HE Loans
This guide explains the most common “home equity” options: HELOC, Home Equity Loan, and Cash-Out Refinance. This is educational only — not a loan offer, quote, or financial advice.
Quick definitions
- HELOC = revolving line of credit secured by your home (draw funds when needed).
- Home Equity Loan = lump-sum 2nd mortgage (fixed amount, usually fixed rate).
- Cash-Out Refi = replace your current mortgage with a larger one and take cash out.
When each one is usually best
HELOC (Line of Credit)
Often best for ongoing projects (repairs, renovations, variable expenses) where you don’t need all funds at once. Payments can be interest-only during the draw period on some programs.
Home Equity Loan (2nd Mortgage)
Often best when you want a one-time lump sum with a predictable payment (e.g., debt consolidation, one-time expense).
Cash-Out Refi
Often best when your existing first mortgage rate is not far from today’s rates (or you’re improving terms), and you want to roll everything into one loan.
Typical qualification factors (high-level)
Exact guidelines vary by lender/program/state and are subject to change. This is a simple baseline view.
| Option | Best For | FICO (Typical) | DTI (Typical) | LTV/CLTV (Typical) | Notes |
|---|---|---|---|---|---|
| HELOC | Flexible draws | ~660+ | ~43–50% | Often up to ~80–90% CLTV | Variable rate common; draw + repayment phases. |
| Equity Loan | One-time lump sum | ~660+ | ~43–50% | Often up to ~80–90% CLTV | Fixed rate common; fixed term/payment. |
| Cash-Out Refi | One loan / restructure | Program dependent | Program dependent | Often lower than HELOC CLTV caps | Rate/fees matter; may reset term. |