Home Equity Loans

Home Equity Loans: Access the Value in Your Home

If you own a property, the equity you've built up may allow you to borrow larger amounts at potentially lower rates. Understand how it works, and the risks, before proceeding.

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No obligation. Rates vary. We are not a lender.

We are not a lender. Fundslender connects users with third-party lenders. We may receive compensation for referrals. No approval is guaranteed. Rates and terms vary based on your creditworthiness and lender criteria. This is not financial advice.

What Is a Home Equity Loan?

A home equity loan lets you borrow against the value of your home that exceeds what you still owe on your mortgage. This difference, your equity, acts as collateral for the loan.

Because the loan is secured against your property, lenders can typically offer larger amounts and lower interest rates compared to unsecured personal loans. However, this also means your home is at risk if you cannot keep up with repayments.

Home equity loans are typically used for significant expenses: home improvements, consolidating high-interest debt, funding education, or covering a major financial need.

Home Equity Loan vs. HELOC

There are two main ways to access home equity. Understanding the difference matters:

Comparison of home equity loan versus HELOC
FeatureHome Equity LoanHELOC
StructureLump sum upfrontRevolving credit line
RepaymentFixed monthly paymentsVariable, draw and repay as needed
Interest rateTypically fixedTypically variable
Best suited forOne-time large expenseOngoing or uncertain costs
PredictabilityHigh, same payment each monthLower, payments can change
Risk if rates riseRate is locked inMonthly cost increases with rate

Rates and structures vary by lender. Ask each lender for full details before proceeding.

Who Typically Qualifies?

Lenders set their own criteria. Common requirements include:

  • You own a home with sufficient equity (often 15–20% minimum)
  • Verifiable income to support repayments
  • Acceptable credit score, requirements vary by lender
  • Existing mortgage in good standing
  • Property must typically be your primary residence or an eligible property type

Meeting these indicators does not guarantee approval. Each lender makes independent lending decisions.

Key Risks to Understand

Because your home secures the loan, the risks are significant:

Potential Benefits
Access to larger loan amounts
Rates typically lower than unsecured loans
Fixed payments (home equity loan)
Interest may be tax-deductible in some cases
Potential Risks
Your home can be repossessed if you default
Reduces your equity stake
Closing costs and fees apply
Less flexibility than unsecured borrowing

Compare Home Equity vs. Other Options

Home equity loan compared to refinance and unsecured loan
FeatureHome Equity LoanCash-Out RefinanceUnsecured Loan
CollateralHome equityHome (full mortgage)None
Typical amountUp to 80–85% LTVDepends on home value$1,000 – $50,000
Rate typeFixedFixed or variableFixed or variable
Existing mortgageUnchangedReplaced entirelyUnaffected
Approval speedModerateSlowerFaster

More in This Section

HELOC
A flexible revolving line of credit secured by your home, how it works and when it makes sense.
Second Mortgage
Borrow a lump sum secured against your home while keeping your existing mortgage in place.
Home Improvement Loans
Using your home's equity to fund renovations, options, costs, and what to consider.

Explore Related Options

Unsecured Loans
Borrow without using your home as security, faster, but typically at higher rates.
Refinance
Replace your existing mortgage with new terms, potentially unlocking cash or reducing payments.
Secured vs. Unsecured
Understand the core difference before you decide which type of borrowing is right for you.

Ready to Explore Home Equity Options?

We connect you with lenders, we don't lend money ourselves. Your home is at risk if you don't keep up repayments. Make sure you understand the terms.

Start My Inquiry →

No obligation. Rates vary. We are not a lender.

Frequently Asked Questions

Most lenders require you to retain at least 15–20% equity in your home after borrowing. For example, if your home is worth $300,000 and you owe $200,000 (33% equity), you may be able to borrow against a portion of that equity. Exact thresholds vary by lender.
If you fall behind on repayments, the lender may begin foreclosure proceedings to recover the debt using your home as collateral. This is the primary risk of secured borrowing, and why it's critical to only borrow what you can comfortably afford to repay.
No. A home equity loan gives you a lump sum upfront with fixed monthly payments. A HELOC (Home Equity Line of Credit) works more like a credit card, you draw funds as needed up to a set limit, and interest is charged only on what you use. Both are secured against your home.
In most cases, yes, lenders typically don't restrict how you use the funds. Common uses include home improvements, debt consolidation, and large expenses. However, using your home's equity to fund discretionary spending or depreciating assets carries significant financial risk.
No. Fundslender is a loan matching service, not a lender. We connect users with third-party lenders who may offer home equity products. We do not set terms, make lending decisions, or guarantee approval.