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A home equity loan is a type of second mortgage that lets you take out equity in your home for things like home renovations, debt consolidation, or other major expenses.
Our top home equity lenders have no fees, high customer ratings, and are available anywhere in the United States. They also allow for higher combined loan-to-value (CLTV) ratios, which means borrowers with less equity in their home can still qualify for a loan.
Best Home Equity Lender: US Bank
This lender offers home equity loans ranging from $15,000 to $750,000, which is a wider range than many other lenders offer. You can get a loan for up to 30 years.
If you have a checking or savings account with a US bank, you may qualify for a 0.5% rate reduction if you set up automatic payments.
Top Overall Finalist: Navy Federal Credit Union
This lender is a solid option for VA loan borrowers, who might not have a ton of equity built up if they put 0% on their home when they bought it. It also has good customer reviews online.
Navy Federal is our “Best Overall” because, while a very strong lender overall, you must be a member of the Navy Federal Credit Union to obtain a loan from this lender. To qualify, you must be a member of the military, veteran, family member of someone who served, or Department of Defense civilian.
Best for Lower Credit Scores: Find Out
Discover offers home equity loans with terms of 10, 15, 20 and 30 years and loan amounts ranging from $35,000 to $300,000.
You will not pay any closing costs with this lender. However, if you repay your loan within three years, you will have to pay Discover a portion of the closing costs, up to $500. This fee does not apply if you live in Connecticut, Minnesota, North Carolina, New York, Oklahoma or Texas.
Best for large loans: Flagstar Bank
If you qualify, you can get a home equity loan from Flagstar for any amount between $10,000 and $1 million. It also doesn’t charge lender fees, although you may still have to pay third-party fees at closing.
If you have a bank account with Flagstar, you could potentially qualify for a 0.25% rate reduction if you set up automatic loan payments from your account.
Best for small loan amounts: Connexus Credit Union
With Connexus Credit Union, borrowers can get a home equity loan for just five years with loan amounts as low as $5,000. If you want to limit your overall interest charges, a shorter term is often a good choice because you’ll spend less time repaying the loan.
Connexus does not disclose whether it charges its own closing costs, but says borrower closing costs can range from $175 to $2,000.
Other Home Equity Lenders We Considered
- Northpointe Bank: Northpointe is one of our top mortgage lenders, but it does not provide information on requirements or features that come with its home equity options.
- Rocket Mortgage: Rocket Mortgage is our preferred lender for refinancing, but it does not disclose rates or other information for its home equity loans.
- TD Bank: Home equity loan offers from this lender are not available in most states.
- Regions: Regions is a solid home equity lender, but it’s only available in certain states.
Methodology: How We Chose the Best Home Equity Lenders for 2022
We’ve looked at the major mortgage lenders in the United States that offer home equity loans. We then evaluated them according to four main criteria:
- Affordability. We assessed the affordability of home equity loans based on rates, fees, and maximum CLTV. When reviewing rates, we looked at both the current APR advertised by the lender and, if applicable, their minimum and maximum APR. For fees, we looked at whether the lender charges an application or closing fee. Home equity loans usually come with third-party closing costs, but some lenders also charge their own fees. All of our top picks say they don’t charge the lender closing costs, with the exception of Connexus, which doesn’t disclose whether it charges any additional fees.
- Client satisfaction. We looked at online customer reviews to gauge how satisfied customers were with each lender.
- Reliability. Three of our top picks have an A+ rating from BBB. The two that don’t are Navy Federal Credit Union, which has an NR (“No Rating”), and US Bank, which currently has no rating listed. We also considered all recent public scandals from the past three years.
- Availablity. Some lenders only offer home equity loans in certain states, so we’ve looked at where each lender offers home equity loans. All of our picks lend in most states and usually only have one or two states where they don’t lend.
Are these home equity lenders trustworthy?
The Better Business Bureau ranks companies based on responses to customer complaints, honesty in advertising, and transparency in business practices. Here are the BBB ratings of our top home equity lenders:
All but two of our top picks have an A+ rating from the BBB.
The Navy Federal Credit Union has an NR, or “No Rating”, because it is currently responding to previously closed customer complaints. US Bank currently does not have a rating as their page is being updated.
In 2020, US Bank paid the US government $200 million when it was accused of approving FHA loans for mortgage insurance even though a) the borrowers did not qualify for FHA loans, or b) US Bank has not checked their credit ratings.
In 2020, a Navy Federal employee claimed the lender pressured mortgage underwriters to approve the loans even though they did not have sufficient reason to believe the applicants could repay the loans. She sued and said the Navy Federal retaliated against her whistleblower, but she dropped the case in late 2020.
Frequently Asked Questions
A home equity loan is a second mortgage that borrows against the equity in your home.
Equity is the value of your home minus any outstanding mortgages you have on the property. For example, if your house is worth $300,000 and you still owe $100,000 on your mortgage, you have $200,000 of equity. With a home equity loan, you could borrow against that $200,000 to do things like make repairs or improve your home.
Home equity loans are installment loans, which means that you will receive your funds in a lump sum at closing and then repay them over a set period of time in regular, equal installments. Home equity loans have fixed interest rates, so your rate and payment amount will stay the same for the life of the loan.
Since a home equity loan is a mortgage, the lender can foreclose on your home if you stop making payments. This is what makes these loans risky. Although you can generally borrow more with a home equity loan – and often at a lower rate – than some other options, you should consider whether loan options that don’t use your home as collateral might make more sense for you. you.
If you fail to pay a personal loan or a credit card, for example, your credit will take a big hit, but you won’t have to worry about losing your home.
If you use the funds from your home equity loan to “purchase, 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 rounded up our top picks for the best home equity lenders here, but which one is right for you depends on your needs and current financial situation. It’s usually a good idea to shop around with a few lenders to see which one gives you the best deal in terms of rates and fees.