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Home Equity Loan Finder

Take advantage of the equity you've built up in your home by using it to finance your next big purchase.

If you own a home and make monthly mortgage payments, you’ve probably built up some home equity. Our mortgages team has thoroughly researched home equity loans (also known as a second mortgage), which can help you tap into that equity. You can use that money for anything including renovations, paying off debt or college.

How does a home equity loan work?

A home equity loan works the same way as other secured personal loans. When you apply, provide details of your mortgage, your personal financial position and the reason you’re taking out the loan. If you’re approved, your loan is based on your equity and how much you can afford to repay.

The equity in your home is used as collateral for the loan, so if you default, the lender could recoup its losses by taking ownership of that equity.

Read our guides to understand more about how borrowing from your home equity works:

Home equity loan costs and fees

A home equity loan has similar fees as your first mortgage. Fees vary from lender to lender, but you should expect closing costs to range from 2% to 5% of the loan amount. A few common fees include:

  • Origination fee
  • Application fee
  • Attorney fee
  • Processing fee
  • Third-party fees, such as fees for the appraisal, title report and credit report

How to get a home equity loan

  1. Compare lenders based on your eligibility, interest rates and closing costs.
  2. Start an application online, in person or over the phone.
  3. Give personal details about your income, employment history and debts. You’ll also need to submit documentation to prove that you have at least 15% to 20% equity in your home.
  4. Your lender approves or denies your home equity loan application. If you’re approved, you’ll receive details about your loan terms and estimated closing costs. If denied, your lender should tell you why.
  5. During closing, you’ll sign documents and agree to the terms of repayment.
  6. Receive your money and start making repayments.

Compare interest rates for home equity loans, HELOCs and cash-out refinancing

Use our tool to get personalized 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.

If you selected a home equity loan or HELOC, enter your ZIP code, credit score and information about your current home to see your personalized rates.

In the Cash-Out Refinance tab, select Refinance and enter your ZIP code, credit score and other property details to see what you might qualify for.

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Calculating my equity

Home equity is essentially the difference between your property’s value and any debt you hold against it. Typically, you can borrow up to 80% to 90% of your home’s value, minus the debt you hold against it. For example, if your home is worth $500,000 and you’ve paid off $300,000, you’ll have $200,000 left on your mortgage. Here’s how much you could borrow with a home equity loan in that scenario:

  • 80% of a $500,000 home = $400,000
  • The amount of debt on the property = $200,000
  • Value ($400,0000– debt of $200,000)= $200,000

How to calculate your home equity

Types of financing I can secure with my home equity

The types of loans available when using your equity give you real flexibility:

  • Fixed-term secured loan. A secured loan is guaranteed by your collateral and can be used for any purpose. It is given to you in a lump sum and you pay it back in installments, usually over a period of one to seven years. These loans generally come with more competitive rates.
  • Line of credit. As a continuous source of credit, you can draw on this loan as and when you need to. You’ll have access to the amount of credit that you’re secured for and be required to make regular repayments and as you repay the credit it will become available again. You may see this product marketed as a HELOC, or Home Equity Line of Credit.

Is a home equity loan the same as a HELOC?

Not quite. While both types of financing draw from your equity as a source of collateral, a HELOC functions more like a credit card. You have a large amount of money you can draw from at any time for the loan period, usually five to 15 years.

A home equity loan usually has the same repayment period, but you’re advanced the lump sum immediately. Because of this, you must pay interest on the entire amount (like a regular mortgage). On the other hand, if you take out a HELOC, you only have to pay interest on the amount you borrow from the possible pool of funds — say $50,000 of the total $100,000.

Compare home equity loans vs. HELOCs

What kind of purchases and investments can I make with a home equity loan?

While the loans are secured, there aren’t many restrictions on how you use your loan. You can use the money for:

  • Home renovations
  • New and used car purchases
  • Vacations
  • Large purchases, such as furniture
  • And much more

Pros and cons of home equity loans


  • Competitive interest. Your loan is secured by a valuable and appreciating asset, your property, so you will usually get a competitive home equity loan interest rate.
  • Flexible loan purpose. You can use the loan for just about anything.
  • Possible tax deduction. If you use your home equity loan for capital home improvements, the interest may be deductible.
  • Predictable monthly payment. Home equity loans have a fixed rate. That means your monthly payment won’t change during the life of the loan.


  • Risk of foreclosure. If you don’t make your loan payments, you may risk losing your home.
  • Loss of home equity. A home equity loan borrows against the equity you’ve built in your property. So you’ll probably take longer to pay off your first mortgage, which also means you’ll pay more in interest.
  • Closing costs. Lenders may charge you closing costs when you take out a home equity loan.

Do I need to apply with the same lender I have for my mortgage?

No. If you decide to apply with a different lender you’ll need to provide details of your mortgage, including your total loan and how much equity you hold.

Is there anything else to consider before applying?

This is a risky type of loan should you default. Failing to repay the loan could result in the lender taking the equity you have in the property to pay the loan. Before you apply, consider how financially stable you are and if this is the right type of loan for you to take out.

A home equity loan can offer you a low-interest rate as well as a flexible way to finance a personal purchase.

How long does it take to get a home equity loan?

Frequently asked questions


Written by

Cassidy Horton

Cassidy Horton is a freelance personal finance copywriter and past contributing writer for Finder. Her writing and banking expertise have been featured in Forbes Advisor, Money, The Balance, Money Under 30,, and other top digital publishers. She holds a BS in public relations and an MBA from Georgia Southern University. See full profile

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