The best HELOC lenders 2020

Like many mortgage products, HELOCs are an incredibly competitive market, which is good news for borrowers. To capture your attention — and business — lenders need to offer something unique or cater to the needs of specific borrowers.

Best HELOC lenders of 2020

Why these 5 lenders stand out in a saturated market.

1. Bethpage Credit Union

Best for: Low rates
As a not-for-profit, this credit union passes on its savings to members in the form of low rates. Its HELOC has one of the best introductory rates we’ve seen. For the first year, you’ll earn a 3.99% APR. After that, Bethpage charges a variable rate for the life of the loan, which is still competitive at 5.5%.Bethpage offers lines of credit up to $2 million. This is impressive, given that many traditional banks cap theirs at $500,000.

Features:

• To qualify for the introductory rate, you’ll need a maximum loan-to-value ratio of 75%. You also need to be a member. To join, deposit at least $5 into a Bethpage savings account.
• The credit union covers the closing costs for HELOCs up to $500,000 — though if you close the line within 36 months, you’ll have to reimburse them.
• You can lock in a portion of your funds at a fixed rate with the Fixed-Rate Loan Option.
  There’s a minimum initial draw of $25,000.

Read Bethpage Credit Union review

2. U.S. Bank

Best for: Flexible lending requirements
With this bank, you can open a line of credit between $15,000 and $750,000 (or $1 million in California). Compared to many traditional lenders, U.S. Bank has a broad view of credit and considers borrower’s full credit history, not just their score. This makes it an ideal choice for those who are in the process of building or rebuilding credit.

The bank doesn’t charge closing costs and waives the $90 annual fee — which kicks in after the first year — for customers with a U.S. Bank Platinum Checking Package. The rates vary between states and borrowers, but typically range from 4.6% to 8.1% APR.

Features:

• Lengthy 20-year repayment period.
• Convenient ways to withdraw money from your line of credit, including a Visa card and online banking.
• Interest rate discounts for eligible customers.
• No early closure fees.
• You have the option to convert a portion of your funds to a fixed rate and keep the rest in a flexible line of credit.

Read U.S. Bank home equity review

3. Bank of America

Best for: Loyalty perks
This Big Four bank has a strong HELOC program for a few reasons. It offers HELOCs from $25,000 to $1 million, and $500,000 on secondary residences, which is rare.It also rewards eligible customers with a string of interest rate discounts. If you set up automatic payments from your Bank of America checking or savings account, you’ll score a discount of 0.25%. Preferred Rewards members can slash their rate further by 0.125% (Gold tier), 0.25% (Platinum) or 0.375% (Platinum Honors). Finally, the bank offers an initial draw discount of 0.1% for every $10,000 withdrawn. If you meet the criteria, these savings can stack up.

Features:

• Borrow up to 85% of your home’s equity.
• The bank takes care of the closing costs and doesn’t charge application or annual fees.
• For predictable payments, you can convert all or part of your variable-rate balance to a fixed-rate.
• Online application and live chat manned by humans, not bots.
• To apply, you’ll need a loan-to-value ratio of 80% or less.
• With over 4,000 branches across the US, Bank of America has a large physical presence.

Read Bank of America HELOC review

4. Figure

Best for: Same-day approval
This online lender is making waves in the market for its fast turnaround. If you’re eligible for a HELOC with Figure, you may be approved within minutes and receive the funds in as little as five days. To put that into context, most lenders take up to a month to process and fund a HELOC.

Figure’s HELOCs have a fixed rate that starts at 4.99% APR. There are a few loan lengths to choose from: five, seven, 10 or 15 years. To apply for a HELOC, you’ll need a minimum credit score of 600 and a maximum loan-to-value ratio of 95%.

Features:

• Open a line of credit between $15,000 and $150,000.
• HELOCs are available in 37 states and the District of Columbia.
• Figure charges a one-time origination fee, which can add up to 3% of the loan amount. It waives all other closing costs.
• The lender accepts secondary residences and vacation homes.
• No hard credit pull.

Read Figure reviewGo to Figure website

5. LendingTree

Best for: Comparing multiple lenders
LendingTree isn’t a lender — it’s an online marketplace that partners with a range of HELOC lenders across the country. Once you fill out an application, you’ll be matched with a list of lenders that meet your needs. The site generates rates, as well as the pros and cons of each loan and lender. This not only reduces your research time, but it may open your eyes to smaller or nontraditional lenders you may not have otherwise considered.

To qualify for a loan, you’ll need at least 20% equity in your home and a debt-to-income ratio of 45% or less.

Features:

• Compare a variety of vetted lenders across all states.
• Submit one application to receive a range of quotes.
• Options for borrowers with bad credit or other financial factors working against them.
• Comprehensive and transparent website.
• The service doesn’t stop when you get a loan. If Lending Tree finds you a better rate, it will send an alert to your account.

Read LendingTree reviewGo to LendingTree website

LendingTree

Compare mortgage and home equity rates from multiple lenders for free

Compare on LendingTree secure site

More details

Features	Loan types: Conventional, Jumbo, FHA, VA, USDA, Home Equity, HELOC, Reverse, Refinance Minimum credit score: Conventional: 620 FHA: 500 VA: 620 USDA: 640 Jumbo: 800 Minimum down payment: 3%

How we came up with this list

To create our list of the best HELOC lenders, we began by confirming each lender’s legitimacy, business practices and site security. We also scanned reviews from the Better Business Bureau and TrustPilot to get an idea of their customer service and engagement.

We then weighed up each lender’s rates, fees, discounts, loan ranges, line amounts and unique features, such as introductory rates and willingness to open HELOCs on second homes. The lending market is competitive, and we know it can be confusing. We narrowed down a list of lenders that met multiple lending criteria. Then, we thought about what matters most to our range of readers.

While we make money from the partners we feature on finder.com, every lender had to meet our strict editorial standards to make the list.

Read the full methodology of how we rate home loan providers.

What should I watch out for?

Though your home is collateral, a HELOC is still a loan you’ll need to commit to for years or decades to come. When you’re comparing lenders, take these factors into account:

• The length of promotional periods. If the introductory rate lasts for six months or more, it’s worth looking into. Otherwise, the lender may just be trying to hook you in. Research the rate that will apply after the introductory period.
• High maximum APRs. Since HELOCs have variable rates, yours may rise and fall with the market. Some lenders, like Wells Fargo, cap their interest rates at a low number so your payments are more predictable, even if the market isn’t.
• Short repayment periods. If you want more time to pay off your HELOC, hunt for a lender that offers a 10-, 15-, 20- or 25-year repayment period.
• Minimum withdrawals. With some lenders, you’ll have to withdraw a minimum amount of money each time you access your line of credit. Remember, you only pay interest on the money you use, so you can minimize the interest you’ll pay overall by choosing a lender that offers low or no minimum withdrawals.
• Inactivity fees. If you don’t draw from your line of credit at least once a year, you may be slapped with a fee by some lenders.
• Prepayment penalties and early closure fees. Many lenders will penalize you for closing or paying off your HELOC early, typically within three to five years.
• Balloon payments. This is a large, one-time payment at the end of the loan term. It can be hefty, so double-check that your lender doesn’t charge one before signing anything.
• Additional fees. Some lenders charge closing costs or annual, membership, maintenance and transaction fees.

Which lenders have the best benefits?

To capture your business, many lenders offer additional benefits. Here, we’ve outlined some of the most useful benefits. This isn’t an exhaustive list, so ask any prospective lenders if they provide these perks.

How to get the best HELOC rates

Your HELOC rate will depend on your credit score, where you live and how much equity you have in your home. The equity requirements vary between lenders and are often out of your control. But in most cases, you’ll need good to excellent credit and a debt-to-income ratio of 43% to 50% to open a HELOC.

2020‘s best HELOC rates

Bottom line

With so many lenders vying for your business, you’re in a good position to pick a lender that suits your needs. In this roundup, we’ve highlighted some lenders that cater to the diverse needs of borrowers. Learn more about the ins and outs of HELOCs in our guide.

Frequently asked questions

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

  Both loans allow you to access the equity in your home. With a home equity loan, you’ll get the money in a lump sum and then pay it back according to a fixed interest rate and schedule.

  A HELOC functions much like a credit card. You can access the cash as you need it during the draw period up to the credit limit. The rates are variable and can fluctuate with market conditions.

• Can I apply for a HELOC online?

  It depends. Several lenders — such as Figure and Bank of America — offer online applications, while others require you to pick up the phone or visit a branch to apply.

• How do lenders determine the credit limit?

  Your credit limit hinges on your credit history and income, as well as the value of the property and the percentage of equity the lender approves you to borrow against. Typically, high-value properties lend themselves to higher credit limits.

• When do I have to start paying off my HELOC?

  A HELOC is divided into two parts: the draw period and repayment period. During the draw period — which lasts five to 10 years — you’ll typically make interest-only payments on the amount you borrowed. Some lenders will allow you to make payments toward the principal as well, which will lower the total cost of your loan.

  When the draw period is over, the repayment period begins. You’ll have a set number of years, usually 10 to 20, to pay off the total amount you borrowed, plus any interest.