Natalie toggles between news stories and enterprise reporting to bring timely personal finance topics to readers. Her mission is to help inform people of all financial backgrounds about events that may affect their financial futures. Her work has appeared in numerous publications such as CNBC, Bankrate, Buzzfeed, ABC Action News, The Chicago Tribune, The Associated Press and the Tampa Bay Times. She’s appeared on various podcasts and news shows to discuss personal finance topics, including Nasdaq’s Trade Talks.
Having lived in several states, owning primary residences and investment properties, Josh Patoka uses his experience using mortgages and HELOCs to help first-time home buyers and home owners find the best home loan for their financial goals. His work has been featured on several financial and media websites.
Natalie Campisi,
Natalie toggles between news stories and enterprise reporting to bring timely personal finance topics to readers. Her mission is to help inform people of all financial backgrounds about events that may affect their financial futures. Her work has appeared in numerous publications such as CNBC, Bankrate, Buzzfeed, ABC Action News, The Chicago Tribune, The Associated Press and the Tampa Bay Times. She’s appeared on various podcasts and news shows to discuss personal finance topics, including Nasdaq’s Trade Talks.
Josh Patoka
Having lived in several states, owning primary residences and investment properties, Josh Patoka uses his experience using mortgages and HELOCs to help first-time home buyers and home owners find the best home loan for their financial goals. His work has been featured on several financial and media websites.
Chris Jennings is a writer and editor with more than seven years of experience in the personal finance and mortgage space. He enjoys simplifying complex mortgage topics for first-time homebuyers and homeowners alike. His work has been featured in a number of outlets, including Yahoo Finance, MSN, Fox Business, and GOBankingRates.
Reviewed
Chris Jennings
Chris Jennings is a writer and editor with more than seven years of experience in the personal finance and mortgage space. He enjoys simplifying complex mortgage topics for first-time homebuyers and homeowners alike. His work has been featured in a number of outlets, including Yahoo Finance, MSN, Fox Business, and GOBankingRates.
Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations.
Home equity lines of credit (HELOCs) are one type of loan that allows homeowners to access their equity as needed. With a HELOC, you can take out cash as many times as you want—up to your credit limit—and pay it back over time, which makes it a flexible financing option.
Read more
Show Summary
- Best HELOC Lenders of April 2024
- Fifth Third Bank: Best HELOC Lender with a HELOC Rewards Credit Card
- Flagstar Bank: Best HELOC Lender for Low APR
- Bank of America: Best Big Bank HELOC Lender
- Citizens Bank: Best HELOC Lender for Customer Discounts
- Truist: Best For Fastest Application Process
- Alliant Credit Union: Best For Those That Need More Cast
- BMO U.S.: Best For Fastest Closing
- PenFed Credit Union: Best Credit Union HELOC Lender
- TD Bank: Best For a Wide Variety of Finance Options
- Connexus: Best For Low Introductory Rate
- Summary: Best HELOC Lenders of 2024
- Methodology
- Tips for Comparing the Best HELOC Lenders
Best HELOC Lenders of April 2024
Forbes Advisor compiled a list of HELOC lenders that excel in various areas, including offering low fees and loan costs as well as convenience and flexibility. The interest rates are reflected as annual percentage rates (APRs) based on recent market rates and compared to the national average. The lenders we compiled for this list had a minimum four-star rating.
- Fifth Third Bank — Best HELOC Lender with a HELOC Rewards Credit Card
- Flagstar Bank — Best HELOC Lender for Low APR
- Bank of America — Best Big Bank HELOC Lender
- Citizens Bank — Best HELOC Lender for Customer Discounts
- Truist — Best For Fastest Application Process
- Alliant Credit Union — Best For Those That Need More Cast
- BMO U.S. — Best For Fastest Closing
- PenFed Credit Union: Best Credit Union HELOC Lender
- TD Bank: Best For a Wide Variety of Finance Options
- Connexus: Best For Low Introductory Rate
Summary: Best HELOC Lenders of 2024
| Company | Forbes Advisor Rating | Starting APR | CLTV | Min. credit score | Learn More | ||||
|---|---|---|---|---|---|---|---|---|---|
| Fifth Third Bank |  |
4.5 |  |
8.50% | 90% | 660 | Compare Rates | Compare rates from participating lenders in your area via Bankrate.com | |
| Flagstar Bank |  |
4.5 | |
8.74% | 80% | 620 | Compare Rates | Compare rates from participating lenders in your area via Bankrate.com | |
| Bank of America |  |
4.0 |  |
9.90% | 85% | N/A | Compare Rates | Compare rates from participating lenders in your area via Bankrate.com | |
| Citizens |  |
4.0 | |
8.50% | 85% | N/A | Compare Rates | Compare rates from participating lenders in your area via Bankrate.com | |
| Truist | 
|
4.0 | |
10.10% | 80% | N/A | Compare Rates | Compare rates from participating lenders in your area via Bankrate.com | |
| Alliant Credit Union |  |
4.0 | |
8.75% | 80% | 620 | Compare Rates | Compare rates from participating lenders in your area via Bankrate.com | |
| BMO Harris |  |
4.0 | |
7.74% | 85% | 650 | Compare Rates | Compare rates from participating lenders in your area via Bankrate.com | |
| PenFed Credit Union |  |
4.0 | |
8.625% | 85% | 680 | Compare Rates | Compare rates from participating lenders in your area via Bankrate.com | |
| TD Bank |  |
4.0 | |
8.34% | 89.99% | 660 | Compare Rates | Compare rates from participating lenders in your area via Bankrate.com | |
| Connexus |  |
4.0 | |
8.74% | 80% | 640 | Compare Rates | Compare rates from participating lenders in your area via Bankrate.com |
Methodology
We reviewed more than 50 mortgage lenders that do business both online and in-person throughout the U.S. The lenders reviewed represent some of the largest HELOC lenders by volume including banks, credit unions and online lenders. Lenders who did not clearly disclose their interest rates and other common qualification requirements online or when contacted, were disqualified from the list. Lenders must also score at least 3.5 stars or higher to make it on the list.
Forbes Advisor scores lenders based on key factors including cost, minimum qualifications (such as credit score requirements) and the length of time it takes to close on the HELOC. The score is weighted evenly among the following loan and lender features:
- Interest rate. 20%
- Minimum credit score requirements. 20%
- Closing timelines. 20%
- Accessibility. 20% (scored based on ease and breadth of online access as well as national reach)
- Lender fees. 20%
- Bonus 5 points. Lenders who also underwrite Home Equity Loans (HELs) are awarded five points for offering more equity loan options
To learn more about our rating and review methodology and editorial process, check out our guide on How Forbes Advisor Reviews Mortgage Lenders.
Tips for Comparing the Best HELOC Lenders
Start by checking the HELOC rates at your current bank, credit union or mortgage lender. Based on the information, continue your research by comparing rates and terms at other banks and lenders to see what aligns best with your needs.
Related: Best HELOC Rates
Make sure to ask lenders about any hidden fees, costs or penalties and what they might be able to waive. Also, check which lenders require balloon payments, which means you will need to repay your outstanding balance at the end of your repayment period in one lump sum.
Completing each lender’s prequalification process may also help you get more specific HELOC rates and other details that will help inform your decision.
How Does A HELOC Work?
A HELOC allows you to use a portion of your home equity as collateral to draw on a revolving line of credit at a variable interest rate. Similar to a credit card, as you pay down the balance and replenish the funds, you may have the option of repeatedly borrowing more as needed, up to a limit.
HELOCs have two phases. The initial period is called the “draw period.” The draw period is a set term (typically lasting 10 years) when you can pull funds from your line of credit. During the draw period, you usually make interest-only payments on the amount you borrow.
Once the draw period ends, the “repayment period” begins. This phase is a fixed period when you must make scheduled repayments on the remaining principal balance and interest on the amount you borrowed.
Though a HELOC provides you with an available line of credit to draw from—usually up to 85% of your home’s equity—you don’t need to tap into all of it, and you only pay interest on the credit you borrow.
The term of a HELOC is how long you have to repay the loan. Typical HELOC terms run from 10 to 20 years. And much like fixed-rate mortgages, HELOC interest rates are usually more favorable the shorter the term. For instance, a 10-year HELOC typically has a lower interest rate than a 20-year HELOC.
What Can You Use A HELOC For?
There are many things you can use a HELOC for, such as:
- Home improvement or repairs
- Consolidating or paying off debt
- Unexpected financial difficulties
- Big ticket items (wedding, college tuition, etc.)
- Investing in a property
- Buying equipment for a new business
- Retirement expenses
How Long Does it Take To Get A HELOC?
The HELOC process typically takes anywhere from two to six weeks. You can accelerate the timeline by having all necessary documents at the ready for when you submit your application. You can also move things along if you can avoid a home appraisal.
Also, if you can apply alone rather than with a co-applicant (such as a spouse), this will shorten the underwriting process. And if you have a strong credit score, this can also help speed up the process as well as get you a lower interest rate.
How To Apply For a HELOC
Here are the main steps to streamline the process for applying for a HELOC.
- Review your debt-to-income (DTI) ratio and credit score
- Have a sufficient and stable income
- Determine if you have enough home equity (at least 15% to 20%)
- Gather required documents
- Shop for lenders and rates
- Submit an application
- Close on the loan and begin to access funds
Frequently Asked Questions (FAQs)
What is a HELOC?
HELOCs are loans that allow you to borrow against the equity in your home. Equity is the value of your home minus anything you still owe on it. Typically, lenders will allow borrowers to access between 80% and 90% of their equity. HELOCs are funded through a line of credit that borrowers can access as needed, similar to a credit card.
What is the draw period on a HELOC?
HELOCs are divided into two main parts: the draw period and the repayment period. The draw period is when borrowers can access their funds. Depending on the type of HELOC you get, the draw period generally lasts five or 10 years. During the draw period, borrowers are only required to pay interest. However, you can pay on the balance, too, if you want to pay off the loan sooner.
What’s better: A HELOC or a Home Equity Loan (HEL)?
HELOCs and HELs are similar in that they both use your home as collateral for the loan. And typically both equity products offer lower rates than other types of loans, such as credit cards and personal loans. Otherwise, there are several key differences between a HELOC and a HEL.
Type of credit
With a HELOC, the loan is in the form of a line of credit that you can use as needed—much like a credit card. You may be able to spend up to $100,000 but you may only use a fraction of that. With a HELOC, you only pay what you use.
A HEL, on the other hand, is a lump sum of money. While you may not use the entire lump sum, you will have to repay the entire amount.
Repayment
One of the most important differences between them is how the loans are repaid. With HELOCs, the interest rate changes from a fixed rate to a variable rate, which means your payments will change over time. Additionally, borrowers are only obligated to pay interest on HELOCs during the draw period, so monthly payments are lower for a period of time. When the draw period ends, borrowers will have to pay both interest and principal, which will likely significantly raise the monthly payment.
On HELs, borrowers have a fixed interest rate and monthly payment over the life of the loan. The amount of their monthly payment doesn’t change over time, which can be easier for budgeting purposes than a HELOC’s repayment structure.
How do you build home equity?
Home equity is the difference between the value of your home and what you owe on it. For example, if your home is worth $400,000 and you owe $100,000 then the equity you have in your home is $300,000. Home equity can be built in several ways:
- Home price: First, as home prices increase, the value of your home will naturally rise, which builds your equity.
- Pay down mortgage: Another way to ramp up the amount of equity you have is to pay down your mortgage. The less you owe on a house the more equity you have in it.
- Home renovation: Another way to potentially boost your equity is to renovate your home. Some additions or updates can add value to your home, which will also give your equity a lift.
Do you have to pay off a HELOC when refinancing?
When you take out a HELOC, your HELOC lender will often require you to pay off your HELOC first before allowing you to refinance your first mortgage. Same as your first mortgage lender, your HELOC lender has a stake in your property’s equity since the collateral in your house secures the HELOC loan.
When you refinance your first mortgage, you now involve a third lender, who goes into the first lien position for repayment. This knocks your HELOC lender into third position, putting the HELOC lender more at risk should you go into foreclosure.
Before refinancing, check with the subordination department of your HELOC lender to determine if your lender will approve being subordinated so you can refinance without paying off your HELOC first.
One other factor to keep in mind is your credit score. Your outstanding HELOC and any late or missed payments will put you at risk for a lower credit score to the extent that you may not qualify for refinancing, in which case you may need to close your HELOC first.
