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A home equity loan is a type of second mortgage that lets you take equity out of your home to use for things like home renovations, debt consolidation, or other major expenses.
The Best Home Equity Loan Lenders
- U.S. Bank Home Equity Loan: Best overall
- Navy Federal Credit Union Home Equity Loan: Best overall, runner-up
- Discover Home Equity Loan: Best for no fees
- Flagstar Home Equity Loan: Best for large loan amounts
- Connexus Home Equity Loan: Best for small loan amounts
Home equity loan lenders typically like to see a maximum CLTV between 80% and 90%, but it varies. A loan-to-value ratio (LTV) is the ratio of how much you owe on your mortgage versus what your house is worth. If your house is worth $500,000 and you still owe $200,000, your LTV is 40%. A combined loan-to-value ratio (CLTV) includes all of the loans you have on your property, including first and second mortgages.
Compare the Top Home Equity Loan Lender Reviews
The best lenders for home equity loans have no or low fees, multiple term length options, high maximum CLTVs, and other beneficial features like customer discounts. Here are the best home equity loan lenders as chosen by Business Insider editors in 2024.
Best Overall: U.S. Bank
7.15% or 7.20%
Fair
- 80% Max CLTV
- Not available in Delaware, South Carolina, or Texas
- Rates shown for loans in the amount of $50,000-$99,999 up to 60% LTV, and for customers with automatic payments from a U.S. Bank personal checking or savings account with a FICO score of 730 or higher. Rates may vary by region and are subject to change.
U.S. Bank is a strong lender overall for home equity loans, with no closing costs, a wide range of loan amounts, and a discount for existing customers.
If you have a U.S. Bank checking or savings account, you could get a 0.5% rate discount if you set up automatic payments.
What to look out for: U.S. Bank home equity loans aren't available in Delaware, South Carolina, or Texas
Best Overall, Runner-up: Navy Federal Credit Union
starting at 6.640%
Fair
- 100% Max CLTV
- Available in 50 states and Washington, DC
- Must be a member of the military, a veteran, a family member of someone who has served, or a Department of Defense civilian
- Personal guidance from first call to closing
- No application or origination fee
- Navy Federal servicing for the life of your loan
Navy Federal Credit Union is a great home equity loan lender for those who qualify for a Navy Federal membership. It offers competitive mortgage rates, a good selection of term lengths, and no fees.
This lender is a strong option for VA loan borrowers, who might not have a ton of equity built up if they put 0% down on their home when they purchased it. It also has good online customer reviews.
What to look out for: Navy Federal is our "best overall" runner-up because, while it's a very strong lender overall, you have to be a member of Navy Federal Credit Union to get a loan with this lender. To qualify, you need to be a member of the military, a veteran, a family member of someone who has served, or a Department of Defense civilian.
The BBB gives Navy Federal an NR (No Rating) because it's responding to complaints that were previously closed.
Best for No Fees: Discover
7.24% - 13.99%
Fair
- No closing costs
- Not available in Iowa or Maryland
- Low, Fixed APRs
- Fixed Repayment Terms
- $0 Origination Fees
Discover is an affordable home equity loan lender that doesn't charge any closing costs, and it will also pay any third-party costs you incur.
Discover offers home equity loans with 10-, 15-, 20-, and 30-year terms and loan amounts from $35,000 to $300,000.
What to look out for: Not available in Iowa or Maryland. You'll need at least a 680 credit score to qualify.
Best for Large Loan Amounts: Flagstar Bank
Undisclosed
Good
- 90% Max CLTV
- Not available in Texas
- Tailored to meet your needs. If you require extra funds to help pay for big projects or unforeseen circumstances, Flagstar offers a variety of home equity options to help you reach your goals.
Flagstar Bank is a good option for borrowers who need larger loan amounts, since you can get a home equity loan for up to $1 million.
If you qualify, you can get a home equity loan from Flagstar for any amount between $10,000 and $1 million. It also charges no lender fees, though you still may need to pay some third-party fees at closing.
If you have a bank account with Flagstar, you could get a 0.25% rate discount if you set up automatic loan payments from your account.
What to look out for: Flagstar home equity loans aren't available in Texas.
Best for Small Loan Amounts: Connexus Credit Union
7.74% to 7.96%
Undisclosed
- Higher max CLTV
- Allows smaller loan amounts
- Not available in Maryland, Texas, Hawaii, or Alaska
- Doesn't disclose lender closing fees
- Use the funds from your Home Equity Loan for home renovations or repairs, college tuition, consolidating debt, vacations, and more – you decide!
- Your interest rate and monthly payment amount will not change over the course of your Home Equity Loan, making budgeting a breeze.
- Within 24 hours of applying, a personal lender will reach out to get the process started and will be available to chat whenever you have questions. To speak with a personal lender with Home Equity Loan expertise today, book an appointment.
- Most Home Equity Loans can be processed entirely online in just minutes and do not require a home appraisal.
Connexus Credit Union offers smaller loan amounts, shorter terms, and a higher max CLTV, making it an affordable choice for borrowers looking to fund smaller projects or keep their interest costs down.
With Connexus Credit Union, borrowers can get a home equity loan with a term of just five years with loan amounts as low as $5,000. If you want to limit your overall interest costs, a shorter term is often a good choice because you'll spend less time paying back the loan.
What to look out for: Connexus doesn't disclose whether it charges its own closing fees, but says borrower closing costs can range from $175 to $2,000. Connexus home equity loans aren't available in Maryland, Texas, Hawaii, or Alaska.
Finding the Right Home Equity Loan for You
Borrower Priorities May Differ
Home equity loans can come in different amounts and term lengths with a variety of benefits and features depending on what lender you're working with. That's why it's so important to make sure the lenders you're considering can meet your needs.
Loan Features Beyond Rates
As you search for the right home equity loan lender for you, consider the loan amounts a lender offers as well as the amount of equity it will let you take out of your home.
Think about what term length you want as well. Shorter terms will have higher monthly payments, since you have less time to pay back what you borrowed. Longer terms can be more affordable on a monthly basis, but you'll pay a lot more in interest over time.
Don't only focus on getting the lowest rate possible. You want a loan that's going to meet your needs while being overall affordable.
Key Factors to Consider When Choosing a Home Equity Loan
Interest Rates
Your interest rate will determine how much you'll pay to borrow from your home's equity. The lower your rate, the lower your monthly payment will be.
Reach out to at least two or three different lenders you're interested in to get quotes so you can compare costs. Be sure to consider both the rates you're offered as well as any fees the lender charges.
Loan Fees
Home equity loans come with some closing costs, but you could pay more or less depending on what lender you work with. Some lenders charge their own fees on top of third-party closing costs like appraisal fees.
Prepayment Penalties
Depending on the lender, you may have to pay a fee if you end up paying off your home equity loan early. Not every lender charges a prepayment penalty, so be sure to ask your lender what its rules are.
Term Lengths
You may be able to choose a term length as short as five years or up to 30 years. Think about what term length makes the most sense for you and look for lenders that offer that length as an option.
Loan Amounts
Minimum and maximum loan amounts vary by lender, so consider how much you're looking to borrow as you shop for the right lender.
Finding Your Perfect Match: Where to Look for Home Equity Loans
Start With Lenders You Trust
It might make sense to get a home equity loan from a financial institution you've worked with before, especially if you liked their customer service and found them to be affordable. If your current bank offers home equity loans, see if they have any customer discounts.
Credit Union
If you're a member of a credit union that offers home equity loans, they may be a good choice if you're looking for a more personalized experience. They may be more affordable as well.
Online Lenders
Online mortgage lenders typically offer a more convenient application process and better digital tools. They may also be able to give you a lower rate, but this isn't always the case, so be sure to shop around.
Big Banks and Mortgage Lenders
Many of the largest banks and mortgage lenders in the country offer options for tapping into your home's equity. Because of their size, they may be able to offer a wider range of products or perks compared to smaller competitors.
Should You Get a Home Equity Loan?
Do You Have the Equity?
You'll need to have sufficient equity in your home to get a home equity loan. Equity is the portion of your home's value that isn't tied to a loan. If your home is worth $500,000 and your mortgage balance is $400,000, you have $100,000 in equity.
You'll typically need to leave some equity untouched when taking out a home equity loan. Some lenders may require you to maintain at least 20% equity in your home, but it varies.
Can You Afford the Monthly Payments?
You'll need to pay your home equity loan on top of any other monthly payments you make, including your mortgage payment. Make sure your budget can handle another payment, especially if you plan to borrow a large sum.
What are the Funds For?
Borrowing against your home's equity can be risky, so you want to make sure it actually makes sense to do so.
Home equity loans are popular for debt consolidation or home improvement projects, since you can borrow larger amounts of money at a lower rate than you might otherwise be able to. These are also things that can help you improve your financial situation overall, either by helping you pay down high-interest debt or making improvements that add value to your home.
Best Home Equity Loan Lenders FAQs
The cheapest way to borrow against your home's equity depends on your needs and how rates are trending. Be sure to compare rates and fees on multiple options to see which type of home equity loan is the most affordable for you. Consider that on a HELOC, you'll only pay interest on what you owe, while home equity loans have the benefit of a fixed interest rate. Cash-out refinances typically have the lowest rates, but you could end up paying more in fees.
Home equity loan rates fluctuate daily, but you can check out Business Insider's guide to current home equity loan rates to see how they're trending today.
HELOCs allow you to borrow against a line of credit and come with a variable rate, while home equity loans are installment loans that are paid back in equal amounts over time at a fixed rate.
If you use your home equity loan funds to "buy, build or substantially improve your home," the interest is tax deductible, according to the IRS. But if you use it for personal expenses, you won't be able to deduct it.
We've gathered our top picks for the best home equity loan lenders here, and our current top pick is U.S. Bank. But the best one for you depends on your needs and current financial situation. It's generally a good idea to shop around with a few lenders to see which offers you the best deal in terms of rates and fees.
Mortgage lenders often look for scores of at least 680 for a home equity loan, though some may have requirements that are higher or lower than this.
When you're researching potential banks to get a home equity loan from, be sure to consider the total costs of a potential loan. This includes both fees and the interest rate you'd pay. Consider other features and benefits a lender offers as well, and whether the lender has good customer reviews.
A home equity loan takes equity out of your house and attaches another loan to your property. If you default on the home equity loan, the lender can foreclose.
Why You Should Trust Us: How Did We Choose the Best Home Equity Loan Lenders?
We looked at the top mortgage lenders in the U.S. that offer home equity loans to find our favorites. We then evaluated them based on four main criteria:
- Affordability. The amount of money you spend getting a home equity loan can vary a lot depending on what lender you go with. We evaluated home equity loan affordability based on mortgage rates, fees, and max CLTV and looked for lenders that offered opportunities for borrowers to save. When looking at rates, we looked at both the lender's current advertised APR and, where available, its minimum and maximum APR. For fees, we looked at whether the lender charges any application or closing fees. Home equity loans typically come with some third-party closing costs, but some lenders will also charge their own fees, as well. All of our top picks say they don't charge lender closing costs, with the exception of Connexus, which doesn't disclose whether it charges any additional fees.
- Customer satisfaction. We looked at online customer reviews to gauge how satisfied customers are with each lender.
- Trustworthiness. Most of our top picks have an A+ rating from the BBB. We also considered any recent public scandals from the last three years.
- Availability. Some lenders only offer home equity loans in certain states, so we looked at where each lender offers home equity loans. All of our picks lend in most states, and typically only have one or two states where they don't lend.
See our full ratings methodology for mortgage lenders »
