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Best Home Equity Loan Companies of 2022

Lashay Lewis | Jan 10, 2023

If you're thinking of using some or all of the equity in your home, there are a few important things to consider. Perhaps the most important is that a home equity loan or a home equity line of credit (HELOC) is a second mortgage against your home, and there can be legal and financial consequences if you fail to keep up your payments on any money you borrow. To help keep your costs as manageable as possible, there are three factors you'll need to carefully consider as you look for a great deal. They are:

  • The loan term

  • The interest rate on the loan

  • Any fees to obtain, maintain or terminate the loan

Longer loan terms can have the lowest monthly payments, but will have higher total interest costs, so it's important to select a term that meets your budget but doesn't cost you more than necessary.

The loan's interest rate plays a key role, too, so shopping around for a lower rate -- or a lower margin for a variable-rate HELOC -- can help keep your payments manageable, too.

Fees to get a home equity loan or home equity line of credit can vary widely; for home equity loan loans, you'll want to ask about closing costs and see if you can get them to be as low as possible. For HELOCS, you may be required to pay them up front, or they may be waived if you keep the line open and in use for a few years. Lines may also be subject to other fees, too, such as non-usage fees or annual fees, so don't forget to ask about them, too.

Below, we show outlines of the terms of some of the best home equity loan lenders we've found.

Lender HSH Rating (?) Ad Disclosure Products Available Line Amounts
Variable Rate Home Equity Line of Credit (HELOC)$25k-$500k line amounts available. Get Free Offer
Fixed Rate Home Equity Line of Credit$15k-$400k line amounts available. Get Free Offer
Discover Home Loans
Fixed Rate Home Equity Loans$35k-$300k loan amounts available. Get Free Offer
US Bank
Fixed Rate Home Equity Loan and Variable Rate Line of Credit AvailableVarious rates and terms available. Get Free Offer
PNC Bank
Fixed Rate Home Equity Loan and Variable Rate Line of Credit AvailableVarious rates and terms available. Get Free Offer


Who is it good for?

Consumers looking for a wide range of borrowing limits. More specifically, those who need to borrow a lot of money.


  • Competitive APR range not exceeding 18% with an introductory low rate of 0.99% for the first six months
  • Flexible borrowing limits ranging from $25,000 to $1 million
  • Ability to switch from a variable to a fixed rate during the draw period


  • Early closure penalty if you close your account within 36 months
  • High minimum credit score requirement of 660 compared to other HELOC lenders
  • No online application process, you’ll need to contact a PenFed agent or visit their branches to get more information

Read Full Review


Who is it good for?

Good credit borrowers seeking a streamlined 100% digital process with fast prequalification and funding in as little as 5 days.


  • Competitive rates with discounts for autopay members of its partner credit union
  • A fully digital transparent process with no hidden fees
  • No application fees, appraisal fees, or ongoing maintenance fees


  • High origination fee of up to 4.99%
  • No in-person support or physical branches to visit
  • New to the market and not yet available nationwide

Read Full Review

Discover Home Loans

Who is it good for?

Borrowers who need under $300,000 in funding and want minimal upfront costs.


  • High loan-to-value ratio of up to 90% of your home's value less what you owe on your mortgage
  • Flexible repayment options with fixed monthly payments
  • Offers on-phone support with loan officers available from 8 a.m to midnight on weekdays


  • High minimum loan amount of $35,000
  • Doesn’t offer purchase loans and home equity lines of credit (HELOCs)
  • Borrower must repay some closing costs if loan paid off within 3 years

Read Full Review

US Bank

Who is it good for?

Customers looking for competitively priced home equity loans from a reputable lender.


  • No closing costs
  • Offers 0.5% interest discount on home equity loans for autopay customers
  • Flexible loan amounts ranging from $15,000 to $750,000


  • Annual fee of $90 for non members
  • Up to $500 early closure fee for loans repaid within 30 months
  • Uneven availability of loan programs in all states for all loan amounts

Read Full Review

PNC Bank

Who is it good for?

Borrowers looking for a low minimum loan amount of as little as $10,000.


  • Offers interest-only payments
  • Provides the flexibility to switch between variable and fixed rates throughout the draw period
  • Gives a 0.25% rate discount for enrolling in automatic payments from a PNC checking account


  • No upfront disclosure of rates, terms, and eligibility requirements
  • Offers only HELOCs, no equity home loan options or cash-out refinance
  • Charges $100 to convert from a variable to a fixed rate

Read Full Review

What Are Some Factors That Will Determine How Much Equity You Can Get From Your Home?


An appraisal is an in-person inspection that is used to evaluate the fair market value of your home based on a number of factors like the current market trend, square footage, the home’s condition, and amenities. The appraisal report will typically include all of these factors to determine the value of your home.

Usually, you can borrow anywhere from 80 to 85 percent of your home’s equity. For example, If your home is appraised at $500,000 and you owe $250,000 this is how you’d calculate your potential loan amount:

Step 1: Calculate your home’s value and multiply it by the percentage of value you can borrow (lenders maximum LTV)

$500,000 x .8 = $400,000 (this is the maximum amount that can be borrowed)

Step 2: Subtract the maximum amount of equity that can be borrowed from your current mortgage balance

$400,000 - $250,000 = $150,000 (this is the total amount you can borrow)

The maximum loan amount that you can borrow will, however, be influenced by factors such as your combined loan-to-value ratio, your credit report, and your debt-to-income (DTI) ratio.

Generally it is the lender who requests the appraisal process and it can cost anywhere from $350 to $450 and can take an average of 7 to 10 days to complete.

If there’s an instance where you feel like there’s incorrect information on your appraisal you can appeal the decision.

If you’re not sure how much equity you might have available, you can use this home equity calculator to get a working estimate.

Debt-to-income Ratio

To determine whether you’re eligible for a loan, lenders use your debt-to-income ratio (DTI), which shows what your monthly debt payments are compared to your monthly income. To qualify for a home equity loan your debt-to-income ratio may need to be under 43%. This is how you calculate your DTI:

  • Add up all of your monthly bills including rent, child support payments, student or car loans, and credit cards

  • Divide your gross monthly income (your income before taxes)

  • The answer you get will be a percentage and will represent your DTI

For example, if your total monthly debt is $2,500 and you earn a gross monthly income of $6,250, your DTI would be 40%, making you eligible for a home equity loan.

Credit Score

Some of the best reverse mortgage companies offer borrowers a variety of loan options making it easier to take on a type of loan that is tailored to your needs. There are three kinds of reverse mortgage loans.

What are the Different Types of Home Equity Loans?

You can get home equity loans from banks, credit unions and online lenders. Here are the three common ways to tap into your home equity:

Traditional home equity loan

A home equity loan is a fixed-rate second mortgage on your home that allows you to access a lump sum amount of money to be repaid over a set term such as 10 or 15 years.

To repay this type of loan, you make fixed monthly payments that include both the principal and interest over the loan's term.

Home equity line of credit (HELOC)

A HELOC is a revolving debt that works like a credit card, in which you borrow the amount of money you need up to a set limit. As you pay it off, your credit is replenished. A HELOC comes with an adjustable interest rate that varies with market rates.

A home equity line of credit has two borrowing and repayment components —the draw period and repayment period. During the draw period, which usually lasts 10 years, your credit line is available for use—you can borrow and often make interest-only payments.

After the draw period, the repayment period commences, which typically lasts 10 to 20 years. During this time you can no longer borrow new funds; instead, you make fully amortizing monthly payments that include both principal and interest.

Cash-out refinance

In a cash-out refinance you pay off your existing mortgage loan with a new, larger loan than you currently owe and receive the difference in cash. A cash-out refinance may be a good option If you want to manage only a single loan and can qualify for an interest rate lower than what you are paying on your existing mortgage.

For instance, say your home’s value is $400,000 with a mortgage balance of $100,000. This gives you tappable equity of $300,000. You can replace your existing $100,000 loan with a $200,000 loan and receive $100,000 in cash at closing.

In What Circumstances Should You Use a Home Equity Loan?

As a homeowner, you can use your home equity loan in various ways to meet your financial needs. Here are a few ideas:

Debt Consolidation

For instance, if you have multiple loans with high monthly payments and interest rates, you can leverage your home equity loan to combine these loans into one loan. You’ll have a single loan to pay monthly. Aside from reducing your financial stress, this move might also save you money in the long run by lowering your interest rates.

Home Improvements

Whether you’re looking to add a deck or remodel your kitchen, a home equity loan can be a valuable source of funds for your home renovations. Besides making your home comfortable, home improvement projects add value to your home.

Paying College Tuition

In cases where mortgage rates are lower than student loan rates, you can utilize your home equity to pay for education expenses for yourself or your children.


Unexpected expenses such as large medical bills can throw a wrench in your financial plans. A home equity loan might be an effective way to maintain financial stability.

Should I Get a Home Equity Loan?

A home equity loan may or may not be a good idea depending on your financial situation. Let’s take a look at the pros and cons of a home equity loan.


As compared to credit cards and other personal loans, home equity loans offer lower interest rates. Refinancing your loan with a home equity loan can allow you to extend your loan term to as long as 20 years thereby reducing your financial burden with affordable monthly payments. The interest on a home equity loan may be tax-deductible if the proceeds are used to buy, build or substantially improve the home that secures the loan. You can use your home equity loan proceeds for virtually anything. There are no restrictions.


Since your home is the collateral for the home equity loan, you risk losing it to foreclosure if you don't keep up with your payments. Most lenders have strict home equity loan requirements. To be eligible, you’ll need a good credit score of at least 620, a debt-to-income ratio of 43% or less, proof of steady income, and at least 15% equity in your home after borrowing. A home equity loan is linked to your home, which means that if you decide to sell your home before you have completely paid off the loan, you’ll have to repay the loan balance.

What's the Difference Between a Home Equity Loan and a HELOC?

HELOCs and home equity loans both borrow against the equity in your home. However, they contain a few aspects that set them apart. Let’s take a closer look:

  • In a home equity loan, you receive a lump sum upfront once the loan is approved and closed, which makes it a good option for big life expenses. Conversely, in a HELOC, you’re issued with a line of credit in which you borrow and repay on a need basis, so long as you stay within your credit limit.

  • Home equity loans charge fixed interest rates. This means you’ll know the amount of interest due for the entire loan term upfront making it easy to budget for the payments. On the other hand, HELOCs usually have variable interest rates that often change based on the prime rate. However, hybrid fixed-rate HELOCs are also gaining popularity. They allow you to pay part of your debt with a fixed rate and the rest with an adjustable rate.

  • You pay off a home equity loan with fixed monthly installments that include both the principal and interest immediately after the loan is disbursed. For HELOCs, you may not be allowed to make interest-only payments during the draw phase and interest plus the principal over the repayment period.

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