Home Equity Loan Requirements: 6 Qualifications

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On average, a typical U.S. homeowner is sitting on roughly $200,000 worth of equity. This represents nearly $30 trillion in tappable funds nationwide — a 64% increase compared to five years ago. However, nearly half of homeowners don’t meet home equity loan requirements.

What do lenders expect before they’ll approve you for an equity-backed loan?

In this post, we’ll share the six key criteria to qualify for a home equity loan or home equity line of credit (HELOC). We’ll also provide real-world loan examples and a list of alternative options that might work for you.

How Much Is Your Home Worth Now?

Home values have rapidly increased in recent years. How much is your current home worth now? Get a ballpark estimate from HomeLight’s free Home Value Estimator.

What is a home equity loan and HELOC?

A home equity loan allows you to borrow against the equity in your home, offering a lump sum with fixed interest rates and set repayment terms. This option is ideal if you need a specific amount for a major expense.

On the other hand, a Home Equity Line of Credit (HELOC) is a revolving credit line based on your home’s equity. You can borrow as needed, up to a certain limit, with variable interest rates. It provides flexibility, especially for ongoing expenses.

Both of these lending options are considered a second mortgage that adds another mandatory monthly payment to your finances.


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