The 6 Best Home Equity Loans 2022 : Choosing the Right Loan for Me
Everyone needs a little help from time to time. If you find yourself low on funds, consider using the equity you have built up in your home to secure more cash. Not all home equity loans are made equal, though, and there are many factors to consider when choosing which one to commit to. Check out this guide to the best home equity loans and lines of credit to help inform your decision, so you end up with the one that is right for you and your situation.
The Best Home Equity Loans 2022: Compare Our Ratings and Reviews
Discover - Best Overall Home Equity Loan
Citizens Bank - Best Variety of Repayment Options
PenFed - Best for Those Using Properties They Do Not Occupy
Regions Bank - Best Home Equity Loan Repayment Term Options
Truist - Best for Home Equity Lines of Credit (HELOC)
U.S. Bank - Best for Those With Good to Excellent Credit
Quicken Loans - Top Runner-Up
1. Discover - Best Overall Home Equity Loan
Discover Home Equity Loan Pros
No application or appraisal fees
No mortgage taxes due at closing
No upfront cash payment due at closing
Some states are exempt from early payment penalties
Discover Home Equity Loan Cons
Depending on your state, you may have to pay a penalty for early repayment
No discounts noted
With virtually no fees or money due upfront, reasonably low rates and availability to those with even less-than-stellar credit, Discover stands out among the best home equity loans.
APR on Discover Home Equity Loans: 4.7/5
Fixed interest rates for first liens through Discover range from 3.99% to 8.99% and 4.15% to 11.99% for second liens.
Discover Home Equity Line of Credit and Loan Terms: 4.4/5
Discover offers home equity loans from $35,000 to $200,000 with options between 10 and 30 years. If you took out a home equity loan for $60,000 at 8.99% APR over a period of 20 years, for example, your payment each month would come out to $539.45.
Eligibility Requirements for Discover Home Equity Loans: 4.8/5
To qualify for a Discover home equity loan, applicants need a minimum credit score of 620 and adequate equity. To receive more than $150,000, applicants must have a credit score above 700.
Discover home equity loans are available in every state. Because the minimum loan is $35,000, applicants must have comparable equity in their homes or higher to qualify. To determine potential rates and monthly payments through Discover, you can use their monthly payment calculator.
Discover Loan/HELOC Application Process: 4.7/5
To apply for the best home equity loans with Discover, you will need several documents, including W-2s from the past two years, your most recent pay stub, a current mortgage statement, a valuation or appraisal of your home and other items that can be found here.
Once you have your information in order, you can apply either online or over the phone with one of Discover's personal bankers. The latter can be reached at 1-855-361-3435 Monday through Friday from 8 a.m. to midnight EST and 10 a.m. to 6 p.m. EST on Saturday and Sunday.
How long the process takes after you or your personal banker have submitted your application varies from person to person, but consumers report most loans that satisfy Discover's requirements are approved within two weeks.
Overall Score of Discover Home Equity Lines of Credit and Loans: 4.7/5
Discover isn’t what you’re looking for? Check out Quicken Loans.
2. Citizens Bank - Best Variety of Repayment Options
Citizens Bank Home Equity Loan Pros
Discount for autopay when using your Citizens Checking account
No closing costs or appraisal fees
Option for full or interest-only payments while in the 10-year draw period
Citizens Bank Home Equity Loan Cons
After the first year, HELOCs have a $50 annual fee
Only available in Connecticut, Delaware, Massachusetts, Minnesota, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island and Vermont
Citizens Bank gives homeowners a variety of options when choosing repayment terms. It also offers a nice autopay discount and has minimum extra costs upfront.
APR on Citizens Bank Home Equity Loans: 4.7/5
Those with the autopay discount can have an interest rate as low as 3.0% with rates going as high as 21%.
Citizens Bank Home Equity Line of Credit and Loan Terms: 4.6/5
Citizens Bank's HELOCs have a 10-year draw period and a 15-year repayment term. Credit lines can range from $10,000 to $200,000 or more depending on the homeowner's credit and equity.
Eligibility Requirements for Citizens Bank Home Equity Loans: 3.5/5
Citizens Bank’s best home equity loans are only available in certain states: Connecticut, Delaware, Massachusetts, Minnesota, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island and Vermont. Credit score requirements for Citizens Bank are not available, but properties must be owner-occupied and can include 1- to 4-person family homes and condominiums.
Citizens Bank Loan/HELOC Application Process: 4.7/5
HELOCs through Citizens Bank can be applied for online. After you submit your application, the bank reviews your paperwork and lets you know what kind of appraisal is needed. After approval, funds should be available within 45 days.
Overall Score of Citizens Bank Home Equity Lines of Credit and Loans: 4.4/5
Quicken Loans provides an alternative to Citizens Bank.
3. PenFed - Best for Those Using Properties They Do Not Occupy
PenFed Home Equity Loan Pros
Credit lines are available for properties both occupied and not occupied by owners
Most closing costs are covered
Annual fee is waived if the amount is paid in interest over the year
PenFed Home Equity Loan Cons
Some properties can't get lines of credit
Though owners do not have to reside in the property, it must be livable with no safety issues
In some states, residents may have to pay city, county or state taxes
Many lenders require homeowners applying for the best home equity loans to use owner-occupied properties, but PenFed gives options to those wanting to use homes they do not live in as long as those properties are livable.
APR on PenFed Home Equity Loans: 4.8/5
Home equity lines of credit start at 3.75%. During draw periods, you can switch from your initial variable APR to a fixed rate.
PenFed Home Equity Line of Credit and Loan Terms: 4.6/5
PenFed offers loan amounts ranging from $25,000 to an impressive $1 million. Your ability to be approved for that amount depends on your equity, creditworthiness, loan-to-value ratio and location. While PenFed pays for most closing costs, if you close your credit line within three years of opening it, you will have to repay those costs. You also have to pay a prepayment penalty if you pay off your account prior to that.
Eligibility Requirements for PenFed Home Equity Loans: 4.7/5
Though PenFed’s best home equity loans used to only be open to military members and government employees, membership is now available to everyone in all states, Washington, D.C., Puerto Rico and Guam. You do need to be a member of PenFed's credit union and have a credit score of 660 or higher. Your score determines what percentage of your equity you can borrow against; those with over 720 score the most favorable terms.
PenFed Loan/HELOC Application Process: 4.2/5
You can apply for PenFed products online; however, it is not clear how long it takes to get funded after approval.
Overall Score of PenFed Home Equity Lines of Credit and Loans: 4.6/5
PenFed not right for you? Check out Quicken Loans.
4. Regions Bank - Best Home Equity Loan Repayment Term Options
Regions Bank Home Equity Loan Pros
No closing costs
Discounts are available when you enroll in auto-pay
0.99% introductory rate for a HELOC's first six months
HELOC has the option of being converted to a fixed-rate loan
Regions Bank Home Equity Loan Cons
Only available in Alabama, Arkansas, Florida, Georgie, Iowa, Indiana, Illinois, Kentucky, Louisiana, Mississippi, Missouri, North Carolina, South Carolina, Tennessee and Texas
Property that equity is in must be in an eligible state
While many homeowners applying for the best home equity loans will only be able to access plans for 15- or 30-year periods, Regions offers a variety of repayment lengths starting at seven years.
APR on Regions Bank Home Equity Loans: 4.8/5
Fixed rates for home equity loans through Regions Bank start at 3.25% and go up to 11.625%. Discounts for auto-pay enrollment can lower that rate to 3.0%.
For the first six months, homeowners who use Regions Bank for a HELOC will enjoy a fixed introductory rate of 0.99%. It then increases to an adjustable rate falling between 3.75% and 10.63%.
Regions Bank Home Equity Line of Credit Terms: 4.8/5
Regions Bank offers the best home equity loans and HELOCs. Their fixed-rate home equity loans start at $10,000 and can go up to $250,000. Repayment terms can be 7, 10, 15 or 20 years.
The HELOCs start at $10,000 but have a maximum of twice their home equity loans, with $500,000 available for qualified applicants. HELOCs work differently than home equity loans in a number of ways; one is that repayment does not start until after what is called a "draw" period, in which homeowners can borrow from their HELOC. Regions Bank offers HELOCs with 10-year draw periods followed by 20-year repayment periods.
For HELOCs of $250,000 or below, Regions Bank takes care of all closing costs. For lines of credit above $250,000, Regions Bank will contribute up to $500 to closing costs.
Eligibility Requirements for Regions Bank Home Equity Loans: 4.0/5
The minimum credit score required for a Regions Bank home equity loan is not disclosed. If your property is not located in one of the 16 states where Regions Bank has a branch, you will not be able to get a home equity loan or HELOC through them. Currently, Regions Bank only has branches in Alabama, Arkansas, Florida, Georgie, Iowa, Indiana, Illinois, Kentucky, Louisiana, Mississippi, Missouri, North Carolina, South Carolina, Tennessee and Texas.
Regions Bank Loan/HELOC Application Process: 4.5/5
The best home equity loans and HELOCs can be applied for online, in person at a Regions Bank branch or by phone at 1-888-462-7627 from 6 a.m. to 7 p.m. Monday through Friday and 8 a.m. to 2 p.m. on Saturdays. You can use Region Bank's calculator to see if a home equity loan is a viable option for you to consolidate your debt. You can also calculate your potential HELOC payments using Region Bank's payment calculator.
Overall Score of Regions Bank Home Equity Lines of Credit and Loans: 4.5/5
Looking for a Regions Bank alternative? Check out Quicken Loans.
5. Truist - Best for Home Equity Lines of Credit (HELOC)
Truist Home Equity Loan Pros
Truist pays for your appraisal
Repayment options are flexible
Fixed-rate repayment options are available
Truist Home Equity Loan Cons
For residents of Alabama, Florida, Georgia, Indiana, Kentucky, New Jersey and Ohio, an annual fee applies
Penalty for closing credit line within three years
For those looking for a home equity line of credit, Truist is a solid option with a low minimum borrowing amount and a relatively quick process time.
APR on Truist Home Equity Loans: 4.2/5
Truist's interest rates are on the high side, starting at 4.5% and going all the way up to 16% or the state's maximum.
Truist Home Equity Line of Credit and Loan Terms: 4.7/5
Truist's HELOCs have a minimum of $5,000, but the maximum depends on the applicant's creditworthiness and the amount of equity available in the home. Repayment can be made over 5, 10, 15 and 20-year terms for fixed-rate HELOCs. For those with variable rates, though, the draw period is 10 years and the repayment period is 20 years.
Eligibility Requirements for Truist Home Equity Loans: 4.6/5
Truist’s best home equity loans are available in all states, but the company does not specify a minimum credit score necessary for applicants. To qualify, homeowners need to have sufficient equity in their home and demonstrate their creditworthiness through standard loan documentation such as employment verification, credit history, W-2s and more.
Truist Loan/HELOC Application Process: 4.7/5
For those looking for a quick turnover, Truist is a quality option with a one-day approval time for qualified applicants. Required information includes your personal information and that of your co-applicant if you are applying jointly, employer information, financial assets and debts and a description of your collateral, including your lender name and balance to value.
You can easily apply online — Truist claims that the application takes under 15 minutes. Once that is complete, a Truist representative confirms your provided information and requests any additional necessary documentation. After all the paperwork has been received, most HELOCs will close within 35 days.
Overall Score of Truist Home Equity Lines of Credit and Loans: 4.6/5
See if Quicken Loans is a better fit for you.
6. U.S. Bank - Best for Those With Good to Excellent Credit
U.S. Bank Home Equity Loan Pros
No closing costs except potential escrow-related costs
Interest rate discount when you enroll in automatic payments
U.S. Bank Home Equity Loan Cons
For the first 30 months, there is a prepayment fee of 1% or up to $500
In New York, lines of credit are only available up to $1,000
If you have the credit to qualify, U.S. Bank offers attractive terms and a number of options.
APR on U.S. Bank Home Equity Loans: 4.8/5
The best home equity loans through U.S. Bank offer rates starting at 4.25% APR for 10-year terms and 4.40% APR for 15-year terms. HELOC rates range from 3.45% APR to 8.60% APR.
U.S. Bank Home Equity Line of Credit and Loan Terms: 4.8/5
U.S. Bank's home equity loans have a minimum of $15,000 and can go up to $750,000 or, for properties in California, $1 million. Their HELOCs have a 10-year initial draw period.
Eligibility Requirements for U.S. Bank Home Equity Loans: 4.0/5
To get the best rates, applicants should have a credit score of 730 or above, a U.S. Bank checking or savings account and enrollment in automatic payments. Available loan types and amounts vary between states, so you will have to check what precise terms are available in yours.
U.S.Bank Loan/HELOC Application Process: 4.6/5
Applications can be completed using any mobile device or computer, and loan officers are available by phone or email to help you as necessary. You can also estimate your rate by using their calculator before proceeding. U.S. Bank states that the length of their loan or HELOC process varies among applicants but that once papers have been signed at closing, your funds will be available after three business days.
Overall Score of U.S. Bank Home Equity Lines of Credit and Loans: 4.6/5
Check out our Top Runner Up, Quicken Loans!
How We Chose the Best Home Equity Loans
To compile this list, we examined the most popular home equity loans and HELOCs on the market to compare interest rates, terms and fees. We looked at consumer reports and used self-reported information from the lenders to get a full picture of what the company believes their process to be and how well the consumer believes that process to work. Home equity loans and HELOCs featured in J.D. Power's 2021 Primary Customer Satisfaction Study were given preference.
Home Equity Loan Buying Guide
Use this guide to answer any remaining questions you may have about the home equity loan or HELOC process.
What Is Home Equity and How Is It Calculated?
Home equity is the difference between what you still owe on your mortgage and how much your home is worth in the current market. For example, if your home's current market value is $200,000 and you have $100,000 to still pay off, you have a loan-to-value ratio of 50% and 50% equity which equals $100,000. The amount a lender will loan you based on your home equity varies depending on their loan-to-value rules.
What Is a Home Equity Loan?
With a home equity loan, homeowners get a fixed-term loan using the equity they have built up in their home as collateral. Most lenders want applicants to have at least 15% equity before they consider approving them for the best home equity loans.
As with most loans, the specific terms depend on a number of factors, including the available equity, the applicant's creditworthiness, debt-to-income ratio and employment history.
Find the right Quicken home equity loan for you.
What Is a Home Equity Line of Credit?
A HELOC is very similar to a home equity loan. Instead of being lent a certain amount with a fixed-rate, however, the homeowner receives a line of credit, similar to a credit card, to use as needed.
HELOCs have a length of time called a "draw period" in which they can withdraw funds from their credit line. Typically, these last 10 years, with an additional 20 years acting as the repayment period.
The amount an applicant is given access to is based on the home equity they have, their credit history, debt-to-income ratio and employment. Although most HELOCs have a variable interest rate, some lenders do allow these to be converted to a fixed rate over time.
Is a Home Equity Loan or Line of Credit Better?
Neither is inherently better than the other; it depends on your specific needs, equity and creditworthiness. If you need a lump sum, the best home equity loans might be preferable, whereas a HELOC allows you to only borrow as needed and only have to pay on the money you actually use.
What Is a Cash-Out Refinance?
For some, a cash-out refinance is an option. With it, the homeowner exchanges their previous mortgage for a new one that is a larger amount than the mortgage's current balance. The difference between the old and new mortgages is paid directly to the homeowner in cash.
How Can I Choose What Home Equity Loan or HELOC Is Right for Me?
While both have their benefits, whether a home equity loan or HELOC is suitable for your needs is entirely dependent on your situation. Because the amount you would be given access to would likely be similar between a home equity loan and a HELOC, as they are both based on your available equity and credit factors, which one is best depends on what you need the money for and what kind of costs you are able to pay.
If it is a fixed-rate plan, for instance, you can count on the amount to stay the same throughout the repayment term. However, the amount you have to pay each month with adjustable rates can vary based on interest rates. If interest rates go up, your payment would, as well.
Closing costs and fees can also vary wildly between the best home equity loans and HELOCs and from lender to lender. Research each option's total costs to ensure you can afford to pay them before proceeding.
The Best Home Equity Loans Summary Comparison
Interest Rates: 3.99% to 8.99%
Loan Terms: $35,000 to $200 between 10 and 30 years
Loan/HELOC Options: Loans only
Interest Rates: 3.0% to 21%
Loan Terms: $10,000 to $200,000 or more with a 10-year draw period followed by a 15-year repayment period
Loan/HELOC Options: HELOCs only
Interest Rates: 3.75% and up
Loan Terms: $25,000 to $1,000,000
Loan/HELOC Options: Both
Interest Rates: 3.0% to 11.625%
Loan Terms: $10,000 to $250,000
Loan/HELOC Options: Both
Interest Rates: 4.5% up to 16% or state’s maximum
Loan Terms: $5,000 and up with a draw period of 10 years and repayment period of 20 years
Loan/HELOC Options: HELOC only
Interest Rates: 3.45% to 8.60%
Loan Terms: HELOCs have a draw period of 10 years and repayment period of 20 years
Loan/HELOC Options: Both
Top Runner Up
Final Thoughts When Choosing the Best Home Equity Loans for You
Which of the best home equity loans is best for you depends on what you need the money for, how much you can afford to pay upfront and monthly and how much equity you have in your home. Compare options and consider carefully to ensure you have enough money for the payments and get the funding best suited to your needs.
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