Best Home Equity Loans of 2021

A home equity loan allows you to tap the equity built up in your house to pay for renovations, college expenses or other large purchases. For almost any need or when you want to consolidate high-interest debt, a home equity loan may be a good choice. But before you borrow, pause to learn more about home equity loans compare home equity lenders to find the best match.

What Are the Best Home Equity Loans?

PNC Bank

3% Min. Down Payment
Not disclosed Min. Credit Score


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3% Min. Down Payment
Not disclosed Min. Credit Score

Best online bank for customer service

Ally Bank is a Detroit-based online bank. Ally offers traditional banking products services, such as conventional mortgages, as well as refinance loans jumbo home loans.

Before You Apply

  • Mortgage types: fixed rate, ARM, home equity loans, refinancing, HomeReady for first-time homebuyers
  • Minimum FICO credit score: 620
  • Maximum loan amount: $4 million
  • Better Business Bureau rating: A+

Best Features

  • A program is available for first-time homebuyers.

  • Existing Ally customers can get a closing cost discount.

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Best for large loan amounts

Bank of America serves roughly 66 million customers in all 50 states. The lender offers conventional, Federal Housing Administration, Department of Veterans Affairs jumbo loans, as well as home equity lines of credit mortgage refinancing.

Before You Apply

  • Mortgage types: fixed rate, Affordable Loan Solution, FHA, VA, ARM, home equity line of credit, fixed-rate refinancing, FHA refinancing, VA refinancing, cash-out refinancing, adjustable-rate refinancing, jumbo
  • Minimum FICO credit score: Not disclosed
  • Maximum loan amount: $2.5 million
  • Better Business Bureau rating: A+

Best Features

  • Bank of America has a wide variety of mortgage products.

  • The lender offers origination fee discounts for qualifying Bank of America Merrill Lynch clients.

  • Home equity lines of credit have no annual, application or cash advance fees or closing costs.

  • Bank of America offers a first-time homebuyer program.

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Best for low down payment

PNC Bank is one of the largest U.S. banks, serving more than 8 million customers in all 50 states. PNC offers most types of mortgages.

Before You Apply

  • Mortgage types: fixed rate, FHA, VA, USDA, ARM, home equity line of credit, refinancing, medical professional mortgage program, jumbo, PNC Community
  • Minimum FICO credit score: Not disclosed
  • Maximum loan amount: $5 million
  • Better Business Bureau rating: A+

Best Features

  • Multiple types of mortgages are available.

  • Some mortgage options require no or low down payments.

  • PNC supplies an online home ownership cost tool.

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Best for no down payment

Alliant Credit Union is a nonprofit financial cooperative. The credit union serves customers in all 50 states. Mortgage products include conventional, jumbo refinancing loans, home equity lines of credit.

Before You Apply

  • Mortgage types: Traditional, ARM, refinancing, home equity line of credit, Alliant Advantage Mortgage
  • Minimum FICO credit score: 620
  • Maximum loan amount: $2.5 million
  • Better Business Bureau rating: A+

Best Features

  • No-down-payment mortgages are available for first-time homebuyers with excellent credit.

  • Mortgages are available to borrowers with FICO credit scores as low as 620.

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Best for fair credit

Flagstar offers banking lending products in every state. Borrowers can select from conventional or government-backed mortgages, such as FHA, VA U.S. Department of Agriculture loans, opt for adjustable-rate mortgages. Other choices include home equity loans lines of credit.

Before You Apply

  • Mortgage types: conventional, VA, ARM, FHA, USDA, jumbo, refinance, home equity
  • Minimum FICO credit score: Not disclosed
  • Maximum loan amount: $3 million
  • Better Business Bureau rating: A+

Best Features

  • Flagstar Bank provides a broad selection of mortgages home equity loans.

  • Some mortgages require no or a low down payment.

  • Borrowers can apply for loans online.

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Best for conventional mortgage

Citizens Bank is a regional bank based in Providence, Rhode Island. It offers traditional banking services products, including home loans mortgage refinance loans.

Before You Apply

  • Mortgage types: conventional, ARM, refinance, HELOC, jumbo, fixed rate
  • Minimum FICO credit score: undisclosed
  • Maximum loan amount: undisclosed
  • Better Business Bureau rating: A+

Best Features

  • Citizens Bank provides a homebuying service with rewards for borrowers in select states.

  • Homebuyers can get an interest rate discount for qualifying automatic payments.

  • Borrowers can apply online.

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Best for low APR

New American Funding is a national mortgage lender with a variety of home loan options. The lender has processed more than $27 billion in mortgages.

Before You Apply

  • Mortgage types: ARM, cash-out refinance, conventional, FHA, HELOCs, jumbo, reverse, USDA VA
  • Minimum FICO credit score: 620
  • Maximum loan amount: $3 million
  • Better Business Bureau rating: A+

Best Features

  • Provides multiple mortgage options, including low no down-payment loans

  • Offers fixed- or adjustable-rate mortgages

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Best for low down payment

Spring EQ is a Philadelphia-based home equity lender. Home equity loans are available in more than 30 states the District of Columbia, Spring EQ has plans to expinto more.


  • Mortgage types offered: Home Equity
  • Minimum FICO score: N/A
  • Max LTV: 100%
  • Max DTI: N/A
  • Closing costs: N/A
  • Equity required: N/A
  • J.D. Power satisfaction rating: N/A

Best Features

  • Loan limits ranging from $20,000 to $250,000.

  • Reduced fees for loans more than $80,000.

  • Loan funding in as little 14 days.

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Best for fair credit

Guaranteed Rate has served millions of Americans since 2000 with more than $150 billion in loan volume. This lender has no minimum loan amount.


  • Minimum FICO score: 580 (FHA)
  • Maximum debt-to-income ratio: N/A
  • Loan amounts: No minimum
  • Total closing costs: Varies
  • J.D. Power overall satisfaction rating: Two out of five

Best Features

  • Provides qualifying borrowers with a 10-minute closing process.

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What Is a Home Equity Loan?

A home equity loan, sometimes called a second mortgage, allows you to borrow against the equity in your home uses your property to secure the loan. You get a lump sum, the loan typically has a fixed interest rate a repayment term of five to 30 years.

Equity is the market value of your home minus what you owe on your mortgage. You can usually borrow up to 85% of your home’s equity. If you have $100,000 in equity, you may be able to borrow $85,000.

Another way to access your home equity is through a home equity line of credit, or HELOC. A HELOC works like a credit card. You get a revolving line of credit, you can borrow as little or as much as you need, up to the credit limit.

HELOCs generally have variable interest rates, meaning your monthly payments can fluctuate. You can use your line of credit during what is called the draw period, which can last up to 10 years, you’re only required to pay interest.

The loan then enters repayment, you may owe a balloon payment or get 10 to 20 years to pay off your balance. Make sure you ask about conditions for renewing or refinancing if necessary.

You will want to look at HELOCs home equity loans work with your lender to make the right choice. Both have pros cons, including the risk of foreclosure if you fail to pay.

Where Can You Get a Home Equity Loan?

Many lenders offer home equity loans. You can get a home equity loan from a bank, a credit union or an online lender.

You may want to obtain a home equity loan from the same lender you used for your first mortgage. Your lender could get more favorable terms because you have a relationship.

What Are the Benefits of Home Equity Loans?

Here are some features of home equity loans that can make them a good idea:

  • You’ll pay a fixed interest rate. Whether interest rates rise or fall, your monthly payment on a home equity loan will remain the same.
  • You’ll pay lower interest rates than on personal loans or credit cards. That’s because your home acts as collateral for the loan.
  • Your interest payments may be tax deductible. If you “buy, build or substantially improve” the home that secures the loan, according to the IRS, you may qualify to deduct your interest payments.
  • You will receive one lump sum. This gives you flexibility to cover large expenses repay over a fixed term in equal monthly installments. You can use the money for almost any purpose, such as renovating a kitchen or paying for a wedding.

What Are the Downsides of Home Equity Loans?

Home equity loans aren’t without risks or drawbacks. These are the main ones:

  • You’ll pay interest on the entire loan amount, even if you are using the money incrementally. An example is during a home renovation.
  • You may have less flexibility compared with a HELOC. That’s because you can draw from a HELOC as needed a home equity loan is one lump sum.
  • You could pay higher interest rates than you would for a HELOC. That’s because your rate is fixed will not fluctuate with market conditions.
  • You’ll have to juggle two mortgage payments. If you’re still paying your first mortgage, make sure you can afford the second mortgage payment on top of your other monthly expenses.
  • You risk foreclosure if you fall behind on payments, as with any loan secured by your home.

What Are the Alternatives to Home Equity Loans?

Even though a home equity loan or a HELOC can be a great way to borrow money, it may not be the right fit for everyone. Compare home equity loans to these alternatives:

  1. Cash-out refinancing. A cash-out refinance is when you take out a new home loan for more money than what you owe on your original loan receive the difference in cash.
  2. Reverse mortgage. A reverse mortgage is a loan for homeowners 62 older to convert home equity into cash that can supplement retirement income.
  3. Personal loan. A personal loan allows you to borrow money for just about anything pay it back in fixed amounts.
  4. Debt consolidation loan. A debt consolidation loan combines several high-interest debts into a new loan that can streamline your payments may reduce your interest charges.

How Can You Choose the Best Home Equity Lender?

The best home equity loan for you is one you can get approved for at the best rate with terms you can manage. Here are some factors to compare among home equity lenders:

Eligibility requirements. Research a lender’s minimum credit score debt-to-income ratio criteria, check whether you meet them. If you do, you can prequalify for a home equity loan to get a rate quote.

Loan limits. Decide how much you need to borrow. If you can’t get a big enough loan or meet a minimum loan amount, you will need to choose another lender.

Interest rates. Try to choose a home equity loan with the lowest possible rate.

Fees. Closing costs can amount to 2% to 5% of your loan, you may have to pay other fees. Still, don’t let fees alone be the deciding factor. A lender that charges closing costs but a low rate may cost less in the long run than the opposite.

Home Equity Loans vs. HELOCs

A home equity loan a HELOC are alike in that they are secured by your home, the money can be used however you want the amount you can borrow is usually limited to 85% of your home equity. But there are also distinct differences.

  • Have a fixed interest rate monthly payment, with a repayment schedule of 10 to 30 years.
  • Provide the borrower a lump sum amount.

  • Allow you to withdraw money as needed up to your credit limit, similar to a credit card.
  • Charge a variable interest rate, meaning your monthly loan payments can fluctuate based on the amount you borrow the rate.
  • Provide a borrowing period, or draw period, of up to 10 years for you to reuse repay the credit line.
  • Require at least interest payments during the draw period.
  • Offer repayment plans of five to 30 years the possibility to renew or refinance.

Are Home Equity Loans Worthwhile?

A home equity loan or HELOC can be worthwhile in certain situations, but homeowners should generally try to protect their equity. Home equity loans or HELOCs should not be used for purchases you otherwise couldn’t afford, or you end up putting your house on the line to take a vacation or buy a car.

These types of loans can be a good idea when you use them for improvements that increase your home’s value or in a true financial emergency.

A home equity loan or a HELOC can offer lower interest rates compared with credit cards personal loans. You’ll need to be certain that you can make the payments, however.

This type of loan may be a bad idea if you can’t afford a rate increase or manage the upfront costs. Before you borrow, know how much your rate might adjust figure out how much of an increase you can handle.

Think about your spending habits whether a home equity loan or HELOC could help or hurt your finances. You may be better off keeping debt on your credit cards not touching your home equity.

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where offers appear on the site but do not affect any editorial decisions,
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