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Compare Home Equity Loan Lenders – Unlock Your Equity

A home equity loan is a good source of money for major projects and one-time expenses because it’s a lump-sum equity draw. It lets you borrow money using your home as collateral. You'll get a lump-sum payment and repay the loan with fixed-rate interest over a predetermined term. Explore our selected home equity and cash-out refi lenders.

Compare Home Equity Loan Lenders – Unlock Your Equity

Rocket Mortgage, LLC
Learn moreat Rocket Mortgage, LLC
Rocket Mortgage, LLC

Rocket Mortgage, LLC: NMLS#3030

4.0
NerdWallet rating
National / regional

National

Max LTV

90%

Min. credit score

680

Learn moreat Rocket Mortgage, LLC
Key factsRocket Mortgage allows borrowers to take out a home equity loan on a second property, though they don't offer e-closing.
Pros
  • Terms of 10 and 20 years.
  • No fee for early repayment.
  • Available for second homes, too.
Cons
  • Doesn’t publish home equity loan rates online.
  • Loan closing cannot be accomplished online.
Read Full Review
Farmers Bank of Kansas City
Learn moreat Farmers Bank of Kansas City
Farmers Bank of Kansas City

Farmers Bank of Kansas City: NMLS#613839

3.5
NerdWallet rating
National / regional

National

Max LTV

100%

Min. credit score

660

Learn moreat Farmers Bank of Kansas City
Key factsGreat for: High borrowing limit
Pros
  • No annual fee.
  • Offers a high borrowing limit compared to other lenders.
  • Doesn’t charge a penalty for early repayment.
Cons
  • Doesn’t offer a fixed repayment option.
  • Rates and fee information are not published online.
BMO
Learn moreat BMO
BMO

BMO: NMLS#401052

4.0
NerdWallet rating
National / regional

National

Max LTV

75%

Min. credit score

620

Learn moreat BMO
Key factsGreat for: Flexible loan terms
Pros
  • Offers 5-, 10-, 15- and 20-year terms.
  • Displays interest rates, including APR, for home equity loans.
  • Borrowers can apply for and track loans online.
Cons
  • May charge a penalty for early repayment.
  • Doesn’t offer home equity loans for investment properties or second homes.
  • About home equity loans

    Home equity loans typically have a fixed interest rate, meaning the payment is the same each month; that makes them easier to factor into your budget. But remember: That home equity loan payment will be in addition to your usual mortgage payment.

    Since it’s a lump-sum equity draw, a home equity loan is a good source of money for major projects and one-time expenses.

    Home equity loans pros and cons

    • Pro: A fixed interest rate.

    • Pro: Monthly payments won't change and are for a set period.

    • Con: Tapping all the equity in your home in one fell swoop can work against you if property values in your area decline.

  • What is the difference between a home equity loan and a home equity line of credit (HELOC)?

    HELOCs and home equity loans are similar in that you’re borrowing against your home equity. But a loan typically gives you a sum of money all at once, while a HELOC is similar to a credit card: You have a certain amount of money available to borrow and pay back, but you can take what you need as you need it. You’ll pay interest only on the amount you draw.

    HELOCs often begin with a lower interest rate than home equity loans but the rate is adjustable, or variable, which means it rises or falls according to the movements of a benchmark. That means your monthly payment can rise or fall, too.

  • Which is better: HELOC or home equity loan?

    Before deciding whether to apply for a HELOC or a home equity loan, consider how much money you really need and how you plan to use it. Factor in interest rates, fees, monthly payments and tax advantages as you weigh your options.

    Using the equity in your home before selling can be a powerful financial benefit. But remember, you're using your home as collateral. One risk to avoid, whether you choose a home equity line of credit or a loan: Resist funding short-term needs with what may eventually amount to a long-term loan.

To recap our selections...

NerdWallet's Compare Home Equity Loan Lenders – Unlock Your Equity

  • Rocket Mortgage, LLC
  • Farmers Bank of Kansas City
  • BMO

Frequently asked questions

  • As you make monthly mortgage payments, you’re building equity in your home. You’re growing the share of your home that you actually own, and once you have enough equity (typically at least 15-20%), you can borrow against it and spend the cash as you wish.

    You’ll receive it all at once in the form of a loan, which is why a home equity loan can be a popular choice for borrowers who know exactly how much they’ll need to accomplish their goals. Shopping around to multiple lenders can help ensure that you get the best rate, which is determined by your debt-to-income ratio, credit score and the amount of equity that you’re borrowing, among other factors.

  • Your credit score is a major factor influencing your interest rate. You're more likely to be approved for a home equity loan with a credit score of 700 or higher. The lowest rates tend to go to borrowers with credit scores of 740 or higher.

    Interest rates also vary by loan term.

    Mortgages with longer terms tend to have higher interest rates. That's the case with home equity loans, too. In NerdWallet's survey of home equity loans, the average rate on loans with 15-year terms is usually higher than on loans with 10-year terms, which usually have higher rates than loans with five-year terms. This isn't an ironclad rule, though. Sometimes, some lenders charge lower rates for loans with longer terms. That's why it pays to shop around for a home equity loan.

    Some lenders will give a discount on a home equity loan's interest rate if you have another account with the bank.

  • If you need a large amount of cash, a home equity loan will likely get you a lower interest rate than a comparable personal loan. But if you need to borrow $10,000 or less, a personal loan, or even a credit card, could do the job — and you won't be using your home as collateral.

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