Best HELOC Lenders

Our research team compared more than 30 popular lenders to find our top five picks based on consumer reviews, interest rates, fees, loan amounts and other features. The best HELOC lenders have high LTV limits, long repayment periods, competitive annual percentage rates and low fees and are available nationwide.

A HELOC is a type of financing that lets a homeowner borrow funds based on their home equity. With a HELOC, you can borrow money up to a credit limit and pay back your balance over a number of years. It is a second mortgage, meaning it doesn’t replace your primary mortgage (like a refinance does).

A HELOC is similar to a credit card in that it’s a revolving line of credit, which means you can make withdrawals up to a specified credit limit repeatedly, pay off the debt as you go and then withdraw funds again as needed. However, there is a limit to how long you can borrow using a HELOC.

A HELOC has two phases: the draw period and the repayment period. During the draw period (typically from five to 10 years), you can withdraw money up to the credit limit. Like with a credit card, you’re expected to make minimum monthly payments during the draw period, though these payments are often interest-only and don’t go toward the principal.

After the draw period closes, you’ll enter the repayment period, during which you make principal and interest payments until the balance is paid off. Repayment periods are often longer than draw periods, so a 10-year draw period could have a 20-year repayment period.

The credit limit is calculated as a percentage of the home’s appraised value minus the combined total of any principal loan balance securing the home. Most lenders typically set the percentage (called a combined loan-to-value ratio, or CLTV ratio) between 60% and 85%.

Here’s how it works: Say your home has a current appraisal value of $250,000. The outstanding balance on your mortgage loan is $160,000. If you obtain an 80% CLTV HELOC, you may be able to borrow 80% of $250,000, minus the $160,000 you still owe on your mortgage. Your potential credit limit may equal $40,000.

A HELOC and a home equity loan are similar in that they both draw funds from the equity in a property. However, they differ in how and when these funds are disbursed. With a home equity loan, the funds are distributed as a lump sum of cash upfront. Home equity loans generally come in handy for situations where the borrower has, for example, an accurate cost estimate for a project. With a HELOC, you can access funds as needed during the draw period.

As with any borrowing decision, it’s a good idea to read customer reviews and gather quotes from multiple lenders before you make your decision. Some lenders may discount upfront fees; others may offer lower rates. You’ll want to consider the overall cost of the HELOC, including all fees and charges.

You can use these points to compare lenders:

The application process for a HELOC is similar to the mortgage loan application process, though it may not require as much personal and financial information. You’ll need to answer questions about your current income, assets and debt. The lender will likely request proof of income and other documentation, like a W-2 and bank statements. A low DTI ratio is also ideal. Each lender may set a different DTI cap, but most look for a DTI ratio of 43% or lower.

You’ll want to also make sure you have at least 15% to 20% equity in your home based on the current appraised value, as well as a good credit score. Most lenders also look for a credit score of 680 or higher to qualify for a HELOC.

If you get a HELOC from a lender that’s not your current mortgage lender, you may need to show proof of payment history. Lenders need to see that you can manage your existing debt effectively. The lender will then use all of this information to determine if you qualify for a HELOC. It will also use this information to determine your credit limit and interest rate.

There are also a few things you’ll want to do before you apply for a HELOC:

If you want to use your equity without taking out a line of credit, you might consider other loan and refinancing options. Home equity loans, cash-out refinances and reverse mortgages all allow borrowers to use their equity for a variety of purposes.

Home equity loan

A home equity loan lets you borrow against the equity you have in your home. Home equity loans are typically disbursed in a single payment and are generally repaid with fixed monthly payments.

Cash-out refinance

A cash-out refinance is a type of refinancing that lets you convert some of your equity into cash. It involves taking out a new mortgage loan larger than your existing balance, paying off your old mortgage loan and keeping the balance in cash. Generally, you can choose between adjustable- and fixed-rate options.

Reverse mortgage

A reverse mortgage is generally for individuals 62 and older. It lets homeowners borrow against the equity in their homes. The lender makes a lump sum or regular payments to the homeowner or provides a line of credit, and the loan doesn’t need to be repaid until after the borrower dies or moves out of the house.

To make our choices for the top HELOC lenders, we collected 15 individual data points from 31 mortgage lenders, including over 14,000 customer reviews and overall ratings from ConsumerAffairs readers submitted between 2019 and 2022. We then used this data to examine the factors that have the most impact on borrowers:

• Minimum credit score: We considered this for all lenders, but there wasn’t much variation among lenders to make it a dominant factor in our choices.
• Maximum loan amount and maximum LTV ratio: We gave higher consideration to lenders that allow a higher LTV ratio (most common is 80%) and higher loan amounts.
• APR: We looked for lenders that have starting APRs below 10%. However, market conditions fluctuate rapidly, so less emphasis was placed on this when making our choices.
• Repayment period: We examined payment term ranges and noted which lenders offer repayment periods of 120 months or longer.
• Availability: We reviewed if borrowers in all states could get a HELOC with the lender, and those with nationwide availability were given more consideration — particularly if they have an online application process.
• Closing costs and other fees: We considered lenders that have closing costs ranging from 2% to 5%, as well as rate discounts and low origination fees.

All of our top picks offer comparable starting APRs, allow high LTV ratios and offer long draw periods, long repayment periods and low closing costs and fees. They also have other features, such as online applications, nationwide availability and high maximum loan amounts.

Since customer feedback is a critical indicator when evaluating companies, this was an important consideration when selecting our top picks. However, for those companies on our list with no ratings on ConsumerAffairs, there were other variables that made them stand out as good options for HELOCs, and we factored those into our decisions.