Traditionally, if you wanted to borrow against your home, you went to your friendly local bank or savings and loan association. Now, though, there are several other types of institutions that provide home equity loans and lines of credit (HELOCs). 

Home equity products have been booming since home prices and values took off in 2020, with 2024 being a particularly good period. Home equity loan originations jumped 13 percent year-over-year – their highest level in nearly seven years – while HELOC originations rose 8 percent.  Total home equity financing issuance could well double by the end of 2025, a study by the trade journal Home Equity Lending News predicts.

Interested in joining the parade? Here’s a guide on where to get a home equity loan or HELOC, and how to find the best lender for your needs. 

Where to get a home equity loan or HELOC

Most lenders in the mortgage business provide home equity financing, but not all products may be available in all states (especially when it comes to HELOCs). Conversely, there are some firms that specialize in home equity loans and HELOCs, but don’t do purchase mortgages.

Banks

Though they backed off a bit during the pandemic, many multi-state retail banks like Bank of America, Citizens Bank and PNC Bank feature home equity-related financing. In fact, these large depositories have tended to be among the largest home equity lenders and to offer the largest HELOC credit lines You might especially benefit from going to one if you already have an account or do business there.

Banks that offer home equity financing:

Advantages of applying for a home equity loan from a bank:

• They often offer discounted rates or suspend fees when the borrower is a current customer. They also offer some of the best special introductory HELOC rates – for a finite period.
• They offer a variety of services and products, which can lead to convenience and savings — making the monthly loan payment from an in-house checking account, etc.
• You can visit a physical branch to apply or meet with a loan officer to discuss your funding needs — a significant upside if you’d prefer not to solely rely on phone or chat support.

Credit unions/savings and loan associations

In fact, credit unions, along with banks, originated more than 90 percent of HELOCs in 2024, according to credit bureau TransUnion. Credit unions also tend to offer the biggest home equity loan amounts.

Though some are publicly traded companies, most credit unions are private, not-for-profit financial institutions with a cooperative structure: They are owned by their “members.” Originally, these members were aligned by factors like location, profession/industry or employment by a particular company. Nowadays, though, many operate on a regional or national level, basically opening up membership to anyone.

Credit unions and S&Ls that offer home equity financing:

Advantages of applying for a home equity loan from a credit union or an S&L:

• They are often smaller institutions, existing to meet the needs of their member-owners. Service is often more personalized and hands-on.
• As not-for-profits, they have no commercial ax to grind, which often translates to lower fees, better rates or other more attractive terms.

Mortgage lenders

A non-bank mortgage lender is simply a lender that doesn’t deal with consumer deposits or other services that retail banks routinely offer: It’s all home loans, all the time. It might be an independent mortgage company, an online lender or both. These lenders, also known as independent mortgage banks (IMBs), can stretch requirements more than traditional lenders and often offer more competitive terms. 

If you bought your home with a mortgage lender like CrossCountry Mortgage, Rate or Lower, you might also find home equity financing with them. Online mortgage companies like Rocket Mortgage also now offer home equity products. Rocket is, in fact, currently the largest home equity loan originator in the U.S.

Mortgage lenders that offer home equity financing:

Advantages of applying for a home equity loan from a mortgage lender:

• They generally feature a broader range of products and product terms.
• Since they specialize in home financing, they have extensive knowledge of the market and can offer expert advice tailored to your situation.
• They generally offer faster closing times and more lenient borrower requirements than traditional lenders. 

Online-only lenders

When you work with an online lender, the entire application process often happens without any face-to-face interaction. These companies don’t have branch locations; instead, they operate exclusively online.

Online-only lenders that offer home equity financing:

Advantages of applying for a home equity loan from an online-only lender:

• Online lenders often offer faster approvals and funding times. Their speed is particularly beneficial if you need the money to cover emergency expenses.
• You may find more competitive interest rates with online-only lenders. They have lower overhead costs compared to brick-and-mortar banks, and can pass these cost savings on to you.

What’s the best place to get a home equity loan?

It depends on what you define as “best.” If it’s a matter of the cheapest rates, online lenders are known to offer more competitive interest rates on home equity loans, since they don’t have to maintain physical offices. That said, some of the best introductory offers come from traditional financial institutions. Bank of America, for example, is known for its aggressive HELOC teaser rates that are currently more than two percentage points below the national HELOC average.

Credit unions are also able to offer extremely competitive rates and loan terms. In fact, if you look beyond a loan’s interest rate to the annual percentage rate (APR), which also rolls the cost of closing costs and other charges into the equation, you’ll often get the best deal at this sort of lender:  As not-for-profit businesses, they tend not to ding you with fees. They often offer more  personalized service, too.

If it’s fast funding you’re after, an online lender could be the best bet. They often move more quickly in processing and underwriting your loan application. Better, for example, with its One Day HELOC, returns approval decisions within 24 hours, and provides money within a week.  

Some might argue that the best place to get a loan is a lender you already have a relationship with. Banks often extend discounted rates or suspend fees for existing customers, and you might have an easier time getting approved as well – if the institution happens to be your primary mortgage lender, say.

But don’t assume anything. The best way to obtain the most competitive home equity loan for your needs and financial profile is to shop around and compare offers, terms and product options from multiple lenders.

Requirements for home equity loans

The lending criteria for home equity loans vary by financial institution. However, here’s an idea of what most will expect from homeowners looking to use their property as collateral:

• Amount of equity in home: At least 15 to 20 percent
• Credit score: Mid to high-600s, although a minimum 700 is preferred
• Debt-to-income ratio (DTI): No more than 43 percent, although some lenders allow up to 50 percent
• Income: Sufficient verifiable income to make timely loan payments (especially in light of DTI)
• Loan-to-value ratio (LTV): No more than 85 percent [for all home-based debt]
• Payment history: Demonstrated credit history/record of timely payments on outstanding debts

Of course, any lender will evaluate your particular financials, too, in the final loan terms they offer you.

Required documents when applying for a home equity loan

Here’s what you’ll typically need to provide to apply for a home equity loan:

• Driver’s license, state-issued ID or passport
• Social Security number
• Proof of employment/employer’s contact information
• Two most recent pay stubs and W-2 statements
• Employment history and dates
• Proof of income for the past two years (i.e., tax returns and 1099s if applicable)
• Documentation to prove you own the property
• Declarations page from your homeowners insurance policy

How to choose a home equity lender

Although you can always start with the lender who provided your primary mortgage, that’s not your only option — or even your best option. With many more sources for a home equity loan beyond the bank, it’s best to compare different types of lenders so you’ll have a sense of which offer the lowest rates and fees and the most convenience or perks.

And transparency, too. You should look for a lender with a history of great customer service, who is upfront with you about the entire loan process, especially the requirements needed to get a loan, from start to finish.

Home equity loans, like primary mortgages, have closing costs, and these should be an important consideration for anyone who is looking for a loan. Some lenders provide you the opportunity to obtain financing with no origination fees or cash due at closing — but charge higher fees. Before committing to an offer, make sure you understand your all-in expenses.

Finally, if you’re getting a home equity loan, know exactly how much you need to borrow — or, in the case of a home equity line of credit (HELOC) — the maximum amount you’ll probably need; don’t just accept whatever the lender is willing to offer you, which might be more than you requested. More debt incurs more interest, which means bigger monthly payments. Remember: You’re tapping your home equity — an asset — and you’ll need to be able to repay the loan or risk losing your home.

FAQ

• How much can you borrow with a home equity loan?
  

  The amount you can borrow with a home equity loan entirely depends on your lender and the equity you have in your home. Lenders also look at your financial profile, including your credit history and score, income and debts. Amounts for home equity loans and HELOCs can range from $10,000 up to a maximum $1,000,000, in some cases.

   

• What is the downside to a home equity loan?
  

  Despite their advantages, home equity loans have several downsides to consider. One is that you’ll need at least 20 percent equity (or 15 percent in some cases) to qualify, making these loans out of reach for newer homeowners, especially those who made small down payments. Another is that you’ll have another monthly expense on top of your mortgage, which could strain your budget. It’s also a debt that would have to be settled as soon as you sell your home, cutting into your proceeds. Finally, your lender could foreclose if you don’t repay the loan, displacing you (and your housemates) and damaging your credit.

   

• Is it hard to get a home equity loan?
  

  Because they are riskier for lenders, home equity loans can be tougher to get than regular mortgages or personal loans: The denial rate for HELOCs is almost 48 percent, according to the latest Home Mortgage Disclosure Act data. The best candidates have paid off much of their mortgage, and have higher-than-average credit score and a low amount of debt relative to their income. Still, even getting a home equity loan with bad credit may be possible.

   

Additional reporting by Emma Woodward