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Home equity loans give borrowers a lump sum of cash they can spend however they want, although common uses include debt consolidation, home remodeling projects and paying college tuition and fees. It's even possible to tap into home equity with these loans without a specific goal in mind, maybe if you want to take advantage of rising home values to access cash for a rainy day or a splurge.
That said, you'll want to consider home equity loan rates carefully since they help determine the total costs of borrowing. Homeowners should also consider additional lender details before they apply, including available loan repayment terms, borrowing limits and eligibility requirements.
If you want to tap into the value of your home with a fixed interest rate, a fixed monthly payment and a set repayment schedule you agree to ahead of time, a home equity loan could be for you. Read on to learn which lenders we recommend, who they're best for and the rates and fees they charge.
Best home equity loan rates of 2024
| Lender | Best for | Home equity loan rates* | Loan terms | Loan amounts | Minimum credit score required |
|---|---|---|---|---|---|
Online interface | 6.72% – 10.43% | 5 to 15 years. | Up to $500,000. | 620 or higher. | |
Responsive customer relations | Starting at 6.29% | Up to 20 years. | Up to $400,000. | 640 or higher. | |
Discover | Low fees and loan costs. | Start at 6.24% APR for 1st liens and 7.49% APR for 2nd liens. | 10, 15, 20 or 30 years. | $35,000 to $300,000. | Not disclosed. |
TD Bank | Competitive rates. | Start at 6.89% APR with auto-pay. | 5 to 30 years. | $10,000 to $499,999. | Not disclosed. |
Navy Federal Credit Union | Military | Start at 6.640% APR. | 5, 10, 15 and 20 years. | $10,000 to $500,000. | Not disclosed. |
U.S. Bank | Flexibility | Start at 7.45% APR (rates vary by state and county) | Up to 30 years. | $15,000 to $750,000 (up to $1 million in California). | 660 or higher. |
Spring EQ | Fast funding | 9.30% APR. | 5 to 30 years. | Up to $500,000. | 640 or higher. |
*APR rates vary by person and location. The numbers given are estimates.
Quicken Loans: Best for online interface
| Pros | Cons |
|---|---|
Easy to find your loan online. Get pre-approved for a loan in as little as 8 minutes. Repay your loan over 5 to 15 years. Online loan calculators help you plan your loan. | Not as transparent as competitors on fees. No HELOC options. Origination fees can be expensive. |
Quciken Loans is a brand of Rocket Mortgage, which was itself a band of Quicken loans until it rebranded in 2021. Rocket Mortgage is the fastest-growing non-bank loan originator in the U.S., and its growth has been fueled by a massive investment in technology that allows Rocket and its brand Quicken to process a lot of loans fast.
A home equity loan from Quicken generally requires good credit and a fair amount of equity in your home. The key advantage of Quicken is it quick online process that puts money in your pocket faster.
New American Funding: Best for responsive customer relations
| Pros | Cons |
|---|---|
Borrow up to $400,000 (or 85% of your home's value). Fast funding in as little as 5 business days. Get a fixed rate on your initial HELOC withdrawal. | Not available in all states. Closing costs and fees apply. |
New American Funding is a large mortgage originator headquartered in California that serves 48 states (not including New York and Texas). The company was started by a husband and wife couple, Rick and Patty Arvielo, who combined his technical expertise with her mortgage industry knowledge to create a company that is fast and responsive to customer needs.
New American Funding's loans are in line with others in the industry in regards to their cost and repayment terms. One notable drawback is New American Funding's requirement that HELOC borrowers withdraw all of their equity funds at closing.
The company has been on the forefront of sustainable and equitable practices in lending. It boasts 3,660 diverse team members, comprised of 55% women; 42% minorities, including 21% who are Hispanic; and 38% Millennials, according to its website, and it has programs specifically designed to help traditionally marginalized borrows gain access to credit.
Discover: Best for low fees and loan costs
| Pros | Cons |
|---|---|
No application fees, origination fees or hidden fees. No cash required at closing. Competitive interest rates. Borrow up to $300,000 of your home's value. Multiple repayment terms to choose from. | Lowest APRs are for borrowers requesting at least $80,000 for second liens or $150,001 for first liens. Home equity loan rates can be as high as 13.99% APR. Potential prepayment penalty. |
Discover home equity loans stand out due to their competitive starting interest rates and their notable lack of fees. For example, these loans come with no application fees, no origination fees, no appraisal fees and no cash required to close. Borrowers can also choose to repay their home equity loan over 10 to 30 years with a fixed monthly payment that will not change.
Unfortunately, a prepayment penalty can apply if you pay the loan off within three years. Specifically, Discover says most homeowners have to reimburse them for up to $500 in closing costs and fees for paying off a home equity loan within 36 months after closing.
TD Bank: Best for competitive rates
| Pros | Cons |
|---|---|
Competitive home equity loan rates. Higher loan amounts than some other lenders (up to $499,999 with traditional terms). Multiple repayment terms to choose from. | $99 origination fee applies. APRs can be as high as 18%. Auto-pay from a TD Bank checking account required for lowest rates. |
TD Bank offers home equity loans with a broader range of available loan amounts. In fact, you can borrow between $10,000 and $499,999 (and potentially more) with one of their home equity loans with repayment terms that last from five to 30 years. Interest rates are extremely competitive, although the bank does say its best rates apply to home equity loans with 5-year or 10-year repayment terms.
All this being said, it's worth noting that a $99 origination fee applies to these loans, and interest rates can be as high as 18% for borrowers without great credit. You also need to use a TD Bank checking account and set up your loan for automatic payments to qualify for the lowest rates they offer.
Navy Federal Credit Union: Best for military
| Pros | Cons |
|---|---|
Competitive interest rates. Borrow up to 100% of your home's value. No application fees, origination fees or hidden fees. Generous borrowing limits up to $500,000. No prepayment penalties. | Military affiliation required. Repayment terms only last up to 20 years. Borrowing up to 100% of home's value may require an additional "funding fee". |
Navy Federal Credit Union offers membership to eligible military members, veterans, their family members and Department of Defense civilians. This credit union also offers a highly competitive home equity loan with low fixed rates, flexible repayment terms and generous borrowing limits up to $500,000. There are no application fees, origination fees or hidden fees either.
Borrowers who qualify can even tap into 100% of their home's value with a home equity loan, although only in situations where they are using the loan toward a home purchase. Borrowing up to 100% of the home's value could also lead to paying a funding fee. Finally, Navy Federal home equity loans come with a maximum repayment term of up to 20 years.
U.S. Bank: Best for flexibility
| Pros | Cons |
|---|---|
Generous loan amounts up to $750,000 ($1 million in California). Repay the home equity loan over up to 30 years. No closing costs or hidden fees. Qualify for 0.50% auto-pay discount. | Interest rates and availability vary by county and state. Higher home equity rates than some other lenders. |
U.S. Bank is another lender to consider if you want a home equity loan with plenty of flexibility. For example, you can borrow as little as $15,000 and as much as $750,000 (or $1 million in California) depending on your needs. You can also choose to repay your home equity loan over any term up to 30 years, and you get a 0.50% auto-pay discount when you have your payment deducted from an eligible U.S. Bank checking or savings account.
On the downside, home equity loan rates offered by this lender can be higher than others depending on the state and county you live in.
Spring EQ: Best for fast funding
| Pros | Cons |
|---|---|
Borrow up to $500,000 (or 95% of your home's value). Fast funding in as little as 14 business days (average is 21 days). Repay your loan over 5 to 30 years. Option to make 120 months of interest-only payments. | Higher interest rates than competitors. Not available in all states. Closing costs and fees apply (up to $1,000 or more). |
Spring EQ is another online lender to consider if you're comparing home equity loans, especially if you need access to your money as quickly as possible. The company says some borrowers get their home equity funds deposited in their account within 14 business days of closing, but that the average is 21 days.
These loans let you borrow up to $500,000, or up to 95% of your home's value, and you can repay your loan over 5 to 30 years. That said, Spring EQ does require some closing costs and fees for their home equity loans that vary based on how the loan is structured. These fees can run as high as $1,000 or more.
How to choose the best home equity loan
The best home equity loans offer a seamless online application process, and they let you borrow as much as you need to reach your goals. That said, there are some factors you'll want to compare across lenders to get the best deal.
Borrowing limits
First, you'll want to make sure you look at home equity lenders that will let you borrow as much (or as little) as you need. While loan amounts vary across lenders, most home equity companies let you borrow between $10,000 and $500,000 with this type of loan.
Home equity loan rates
Compare loan companies to find the lowest possible rates you can qualify for, and take the time to "check your rate" with no impact to your credit score with lenders who offer this option.
Loan discounts
See if you can pay a lower rate for completing qualifying activity, such as setting up your loan for automatic payments from a specific type of checking or savings account.
Loan fees
Watch out for hidden loan fees like origination fees and application fees. Many of the best home equity lenders don't charge any fees, but some do.
Repayment terms
Finally, make sure lenders you're considering offer repayment terms you can live with, whether you want to pay down your loan over 5 years or over 30 years.
How to apply for a home equity loan
To apply for a home equity loan, you'll need to submit information like your full name, the address of the home you want to apply financing to, your employment information, your income and your Social Security number. You may also need to share your marital status, citizenship status and borrowing status to apply, and you will likely have to supply a few months of pay stubs and potentially even proof of your homeowners insurance policy. The lender may also ask you the purpose of the loan, which could be debt consolidation, a large purchase, home improvements or something else.
In some cases, you can "check your rate" and gauge your approval odds before you fill out a full loan application. When you take the time to do this, you get a look at the rates you may be able to qualify for and other repayment terms without a hard inquiry on your credit reports.
Either way, you can often find out if you're eligible for a home equity loan — and how much you can borrow — in a matter of minutes once you apply. From there, you'll move through the underwriting and approval process, which can vary by lender, and you can expect to close on your loan and get funding within 45 days.
Home equity loan vs. HELOC
A home equity loan lets you borrow against the value of your property without refinancing your first mortgage, and the same can be said about a similar product called the home equity line of credit (HELOC). However, these products don't work exactly the same, thus they tend to appeal to different types of borrowers:
- Home equity loans come with a fixed interest rate, a fixed monthly payment and a fixed repayment schedule that will not change.
- Home equity lines of credit (HELOCs) come with variable interest rates and base your monthly payment on how much you borrow from the line of credit.
Home equity loans vs. HELOCs
The following chart compares home equity loans vs. HELOCs based on how they work and the type of rates they offer.
| Home equity loans | Home equity lines of credit (HELOCs) | |
|---|---|---|
How you borrow. | Lump sum. | Line of credit you can access as needed. |
Interest rates. | Fixed rates. | Variable rates. |
Timing. | Borrow it all upfront. | Borrow and repay the line of credit multiple times if you want. |
Collateral. | Uses the value of home as collateral. | Uses the value of home as collateral. |
When should you get a home equity loan?
- You want to access home equity without refinancing your mortgage. If you're happy with the first mortgage on your home and you don't want to refinance, a home equity loan lets you tap into equity you have without making changes to the first lien on your home.
- You need cash for debt consolidation or a large purchase. You can borrow what you need against your home equity, then use the funds to pay down high interest rate debt, purchase new home appliances, pay for a much-needed vacation and more.
- A home remodeling project is on your agenda. Home equity products are common among homeowners who want to remodel their kitchen, add an addition to their home or make other big improvements.
- You prefer to borrow against your home equity with a fixed interest rate. Because home equity loans offer fixed rates, they are more predictable and stable than variable rate products like home equity lines of credit (HELOCs).
Methodology
To find the best home equity loans, we looked for lenders that offer generous loan terms, flexible repayment options and availability in at least 30 states nationwide. We also compared lenders based on their application fees and origination fees (if any), as well as other hidden fees that can apply.
Finally, we compared lenders based on their application process and timeline to funding, and we gave preference to companies that disclose the full terms of their home equity loans online.
Frequently asked questions (FAQs)
What is a home equity loan?
A home equity loan is a secured loan that uses the value of your home as collateral. These loans come with fixed interest rates, fixed monthly payments and a set repayment schedule you agree to ahead of time.
What are some home equity loan alternatives?
Popular home equity loan alternatives include home equity lines of credit (HELOCs), personal loans and 0% APR credit cards.
How do home equity loans work?
Home equity loans give you a lump sum of cash upfront, which you can spend however you want. You make payments as agreed to ahead of time, which are based on a fixed interest rate, the amount you borrowed and a set repayment plan that lasts from five to 30 years.
What can I use a home equity loan for?
You can typically use home equity loan funds however you want. Common uses for these loans include debt consolidation, home remodeling projects, higher education expenses, and wedding financing.
Will home equity loan rates go down in 2023?
Nobody can predict whether home equity loan rates will go up or down in 2023, or in future years.
How do I take out equity without refinancing?
Home equity loans and home equity lines of credit (HELOCs) let you borrow against the equity in your home without refinancing your first mortgage.
This story was written by NJ Personal Finance, a partner of NJ.com. The information presented here is created independently from the NJ.com editorial staff, and purchases made through links in this article may result in NJ.com earning a commission.
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