Best HELOC Lenders of 2023
A HELOC lets you tap your home's equity. Compare our selections for best HELOC lenders.
Some or all of the mortgage lenders featured on our site are advertising partners of NerdWallet, but this does not influence our evaluations, lender star ratings or the order in which lenders are listed on the page. Our opinions are our own. Here is a list of our partners.
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 |
|---|---|---|---|---|---|
4.0/5 Best for large withdrawals | National | 90% | N/A | ||
5.0/5 Best for fixed-rate option | National | 85% | 660 | ||
 Bethpage Federal Credit Union: NMLS#449104 Learn moreat Bethpage Federal Credit Unionat Bethpage Federal Credit Union | 5.0/5 Best for large withdrawals | National | 85% | 670 | Learn moreat Bethpage Federal Credit Unionat Bethpage Federal Credit Union |
4.5/5 Best for no annual fees | Regional | N/A | N/A | ||
4.5/5 Best for large withdrawals | National | 85% | 640 | ||
4.0/5 Best for no annual fees | National | N/A | N/A | ||
4.0/5 Best for fixed-rate option | National | 85% | N/A | ||
4.5/5 Best for existing customers | National | 85% | 680 | ||
4.5/5 Best for long draw period | Regional | 90% | 640 | ||
4.5/5 Best for fixed-rate option | National | 80% | N/A |
Bethpage Federal Credit Union: NMLS#449104
National
85%
670
- Offers a fixed-rate option.
- No annual fees.
- Offers a fixed introductory rate.
- Minimum draw required for best rate.
Guaranteed Rate: NMLS#2611
National
640
85%
- CLTV borrowing limit over 80%.
- Offers a fixed-rate option.
- Offers paths for rate discounts.
- No information about annual fees.
- Offers a fixed-rate option.
- Borrowing limit of 85% CLTV.
- Annual fee of $99.
- Offers a fixed-rate option.
- Offers a rate discount for existing customers.
- Annual fee of $50.
State Employees' Credit Union: NMLS#430055
Regional
90%
640
- Long draw period of 15 years.
- Introductory offer is below the prime rate.
- Credit union membership is limited by restrictive requirements.
How a HELOC works
A HELOC works similarly to a credit card: You’re able to borrow up to a certain limit as needed, rather than taking out a lump sum all at once. The lender uses your home’s value to set the HELOC limit, and they’ll let you borrow a percentage of what you own. 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'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.
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.
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. You risk losing out on equity profits by mortgaging the future value of your home, so think carefully before choosing this option.
More from NerdWallet
Last updated on March 1, 2023
Methodology
The star ratings on this page reflect each lender's home equity line of credit star rating. HELOC star ratings are awarded based on the following evaluated factors for reviewed mortgage lenders that offer HELOCs: whether a fixed-rate option is available, CLTV borrowing limits, annual fees and transparency on key factors.
NerdWallet reviewed more than 50 mortgage lenders, including the majority of the largest U.S. mortgage lenders by annual loan volume (measured among lenders with 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 in this roundup, lenders must score a 4 or above according to our HELOC methodology.
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 2021 HMDA data for origination volume, origination fee, average interest rate and share-of-product data.
NerdWallet's Best HELOC Lenders of 2023
- Alliant: Best for large withdrawals
- Bank of America: Best for fixed-rate option
- Bethpage Federal Credit Union: Best for large withdrawals
- Golden 1 Credit Union: Best for no annual fees
- Guaranteed Rate: Best for large withdrawals
- Homebridge: Best for no annual fees
- PenFed: Best for fixed-rate option
- PNC: Best for existing customers
- State Employees' Credit Union: Best for long draw period
- Truist: Best for fixed-rate option
Frequently asked questions
- Are banks still offering HELOCs?
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.
- What credit score do you need for a HELOC?
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.
- Is a HELOC tax-deductible?
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 your home, according to the IRS.
