Ais a fixed-rate, second mortgage that allows you to borrow against the equity in your home. This installment loan gives you access to funds for virtually any purpose, including , paying for large expenses and covering .
If you’re considering tapping into your home’s equity, you’ll find plenty of national and regional banks, credit unions and online lenders offering home equity loans. As you might expect, loan options and lending requirements vary from lender to lender. We’ve created this guide to help you identify partner lenders offering the best home equity loans across a range of categories.
You can easily explore your local home equity loan options here now.
Best home equity loans 2023
Here are some of the best home equity loan lenders currently available.
Best overall: Discover
While you may save thousands of dollars over time by choosing a home equity loan with the lowest annual percentage rate (APR), other factors are also essential to consider. It’s wise to balance borrowing limits, repayment terms, fees and other factors to make an informed decision that best suits your needs.
Along these lines, Discover is our choice for the best overall home equity loan that checks all the boxes, such as:
- Competitive rates: Fixed rate APRs start at 6.24% as of April 2023.
- Generous equity access: While most lenders allow you to access up to 80% to 85% of a home’s value, Discover’s home equity loans offer a maximum 90% loan-to-value (LTV) rate if eligible.
- High borrowing limit: Home equity loan limits range from $35,000 to $300,000.
- Flexible repayment options: Loan repayment terms are for 10, 15, 20 or 30 years. Shorter repayment terms generally result in higher monthly payments, but you’ll save more in interest over the life of the loan. Conversely, longer terms result in lower monthly payments, but you’ll pay more in interest overall.
- No origination fees: Discover also doesn’t charge appraisal fees, mortgage taxes or require cash at closing.
Learn more here now.
Best for low APR: Third Federal
As of April 2023, Third Federal offers 6.49% and 6.99% APRs for 5- and 10-year home equity loans, respectively. The lender also offers a Lowest Rate Guarantee that states, “Third Federal will provide you with the lowest interest rate on a similar Home Equity Loan (HELOAN) offered by any properly licensed lender, or pay you $1,000.” Loan amounts range from $10,000 to $200,000 with a maximum LTV of 80%.
If you happen to live in Florida or Ohio, you may be eligible for Third Federal’s Fixer Upper Home Repair loan. This program is designed for homeowners looking for a small cash infusion between $1,000 and $9,900 for a home renovation project. The loan comes with a 2.99% APR and a monthly payment as low as $10.
Best for home improvement: Flagstar
Flagstar is one of the largest mortgage loan originators in the United States. The lender’s home equity loans may be ideal for homeowners with upper-value homes and substantial equity they can access to cover renovations.
Whether you want to useor build additional space, Flagstar Bank’s home equity loan offers borrowing amounts that should fit the bill. Specifically, loan amounts range from $10,000 to $1,000,000 with repayment terms of 10, 15 or 20 years. Interest rates start at 8.04%. Unfortunately, Flagstar doesn’t offer home equity loans in every state, so contact the lender to check for loan availability in your area.
Best for debt consolidation: Rocket Mortgage
Many Americans are carrying large amounts of consumer debt. According to Experian, total consumer debt balances increased to $16.38 trillion in 2022, up nearly $1 trillion over the previous year.
Experts recommend you only uselike unexpected medical expenses and emergency debt consolidation. But, if alternative options aren’t available, a may relieve your budget if you can consolidate high-interest debt into one lower-interest loan. Consider getting a home equity loan quote from Rocket Mortgage to see if a new loan could lessen the strain on your budget and potentially save you money in interest charges.
Rocket Mortgage is a reputable home loan lender offering home equity loans ranging from $45,000 to $350,000 and repayment terms of 10 and 20 years. Rates vary depending on your credit, equity and other factors. For example, we were quoted a 6.375% APR on a 30-year fixed-rate home equity loan for a homeowner in California with excellent credit.
To qualify, you’ll need a minimum FICOof 680, and your debt-to-income ratio must be 45% or less.
Check out your home equity loan options now and start consolidating your debt at a low rate.
Best for borrowers with excellent credit: U.S. Bank
U.S. Bank offers home equity loans to borrowers with credit scores of 660 or higher and who meet eligibility criteria. However, a higher credit score may help you qualify for more favorable terms. U.S. Bank is the best home equity lender for borrowers with excellent credit due to its low APR offers for borrowers with credit scores of at least 730.
As of April 2023, U.S. Bank offers 7.50% APR on a 10-year term and 7.45% APR on a 15-year term for their. These rates apply to loans ranging from $50,000 to $90,000 up to 60% LTV. To receive the lowest rate, you must have a credit score of at least 730 and set up automatic payments from a U.S. Bank personal checking or savings account.
Best for borrowers with bad credit: Discover
Our list of the best home equity loans ends where it began. Discover took home the best overall home equity loan honor because it excels in numerous categories, including this one.
With a minimum credit score requirement of 620, Discover’s home equity loan helps borrowers who may have limited options due to bad credit. Like other lenders, Discover also considers credit history, employment, income, equity amount and other factors when reviewing home equity loan applications.
Of course, higher credit scores do open you up to more favorable terms, like borrowing limits over 80% LTV. Discover also notes that loan requests over $150,000 require a credit score of 700 or better.
The bottom line
As with other financial products, shopping and comparing multiple home equity loan lenders can help you narrow your choices and identify the best home equity loan for your situation. Run the numbers, including interest rates, fees, appraisal and cash required at closing, to ensure they make financial sense before taking out a new loan. Start shopping for home equity loan lenders here or via the below table.