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Bankrate's ranking of the best home equity loan lenders compares interest rates, fees, terms and more to help you start your search for a loan. The resources below also serve as a starting point for learning about how home equity works and when a home equity loan is a good option.
A home equity loan is a lump-sum loan that’s secured by the equity in your home. Because they are secured, they can have repayment terms of up to 30 years and fixed interest rates of an average of five percent. If you have good credit, you may be able to get an even lower rate.
Home equity loans can be used for nearly any purpose. You’ll typically need at least 15 percent to 20 percent equity in your home to qualify for a home equity loan. If you are interested in this type of loan for paying high-interest debt, financing home renovations or another purpose, learning what the options are and what current rates are can help you find the best option for your situation.
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Home Equity Loan: A loan that lets you borrow against the value of your home, with funds delivered as a lump sum.
Cash-out refinancing replaces your current home loan with a bigger mortgage, allowing you to take advantage of the equity you've built up in your home and access the difference between the two mortgages (your current one and the new one) in cash.
Borrow $35K-$300K with a low FIXED rate and ZERO application or origination fees. Apply online.
Answer some questions about your home equity needs to help us find the right lenders for you.
See competitive home equity rates from lenders that match your criteria and compare your offers side by side.
After selecting your top options, connect with lenders online or by phone. Next, choose a lender, finalize your details and lock your rate in.
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Bankrate analyzes loans to compare interest rates, fees, accessibility, online tools, repayment terms and funding speed to help readers feel confident in their financial decisions. Our meticulous research done by loan experts identifies both advantages and disadvantages to the best lenders.
When shopping for a home equity loan, look for a competitive interest rate, repayment terms that meet your needs and minimal fees. Loan details presented here are current as of the publication date. Check the lenders’ websites to see if there is more recent information. The top lenders listed below are selected based on factors such as APR, loan amounts, fees, credit requirements and broad availability.
|LOAN TYPE||BORROWER||FIXED INTEREST RATE|
|Home equity loan||6.81%||3.25%–7.94%|
|10-year fixed home equity loan||6.88%||3.50%–7.94%|
|15-year fixed home equity loan||6.90%||3.75%–8.04%|
The best home equity loan lenders offer a variety of repayment terms, low interest rates and few fees. Each lender will evaluate your eligibility differently, so shopping around can help you find the best offer. Your rate will depend on your credit score, income, home equity and more, with the lowest rates going to the most creditworthy borrowers.
|LOAN TYPE||LOAN AMOUNT||LOAN TERM||APR RANGE||BEST FOR|
|Discover||$35,000–$300,000||10 to 30 years||3.49%–11.99%||Low rates|
|BMO Harris Bank||$25,000–$150,000||5 to 20 years||Starting at 4.24% (with autopay)||Different loan options|
|KeyBank||$25,000–$250,000||1 to 30 years||Starting at 2.10% (with client discount)||Homeowners with limited equity|
|Spring EQ||Up to $500,000||Not specified||Starting at 5.205%||Fast funding|
|Flagstar Bank||$10,000–$500,000||10 to 20 years||Starting at 6.53% (with autopay)||Flexible loan terms|
|U.S. Bank||$15,000–$750,000||Up to 30 years||Starting at 3.8% (with autopay)||Low fees at a national bank|
|Third Federal||$10,000–$200,000||5 to 20 years||Starting at 3.29%||Customer service|
|Frost||Starting at $2,000||7 to 20 years||Starting at 4.49% (with autopay)||Low fees at a regional bank|
|Connexus Credit Union||Starting at $5,000||5 to 20 years||Starting at 3.49%||Branch network|
|Regions Bank||$10,000–$250,000||7 to 20 years||3.00% (with autopay)||Customer experiences|
A home equity loan is a lump sum that you borrow against the equity you’ve built in your home. Most lenders will let you borrow up to 80 percent to 85 percent of your home’s equity, that is, the value of your home minus the amount you still owe on the mortgage.
These loans have fixed interest rates and typical repayment periods between five and 30 years. Because your home serves as the collateral for a home equity loan, a lender can foreclose on it if you fail to make the payments.
Home equity loans are available at many banks, credit unions and online lenders. You may use these funds for a range of purposes, including debt consolidation, home improvement projects or higher education costs. The amount you can borrow depends on how much equity you have, your financial situation and other factors.
After reviewing your application and checking your credit, the lender will tell you how much you can borrow, your interest rate, your monthly payment, your loan term and any fees involved. Once you agree to the loan terms, the financial institution will disburse funds as one lump sum. You then repay the loan over time in fixed monthly payments.
You can calculate how much equity you may be able to borrow by dividing the amount you owe by the value of your home.
For example, say you owe $200,000 on a home worth $400,000. That’s $200,000 / $400,000 = 0.50 or 50 percent loan to value (LTV). This means that you have 50 percent equity in your home. Compare that number to your lender’s maximum LTV ratio to see if you might qualify for a home equity loan.
Next, calculate how much you may borrow by multiplying your home's value by the lender's maximum LTV and subtracting your mortgage balance.
Say your lender allows you to borrow up to 85 percent of your home's value. In this example, that would be $400,000 x 0.85 = $340,000. From there, you would subtract your mortgage balance: $340,000 - $200,000 = $140,000 as the maximum amount you may be eligible to borrow.
While home equity loans can be used for almost anything, taking out a loan for something you can pay for another way or don't need can be expensive in the long run. For that reason, financial experts generally advise being careful with what you use loan money for.
Some of the best uses to make the most of your loan include:
Home equity loans are best suited for people who know how much they need for a given project, as the funds are distributed in one lump sum. Additionally, they’re a good option for those who want to use the funds for home improvements because the interest borrowers pay is tax deductible if the money is used for renovations.
Conversely, if you use home equity loan funds for any reason aside from substantial home improvements, such as paying off student debt or consolidating credit card bills, the mortgage interest is no longer deductible under the tax law.
Another benefit of home equity loans is that they have competitive interest rates, which are usually much lower than those of personal loans and cash-out refinances. Compare lenders’ rates for the best deal available.
However, if you need money quickly, a home equity loan may not be the way to go. It can take longer to receive the funds from a home equity loan than a personal loan. Additionally, you may be subject to expensive closing costs.
Lower interest rates than those of unsecured debt such as credit cards or personal loans.
High borrowing limits.
Fixed monthly payments.
Interest may be tax deductible.
Potentially expensive closing costs.
Risk of losing your home if you are unable to make the payment or ending up underwater on your mortgage if the home value drops.
Longer funding timeline than that of personal loans.
Prepare for a home equity loan application by checking your credit, calculating your home equity and taking stock of how much other debt you already have. Many lenders let you start the application process online by entering your personal and financial information.
The documents and information you’ll typically need to apply for a home equity loan include:
Depending on the lender, borrowers may pay various fees either at closing or throughout the life of the loan. These add to your overall costs, so understand what you’ll pay before signing for a home equity loan. Some common costs include:
Additionally, you may have to pay for title insurance, property insurance, flood insurance or certain taxes depending on the lender, the home’s location, your state laws or other factors
If you have poor credit, you may have a harder time getting approved for a loan, but it is still possible. If you're interested in applying for a bad-credit home equity loan, the first step is to shop around with a few lenders. Since each lender has its own requirements, it's possible one lender will be more accepting of poor credit scores and offer better rates than a similar lender.
Generally, you'll have to meet the following criteria to qualify for a home equity loan:
If you don't meet the requirements, you may want to consider getting a co-signer to increase your chances of approval.
As the economy has started to recover from the COVID 19 pandemic, the Federal Reserve has had to raise interest rates to combat inflation. It is likely that these rates will continue to rise in the coming months.
This decision from the Fed has led to rising mortgage rates, which directly impacts rising home equity rates. Because home equity loans typically have fixed rates, it is a good idea to lock in a rate sooner rather than later to avoid higher costs if rates continue to rise.
A variety of lenders offer home equity loans that let you borrow against your home’s value. Most are fixed-rate loans, which protect you against payment hikes because the interest rate and monthly payment remain the same over the life of the loan. However, some lenders offer better loan terms, lower rates or fewer fees.
Current home equity loan rates range between 3 percent and 12 percent, depending on the lender, loan amount and creditworthiness of the borrower. Our list of the best home equity loans for 2022 can help you decide which loan might work best for your needs.
Overview: Discover is well known for its rewards credit cards, but this national bank also offers a full lineup of banking services, such as checking and savings accounts, personal loans and student loans. We chose this bank as the best for low rates because of its national reach (Discover is available in all 50 states and Washington, D.C.) and low rates.
Why Discover is the best home equity loan for low rates: Its APRs start at 3.49 percent, which is 1.21 percentage points below the average home equity loan rate as of late June 23, 2021. That’s also lower than six of the other lenders profiled on this page.
Perks: Discover’s home equity loans allow you to borrow up to $300,000 against your home equity. You can choose a loan term of 10, 15, 20 or 30 years. Plus, borrowers won’t pay origination fees, application fees, home valuation fees or cash at closing. It’s a solid option that’s available to most borrowers across the country.
What to watch out for: The best rates go to customers with excellent credit, so if your credit score needs work, you may want to look elsewhere. Also, borrowers who pay their loans off within 36 months may have to repay closing costs covered by Discover (max $500).
Overview: BMO Harris Bank has more than 600 branches spread across Arizona, Florida, Illinois, Indiana, Kansas, Minnesota, Missouri and Wisconsin, but customers nationwide can access BMO’s online banking resources. Its home equity loans come with low loan minimums, few fees and a variety of term options.
Why BMO Harris Bank is the best home equity loan for different loan options: Loan amounts range from $25,000 to $150,000, with terms of five to 20 years. With so many ways to tailor your loan to your needs, a home equity loan from BMO Harris can be ideal for just about any financial need.
Perks: Borrowers have plenty of options when it comes to loan terms and amounts on BMO’s home equity loans. Plus, there are no application fees and you get a 0.5 percent discount when you set up autopay with a BMO Harris checking account.
What to watch out for: You can start your application online, but you may have to speak with a banker to get final approval.
Overview: You can borrow up to 90 percent of your home’s value with rates as low as 2.32 percent APR in some states. KeyBank’s terms are also flexible — lasting up to 30 years — making this bank a solid choice.
Why KeyBank is the best home equity loan for homeowners with limited equity: When you don’t have a lot of equity in your home, it can be difficult to find a lender willing to extend you credit. Fortunately, KeyBank lets you borrow up to 90 percent of your home’s value in a first and second mortgage if you qualify.
Perks: You can get a 0.25 percent rate discount if you have a KeyBank checking account and a KeyBank savings account.
What to watch out for: As a regional financial institution, KeyBank offers home equity loans in only 15 states. Plus, a $295 origination fee applies, and you may have to pay for title insurance, closing fees and mortgage taxes. KeyBank’s loan details vary by location; the information here applies to the 80013 zip code.
Overview: If you have an average credit score and you’ve built equity in your home, Spring EQ can help you tap into that equity with flexible loan terms to fit most borrower profiles.
Why Spring EQ is the best home equity loan for fast funding: If you’re approved for a home equity loan, you could get your loan funds in as few as 11 days once Spring EQ receives your required documents.
Perks: You can borrow as much as 90 percent of your home equity at rates starting at 5.205 percent APR. Spring EQ’s minimum credit score is 680, and its maximum DTI ratio is 50 percent, which is a draw for people with tight finances. Plus, applicants typically aren’t required to provide proof of assets.
What to watch out for: Self-employed borrowers may need to provide more proof of income. Additionally, the option to borrow 90 percent of your home's value requires you to have a credit score of at least 740.
Overview: Established in 1987 and with 150 branches spread across California, Indiana, Michigan, Ohio and Wisconsin, Flagstar Bank consistently gets high marks for customer satisfaction and offers a full lineup of banking services. APRs start at 6.53 percent in some states.
Why Flagstar Bank is the best home equity loan for flexible loan terms: Terms range from 10 to 20 years on loans from $10,000 to $500,000.
Perks: Flagstar gives borrowers a 0.25 percent rate discount for making automatic payments.
What to watch out for: Flagstar’s home equity loans are available only in bank branches. It’s a good bet if you can meet qualifications and live near a branch; otherwise, you may need to look elsewhere. Additionally, loan details vary by location — loan details presented here are based on the 49546 ZIP code.
Overview: With roots that trace back to 1863, U.S. Bank is now the fifth-largest bank by assets in the country, with about 3,000 branch locations in 27 states. It’s a solid option for low fees at a nationwide lender.
Why U.S. Bank is the best home equity loan for low fees at a national bank: There are no closing costs on U.S. Bank’s home equity loans, which could save you thousands of dollars.
Perks: U.S. Bank offers rates starting at 3.8 percent APR on 10- and 15-year home equity loans. These low rates include a 0.5 percent discount for those who make automatic payments from U.S. Bank checking or savings accounts.
What to watch out for: U.S. Bank tends to have stricter credit requirements, so the best interest rates go to people with credit scores around 730 or higher. If your credit needs work or the loan terms don’t fit your needs, you might want to try another lender.
Overview: Third Federal (ThirdFed) offers a wide array of banking and financial products, including home equity loans and lines of credit, mortgages and deposit accounts. The bank is known for its dedication to helping customers achieve their financial goals through offering low rates and little fees.
Why ThirdFed is the best home equity loan for customer service: The bank scores an impressive A- on the Better Business Bureau and is known for providing its customers with helpful tools, like a mobile app and home equity calculators.
Perks: If you qualify for a lower rate with a different lender or competitor, you may be eligible for a rate match or $1,000. Additionally, you can choose between fixed-rate or adjustable-rate terms.
What to watch out for: It doesn't disclose eligibility requirements like a minimum credit score or income amount before you apply. Plus, in order to qualify, you must have at least 20 percent equity in your home.
Overview: Established in 1868 and with 130 branches spread across Texas, Frost is a full-service bank that offers checking and saving accounts, personal loans, insurance, investment products and more. Frost’s customer service is also consistently highly rated.
Why Frost is the best home equity loan for low fees at a regional bank: Frost doesn’t charge prepayment penalties, application fees or annual fees on its home equity loans, and there are no closing costs on loans from $2,000 to $500,000.
Perks: Frost is a great option if you live in the Lone Star State. It’s a good fit for people who just need to borrow a small amount, as loans range from as little as $2,000 to $500,000 or more. Frost offers a 0.25 percent discount for those who set up an automatic payment from a Frost checking or savings account.
What to watch out for: This bank only has branches in Texas, so if you’re looking for in-person service and live elsewhere, you'll need to look to a different lender.
Overview: Established in 1935, Connexus offers auto loans, personal loans, student loans, credit cards, banking products and more. Connexus’ home equity loan rates are on par with those of other financial institutions on this list, starting as low as 3.49 percent APR.
Why Connexus Credit Union is the best home equity loan for a branch network: While some banks and credit unions are localized in one state or region, Connexus serves all 50 states through a co-op shared branch network of more than 6,000 locations throughout the U.S.
Perks: Borrowers can bank in person or apply for home equity loans online or by phone. You’ll have to join the credit union, but membership options are flexible enough that just about anyone can find a way to join.
What to watch out for: Borrowers won’t pay an annual fee but will be responsible for closing costs that can range from $175 to $2,000, depending on the property location and loan terms.
Overview: Established in 1971 and with a presence in 15 states, Regions offers a full lineup of personal banking services, including checking and savings accounts, credit cards, mortgages, student loans, personal loans, auto loans and home equity loans and lines of credit.
Why Regions Bank is the best home equity loan for customer experience: Regions Bank made our list because it consistently earns high marks from various consumer rating agencies.
Perks: Home equity loans come with low interest rates, no annual fee, flexible repayment terms and no closing costs. Borrowers may also qualify for a rate discount by setting up autopay from a Regions Bank checking account.
What to watch out for: The property securing your home equity loan will have to be located in a state where Regions has a branch, and you’ll need to close on the loan at a branch location. You’ll need at least $10,000 in equity. Additionally, borrowers are on the hook for a few fees, including late fees of 5 percent (with a minimum of $29 and a maximum of $100 in most states). There’s also a returned check fee of $15 for all states.
To select the top lenders that offer home equity loans, Bankrate considered 15 factors that help consumers decide whether a lender is a good fit for them, such as minimum APR and maximum combined loan-to-value ratio. We sought lenders with low fees and a range of loan amounts for borrowers with varying budgets and credit profiles. We also looked for conveniences like online applications and fast funding.
Of the 34 lenders reviewed, 10 made Bankrate's list of best home equity loans. Each lender has a Bankrate rating, which consists of three categories. These categories include:
Home equity loans and home equity lines of credit (HELOCs) are both loans backed by the equity in your home. However, while a home equity loan has a fixed interest rate and disburses funds in a lump sum, a HELOC lets you make draws with variable interest rates, like a credit card.
Generally speaking, if you're planning on making multiple home improvement projects over an extended period of time, a HELOC may be the better option for you. If you're thinking about consolidating high-interest credit card debt or doing a larger home improvement project that would require all of the funds upfront, a home equity loan may be the best option.
Because home equity loans and HELOCs both use your home as collateral, they are both viable options if you have poor credit — it will likely be easier to qualify for a home equity product than, say, an unsecured personal loan.
However, it's still important to consider which option is right for your financial situation, especially if your poor credit is a result of missed payments. If you know that you would benefit from a structured monthly budget, a home equity loan is the right option. If you would rather focus on keeping your debt low, a HELOC will allow you to take out only as much as you need and pay it back on a more flexible timeline.
If you've shopped around at different lenders, have considered getting a co-signer and still aren't sure if you'll get approved due to your credit score, you still have options. Consider why you're interested in taking out a loan. Do you need the funds immediately? Will this help you or hurt you in the long run by racking up more debt?
If you're having trouble getting approved, take some time to improve your credit score. It's also important to decide how a loan could impact your credit score in the future because you'll be taking on more debt with both a home equity loan and a HELOC.
Home equity is the stake you have in your property, as opposed to the lender's stake. To calculate your home equity, subtract your current mortgage balance from the appraised value of your home. Over time, you build up equity in your home as you make payments on your mortgage. Home equity is one way to measure your personal wealth because you can borrow from your home equity in the form of loans or lines of credit.
You’ll need a substantial amount of equity in your home to qualify for a home equity loan. A home equity calculator can help you figure out how much you can borrow.
A home equity loan is an installment loan based on the equity of the borrower's home. Most home equity lenders allow you to borrow a certain percentage of your home equity, typically up to 85 percent. Unlike with a HELOC, you receive all of the money upfront and then make equal monthly payments of principal and interest for the life of the loan (similar to a mortgage).
A variety of banks and credit unions offer home equity loans. If you have an existing relationship with a bank, it may be best to start your search there, but it’s always a good idea to shop around with a few lenders to compare rates, fees and loan terms.
A good way to do this is by taking advantage of prequalification forms, which let you see your potential rates and eligibility with a lender without impacting your credit score.
A home equity loan may be a good option if you've been planning a large home renovation or if you need to consolidate debt and you spot a good rate. If you’ve been considering a home equity loan, now is the time to lock in your rate. Rates are lower than historical benchmarks, but many banks have tightened approvals, and some have even temporarily suspended their home equity products.
Many lenders have fixed LTV ratio requirements for their home equity loans, meaning you'll need to have a certain amount of equity in your home to qualify. Lenders will also factor in your credit score and income when determining your rate and eligibility.
Minimum requirements generally include a credit score of 620 or higher, a maximum loan-to-value ratio of 80 percent or 85 percent and a documented source of income.
Home equity loan rates are typically higher than mortgage rates because home equity loans are considered second mortgages. In the event of a foreclosure, the lender of a second mortgage will be paid only after the lender of the first mortgage has been paid in full. To make up for this risk, lenders offering second mortgages will charge higher interest rates.
Unlike other loans, such as personal loans, home equity loans must go through a closing period. During this period, all home equity loans are legally subject to a three-day cancellation rule, which states that you have the right to cancel your home equity loan until midnight of the third business day after you sign your contract. Changes to the contract, as well as funds disbursement, cannot occur during this time.
Home equity loans and cash-out mortgage refinances are both potential ways to get money for home renovations or unexpected expenses. That said, both options have their pros and cons.
While a home equity loan is a "second mortgage" that allows you to borrow additional funds for nearly any purpose, a cash-out refinance replaces your existing mortgage. With a cash-out refinance, you'll take out a new mortgage for more than your outstanding loan balance, and then withdraw the difference in cash. Because of this, a home equity loan is typically best if you already have a good rate and terms on your current mortgage. A cash-out refinance only makes sense if you can qualify for a better interest rate on your mortgage and you don't mind resetting your repayment term.
Because home equity loans typically require appraisals, it can take longer to get a home equity loan than a personal loan. From application to funds disbursement, the process typically takes two to four weeks — although some new online lenders are trying to shorten that process.
The exact amount you can borrow varies depending on the lender, but you can generally borrow up to 80 or 85 percent of your home’s appraised value.
A home equity loan is not the right choice for every borrower. Depending on what you need the money for, one of these options may be a better fit: