand, it’s a one-time infusion of cash that you pay back over time. Home equity loans almost always have a fixed interest rate, meaning your monthly payment won’t change as rates bump around.
Home equity line of credit (HELOC)
HELOCs function similarly to credit cards. You can take out money as needed, up to your total line of credit, during your draw period (usually 10 years). After your draw period ends, you’ll enter your repayment period during which you will make payments toward both the interest and principal (how much money you’ve borrowed) on your loan. As is the case with credit cards, there will be a limit on how much you can borrow at once.
The interest rates for a HELOC are often variable, meaning it rises and falls with an index, usually the prime rate. This is something you should always pay attention to, but particularly in today’s rising rate environment.
Alternatives to home equity loans
If a home equity loan doesn’t seem like the right move for you, there are other financing options to explore.
HELOC
There are a handful of alternatives to home equity loans, but the most obvious one is a HELOC. A HELOC offers you a revolving line of credit against the equity you’ve built in your home. A HELOC is a good choice if you’re unsure of how much money you need, or you need access to an on-going, low-rate source of cash over a period of months or years
Personal loan
Personal loans tend to have higher interest rates than home equity loans, but they come with less risk because you don’t have to put your home up as collateral. When you take out a personal loan, you receive a one-time cash infusion that you pay back over the life of the loan.
If the risk of a secured loan is not worth it to you, a personal loan may be a better fit for your borrowing needs.
Cash-out refinance
Unlike a home equity loan or HELOC, a cash-out refinance replaces your existing mortgage with a new mortgage. Ideally, that new mortgage has more favorable terms -- namely a lower interest rate. A cash-out refinance provides you with a sum of cash that is then added back onto the balance of your new mortgage.
A cash-out refinance can work well for someone who wants to get upfront cash while changing their mortgage terms.
How to get a home equity loan
The steps to apply for a home equity loan are similar to applying for a mortgage.
- Interview multiple lenders to determine which lender can offer the lowest rates and fees. The more companies you speak with, the better your chances of finding the most favorable terms
- Have at least 15% to 20% equity in your home. Almost all lenders will require you to have at least 15% to 20% equity in your home before considering you for a home equity loan. If you do, lenders will then take into account your credit score, income and current DTI to determine whether or not you qualify as well as your interest rate.
- Be prepared to have financial documents at the ready, such as pay stubs and Form W-2s. Proof of ownership and the appraised value of your home will also be necessary.
- Close on your loan. Once you submit your application, the final step is closing on your loan. In some states, you’ll have to do this in person at a physical branch.
Requirements for a home equity loan
Although it varies by lender, to qualify for a home equity loan you’re typically required to meet the following criteria:
- Have at least 15% to 20% equity built up in your home: Home equity is the amount of home you own. Subtract what you owe on your mortgage and other loans from the current appraised value of your house to get that number.
- Adequate, verifiable income and stable employment: Proof of income is a standard requirement to qualify for a home equity loan. Check your lender’s website to see what forms and paperwork you will need to submit along with your application.
- A minimum credit score of 620: Lenders use your credit score to determine the likelihood that you’ll repay the loan on time. Having a strong credit score -- at least 700 -- will help you qualify for a lower interest rate and more amenable loan terms.
- A debt-to-income ratio of 43% or less: Divide your total monthly debts by your gross monthly income to get your DTI. Like your credit score, your DTI helps lenders determine your capacity to make consistent payments toward your loan. Some lenders prefer a DTI or 36% or less.
How to find the best home equity lender
You don’t need to get your home equity loan from the same lender through which you have your mortgage, though it may make sense to do so. Shopping for a different lender can help you secure a lower interest rate.
However, the rate a lender advertises may not be the rate you qualify for. Your exact interest rate will depend on multiple factors, including your DTI ratio, LTV ratio and loan amount. The lowest rates are generally reserved for borrowers with a good credit score and clean credit history.
It’s crucial to take the time and effort to shop around and compare offers. Be sure to ask questions up front to understand what rates and fees are associated with your home equity loan.
“Seek lenders that make you feel comfortable and informed with the home equity loan process,” says Rob Cook, vice president of marketing, digital and analytics for Discover Home Loans. “Look at what tools a lender makes available to borrowers to help inform their decision.”
Be sure to consider the lenders’ APRs in addition to interest rates to get an idea of the true rate you are paying with fees included. Terms and fees vary between lenders, so what you want is a true apples-to-apples comparison.
“Costs and fees are an important consideration for anyone who is looking for a loan. Homeowners should understand any upfront or ongoing fees applicable to their loan options,” Cook advises. “They should also look for prepayment penalties that might be associated with paying-off their loan early.”
Other factors to consider when comparing lenders include how convenient the application process is, if there are any local branches available to you, the lender’s customer support options and whether there are any rate discounts available -- like a discount for setting up automatic payments.
The bottom line
A home equity loan allows you to leverage your home’s equity without disturbing your primary mortgage rate. It’s crucial to shop around and compare lenders in order to find one that offers the best rate and most amenable loan terms for your needs. In addition to interest rates, consider a lender’s APR, rate discounts, application process and any costs or fees associated with the loan.
FAQ
Is it a good idea to borrow from your home’s equity?
Whether through a home equity loan, HELOC or cash-out refinance, borrowing from your home’s equity can be a good way to access large amounts of cash at relatively low interest rates compared with credit cards and personal loans. But it’s not without risks. Because your house acts as collateral for the loan, you could lose your home if you fall behind on payments. That’s why it’s important to only borrow what you can afford to pay off. What’s more, avoid borrowing against the equity of your home for nonessential expenses such as a vacation, wedding or luxury purchase.
How much can you borrow with a home equity loan?
That mainly depends on how much equity you have in your house. Exact requirements vary by lender, but most home equity loan lenders limit your loan-to-value, or LTV, ratio to 85% or under. This means that the total value of the home equity loan you’re seeking, plus the outstanding loan balance on your primary mortgage, can’t exceed 85% of your home’s appraised value.
For example, if you have a house worth $300,000 and a $100,000 mortgage balance, the maximum amount you can borrow with a home equity loan would be $155,000 (assuming a maximum LTV of 85%).
What credit score do you need to get a home equity loan?
When deciding whether to grant you a home equity loan, lenders look at multiple factors: your credit score and credit report, your debt-to-income ratio, your monthly income, and how much equity you have in your home, among other things. Each lender also has its own unique underwriting requirements. But in general, you’ll want a credit score of at least 620 to have the best chance of getting a home equity loan. Keep in mind that your creditworthiness can also affect the interest rate you get. The lowest advertised rates are usually reserved for the most creditworthy borrowers.
Methodology
We evaluated a range of lenders based on factors such as interest rates, APRs and fees, how long the draw and repayment periods are, and what types and variety of loans are offered. We also took into account factors that impact the user experience such as how easy it is to apply for a loan online and whether physical lender locations exist.
