Best HELOC Lenders of 2022
A HELOC lets you tap your home's equity. Compare our selections for best HELOC lenders.
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A home equity line of credit, or HELOC, is a second mortgage that lets you borrow against the value of your home. You tap some of your equity as needed and pay back only what you borrow. Borrowers often use HELOCs to finance home improvement projects, educational expenses or debt consolidation.
The interest rate on a HELOC tends to be lower than rates on credit cards and personal loans. Lenders use your loan-to-value ratio, or LTV, to decide if you have enough equity for a HELOC.
NerdWallet has chosen some of the best HELOC lenders to help you find the one that's right for you.
A home equity line of credit, or HELOC, is a second mortgage that lets you borrow against the value of your home. You tap some of your equity as needed and pay back only what you borrow. Borrowers often use HELOCs to finance home improvement projects, educational expenses or debt consolidation.
The interest rate on a HELOC tends to be lower than rates on credit cards and personal loans. Lenders use your loan-to-value ratio, or LTV, to decide if you have enough equity for a HELOC.
NerdWallet has chosen some of the best HELOC lenders to help you find the one that's right for you.
Best HELOC Lenders
| Lender | NerdWallet rating | National / regional | Max LTV | Min. credit score | Learn more |
|---|---|---|---|---|---|
 PenFed: NMLS#401822 | Best for fixed-rate option | National | 80% | N/A | Read review |
 Flagstar: NMLS#417490 | Best for borrowers with a lot of equity | National | 80% | 680 | Read review |
 Bank of America: NMLS#399802 | Best for long-term financial planning | National | 85% | 660 | Read review |
 San Diego County Credit Union: NMLS#580585 | Best for avoiding fees | Regional | 70% | 620 | Read review |
 US Bank: NMLS#402761 | Best for fixed-rate option | National | 80% | 620 | Read review |
 State Employees Credit Union: NMLS#430055 | Best for large withdrawals | Regional | 90% | 640 | Read review |
 Alliant: NMLS#197185 | Best for large withdrawals | National | 90% | N/A | Read review |
PenFed: NMLS#401822
National / regional
NationalMax LTV
80%Min. credit score
N/AFlagstar: NMLS#417490
National / regional
NationalMax LTV
80%Min. credit score
680Bank of America: NMLS#399802
National / regional
NationalMax LTV
85%Min. credit score
660San Diego County Credit Union: NMLS#580585
National / regional
RegionalMax LTV
70%Min. credit score
620US Bank: NMLS#402761
National / regional
NationalMax LTV
80%Min. credit score
620State Employees Credit Union: NMLS#430055
National / regional
RegionalMax LTV
90%Min. credit score
640Alliant: NMLS#197185
National / regional
NationalMax LTV
90%Min. credit score
N/ACurrent average HELOC rate
Average | High | Low |
|---|---|---|
4.870%. | 5.650%. | 4.040%. |
» MORE: Current HELOC rates
How a HELOC works
A HELOC works like a credit card: You’re able to borrow up to a certain limit, repay some or all of what you took out, then do it again as needed. The lender uses your home’s value to set the HELOC limit. You may borrow during a draw period that lasts for several years and pay interest only on the balance. After the draw period ends, you may no longer take money out, and you pay the principal plus interest.
To obtain the best HELOC rates, make sure you comparison shop, preferably among at least three lenders. By shopping around, you're likely to find the combination of features and interest rate that make the best home equity line of credit for your needs.
Pros and cons of HELOCs
A HELOC can have a variable interest rate, which means it can go up or down over time. When the interest rate rises, the minimum monthly payment may increase, too. Less commonly, some lenders offer a fixed-rate HELOC option, meaning that you can lock in some or all of the loan balance at a specific APR.
A HELOC's main advantage is that it offers flexibility. During the draw period, the minimum monthly payment covers just the interest on the balance, so you don't have to pay principal if you don't want to.
There are two major disadvantages to a HELOC: The interest rate can rise, and you can get in over your head if you're not careful. You may end up borrowing so much that you can't comfortably afford the principal and interest during the repayment period.
HELOCs typically have lower interest rates than credit cards. But defaulting on a HELOC could put your home at risk of foreclosure.
Alternatives to HELOCs
A HELOC is not your only option for tapping your home's equity. If you know exactly how much you need to borrow, you may consider a home equity loan, which you receive as a lump sum and pay back at a fixed rate.
» MORE: Best home equity loan lenders
If you need to borrow more money than you'd qualify for with a HELOC or home equity loan, a cash-out refinance may be the right choice for you. This replaces your original mortgage with a larger one, and you receive the difference between the value of the loan and the amount you currently owe in cash.
Finally, if you cannot qualify for a HELOC, a shared appreciation agreement may be worth exploring. This transaction allows you to sell off a stake in your future equity earnings to a company in exchange for an advance on some of your current equity. This type of agreement is typically for homeowners with a lot of equity but little cash reserves, and most consumers are better served by a HELOC if they can get one.
More from NerdWallet
Last updated on October 3, 2022
Methodology
The star ratings on this page reflect each lender's overall star ratings. Read more about how we determine those ratings.
The lenders on this page are chosen using this methodology:
NerdWallet reviewed nearly 60 mortgage lenders, including the majority of the largest U.S. mortgage lenders by annual loan volume (lenders had to have at least a 1% market share), lenders with significant online search volume and those that specialize in serving various audiences across the country.
For inclusion on this roundup, lenders must offer a HELOC and publish information on NerdWallet’s evaluated HELOC factors online. Evaluated factors are: whether or not a lender offers a fixed-rate option, maximum and intro APRs, CLTV borrowing limits and annual fees.
NerdWallet solicits information from reviewed lenders on a recurring basis throughout the year. All lender-provided information is verified through lender websites and interviews. We also utilized 2020 HMDA data for origination volume, origination fee, rate spread and share-of-product data.
To recap our selections...
NerdWallet's Best HELOC Lenders of 2022
- PenFed: Best for fixed-rate option
- Flagstar: Best for borrowers with a lot of equity
- Bank of America: Best for long-term financial planning
- San Diego County Credit Union: Best for avoiding fees
- US Bank: Best for fixed-rate option
- State Employees Credit Union: Best for large withdrawals
- Alliant: Best for large withdrawals
Frequently asked questions
Yes, banks are still offering HELOCs. At the beginning of the COVID-19 pandemic, some lenders suspended underwriting new HELOCs. Now, some have resumed HELOC lending and some haven't.
Lender requirements vary, but typically you'll need a credit score of 620 or higher. Taking out a HELOC will probably reduce your credit score temporarily when it appears on your credit report.
The interest you pay each year on a HELOC is tax-deductible up to a limit as long as the borrowed money is used to buy, build or substantially improve the home, according to the IRS.
