Home Equity Loan

You’re generally eligible if you have enough equity in your home, a credit score of 680 or above, and a debt-to-income (DTI) ratio of 45% or less. The higher your credit score, the more cash you may be able to access.

Estimate your equity by subtracting what you owe on your mortgage from what you could sell your home for. Keep in mind that you might not be able to take out the full amount — you may be required to leave a percentage (often 20%) of your equity in your home.

You’ll connect with a loan specialist who will help you understand if a home equity loan is right for you. A third-party appraiser determines your home’s value. Then you’ll close on your loan and receive a lump-sum payout. You’ll make monthly payments at a fixed interest rate until the loan is paid off.

You can use a home equity loan for almost any purpose — paying for home improvements or renovations, consolidating debt, covering education costs, or handling major life expenses. How you use the funds is up to you.

Home equity is the difference between your home’s value and what you still owe on your mortgage. For example, if your home is worth $200,000 and your mortgage balance is $150,000, your equity is $50,000.

Any time you open a new loan, your credit score may drop slightly. The drop is usually temporary, and your score may even increase after opening the loan since your total available credit will go up.