HEA vs HEI vs HELOC vs Home Equity Loan: What’s the Difference? (2026)

A home equity line of credit (HELOC) and a home equity loan are both loans, you borrow against your equity and pay it back with interest. A home equity agreement (HEA) and a home equity investment (HEI) are the same product with two different names, you’re not borrowing at all. You’re selling a company a slice of your home’s future value in exchange for cash today, with no monthly payments and no interest rate.

Here’s how all four stack up, and how to tell which one actually fits your situation.

HEA vs HEI vs HELOC vs home equity loan at a glance

What is a HELOC?

A home equity line of credit (HELOC) is a revolving line of credit secured by your home, similar to a credit card. You get approved for a credit limit, draw money as you need it during a set “draw period” (often 10 years), and only pay interest on what you’ve actually borrowed.

• Rates are usually variable and tied to the prime rate
• You can borrow, repay and borrow again during the draw period
• Once the draw period ends, you enter a repayment period and start paying down principal and interest
• Your home secures the debt, so missed payments put you at risk of foreclosure

What is a home equity loan?

A home equity loan gives you a specific amount of money in one lump sum, borrowed against your home’s equity. It’s sometimes called a second mortgage or a HELOAN.

• You get all the money up front, not in draws
• Most home equity loans carry a fixed interest rate
• You repay in equal monthly installments over a set term
• Like a HELOC, your home is collateral, so nonpayment risks foreclosure

See the best home equity loan rates available to you today

Use our tool to see estimated rates from top lenders based on your location and financial details. Select whether you’re looking for a home equity loan, HELOC or cash-out refinance.

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What is an HEA (home equity agreement)?

A home equity agreement (HEA) isn’t a loan. You receive a lump sum up front, often around 10% of your home’s value, though this varies by company, in exchange for giving an investment company a larger stake in your home’s future value, commonly two times what you received. There’s no interest rate, no monthly payment and no fixed repayment date. Instead, you settle the agreement, by selling the home, refinancing or buying out the investor’s stake, usually within 10 to 30 years.

Some companies also discount your home’s starting value below its appraised value before calculating that stake, per the CFPB. For example, a company might set your starting value 25% below the appraisal, which increases the company’s share of any appreciation from that lower baseline.

Is an HEI the same thing as an HEA?

Yes. A home equity investment (HEI) and a home equity agreement (HEA) are the same product. Companies simply use different branding, some call themselves investment platforms and use “HEI,” others use the more contract-sounding “HEA.” You may also see the term HESA (home equity sharing agreement), which describes the identical structure. If you see any of these three terms, assume the mechanics are the same: cash now for a share of your home’s future value later.

HELOC vs home equity loan: what’s the real difference?

Both are loans secured by your home, but they’re structured for different needs.

• Access to funds. A HELOC lets you draw money over time. A home equity loan gives it all to you at once.
• Rate type. HELOCs are typically variable. Home equity loans are typically fixed.
• Best for. A HELOC fits ongoing or uncertain expenses, like a renovation with a shifting budget. A home equity loan fits a one-time, known cost, like consolidating a fixed amount of debt.
• Payment predictability. A home equity loan gives you the same payment every month. A HELOC payment can change with your balance and interest rate.

HEA/HEI vs HELOC and home equity loan: the fundamental difference

This is the split that actually matters, and it comes down to one question: are you borrowing money or selling a piece of your home’s future?

• With a HELOC or home equity loan, you keep 100% of your home’s future appreciation. You just owe interest on what you borrowed.
• With an HEA or HEI, you give up a portion of that future appreciation in exchange for avoiding monthly payments and an interest rate.
• HELOCs and home equity loans typically require good to excellent credit and steady, verifiable income.
• HEAs and HEIs are built for homeowners who don’t qualify for a traditional loan, have inconsistent income or specifically want to avoid a new monthly payment.
• If your home’s value rises sharply, an HEA or HEI can end up costing far more than a loan would have. If it falls, you could owe less than you received, but you’re still giving up a chunk of your equity either way.

What does each option actually cost?

• HELOC. Interest on your outstanding balance, plus possible appraisal fees, application fees and closing costs.
• Home equity loan. A fixed interest rate over the full loan amount, plus similar closing costs.
• HEA/HEI. No interest rate, but you repay the original amount plus a negotiated share of your home’s appreciation, calculated when you settle the agreement. In a fast-appreciating market, this can outpace what you would have paid in loan interest. In a flat or declining market, it can cost less than a loan, or the investor can take a loss.

In a 2025 analysis, the CFPB modeled a $50,000 HEA against a $50,000 HELOC at 9% interest over 10 years. The HELOC cost $95,000 total in that example. The HEA cost between $94,000 and $216,000 depending on how much the home appreciated, cheaper only if the home lost value, and roughly double the HELOC’s cost under strong appreciation.

There’s no single “cheapest” option. The right comparison depends on your home’s expected appreciation, how long you plan to stay and whether you can qualify for and manage loan payments.

Which one is right for you?

• Want to keep all your home’s future appreciation and can qualify for a loan. A HELOC or home equity loan.
• Need money for an ongoing project with a flexible budget. A HELOC.
• Need a fixed, predictable payment for a known expense. A home equity loan.
• Can’t qualify for a traditional loan or want to avoid a new monthly payment entirely. An HEA or HEI.
• Expect your home to appreciate significantly and can otherwise qualify for a loan. A HELOC or home equity loan usually protects more of your wealth long term.
• Value not having any debt or payment obligation more than protecting future appreciation. An HEA or HEI.

Risks to know before you sign

HELOC

• Variable rates mean your payment can rise
• Your home is collateral — missed payments risk foreclosure
• Some lenders can freeze or reduce your credit line if your home’s value drops

Home equity loan

• You’re locked into monthly payments regardless of your finances changing
• Your home is collateral — missed payments risk foreclosure
• Taking on a second loan increases your total monthly debt load

HEA/HEI

• Companies structure these as agreements, not loans, so they generally don’t carry the same federal mortgage protections — though the CFPB has argued in court that some of these products should legally count as mortgages. That question is still unresolved, so your protections currently depend mostly on your state
• The company places a lien on your home, which can complicate refinancing your primary mortgage
• If your home appreciates a lot, you could owe significantly more than you received
• Ending the agreement early to sell or refinance may require a lump-sum payout you have to plan for

Are HEA and HEI agreements regulated?

HELOCs and home equity loans are mortgages, so they already fall under standard federal mortgage lending rules. HEAs and HEIs are the ones in a gray area, and that’s changing fast.

• The CFPB published a report in January 2025 detailing the high costs and non-standardized disclosures in these agreements, and separately argued in a court filing that some of these products should be treated as mortgages under the Truth in Lending Act — a position the industry disputes.
• Connecticut, Maryland, Illinois and Maine have since passed their own laws treating HEA/HEI agreements as consumer credit or mortgage loans, with licensing and disclosure requirements.
• Colorado’s attorney general reached a 2026 settlement requiring a major provider to treat its agreements as regulated consumer credit.
• Many other states still have no specific statute, so your protections come mainly from the contract itself

Rules vary by state and are changing quickly. Check your state attorney general’s or banking regulator’s site for the current requirements before signing an HEA or HEI.

Where can you actually get one of these?

• HELOC. Banks, credit unions and online mortgage lenders. Your current mortgage lender is often a good starting point since they already have your home’s records. And, you may even look into no doc options.
• Home equity loan. The same pool of banks, credit unions and online lenders that offer HELOCs — many offer both products side by side.
• HEA/HEI. A smaller group of specialized equity-investment companies, since this isn’t a mortgage product traditional banks offer.

Alternatives to consider

• Cash-out refinance. Replaces your entire mortgage with a larger one and gives you the difference in cash. Can make sense if today’s mortgage rates are close to or below what you’re currently paying.
• Personal loan. Unsecured loan, so your home isn’t collateral, but amounts are usually smaller and rates are usually higher than a HELOC or home equity loan.
• Reverse mortgage. Available to homeowners 62 and older, it lets you convert equity into cash without monthly payments, but reduces what you or your heirs keep from the home’s sale.
• Selling and downsizing. Converts all your equity into cash at once without taking on debt or sharing future appreciation, at the cost of moving.
• 0% APR credit card or 0% financing. Can work for smaller, short-term needs without touching your home at all, but usually caps out well below what home equity options offer.

Frequently asked questions

• Is an HEA the same as a HELOC?

  No. A HELOC is a loan with interest and required payments. An HEA isn't a loan — you receive cash for a share of your home's future value instead.

• Can I have a HELOC and an HEA at the same time?

  Sometimes, but many HEA and HEI companies require their lien to be in a specific position, and existing lenders may restrict adding a new lien. Check with both companies before assuming you can combine them.

• Is HEA or HEI money taxable?

  It depends on your state and how the transaction is structured. Talk with a tax professional before assuming the lump sum is tax-free.

• Which is cheaper: a HELOC or an HEI?

  It depends entirely on how much your home appreciates and how long you keep the agreement. A HELOC is often cheaper if your home appreciates a lot and you can manage the payments. An HEI can cost less if appreciation is modest.

• Do HEAs require good credit?

  No. HEA and HEI companies typically focus more on your home's value and equity than your credit score or income, which is part of why they appeal to homeowners who don't qualify for a traditional loan.

• What happens if I don't sell my home before my HEA term ends?

  Most agreements require settlement by the end of the term (commonly 10 to 30 years), typically through a buyout, refinance or forced sale if you haven't settled another way. Check your specific contract's end-of-term terms before signing.

To make sure you get accurate and helpful information, this guide has been edited by Richard Laycock as part of our fact-checking process.

Written by

Megan B. Shepherd

Editor, Loans & Insurance

Megan B. Shepherd is a personal finance expert and editor for loans and insurance at Finder. Her personal finance expertise has been featured on Forbes, Nasdaq, MediaFeed, Fox News, Time, Reviews.com, and carinsurance.com, adding invaluable information related to personal loans, financial strategies and smart borrowing tactics. Megan graduated from the University of Texas at Dallas with a BS in Business Administration with an entrepreneurial focus. She's worked as a certified financial adviser and has earned certificates of completion from A.D. Banker & Company. See full bio

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