What is home equity and how do you calculate it?

Home equity is the stake you have in your property. Over time, you build up equity in your home as you make payments on your mortgage or your home’s value rises. If you have built a substantial amount of equity in your home, you can take out a home equity loan. Home equity loans are installment loans that allow you to borrow a percentage of your home equity, typically up to 85 percent. Unlike with a HELOC, you receive all of the money upfront and then make equal monthly payments of principal and interest for the life of the loan (similar to a mortgage). To calculate your home equity, subtract your current mortgage balance from the appraised value of your home. Check out Bankrate’s home equity calculator to estimate how much you can borrow.

What is a home equity loan?

A home equity loan is an installment loan based on the equity of the borrower's home. Most home equity lenders allow you to borrow a certain percentage of your home equity, typically up to 85 percent. Unlike with a HELOC, you receive all of the money upfront and then make equal monthly payments of principal and interest for the life of the loan (similar to a mortgage).

Where can I get a home equity loan?

Banks, credit unions and other types of lenders offer home equity loans. Here’s an overview: Banks: A bank can offer a competitive rate for a home equity loan, provided you meet requirements for the lowest possible APR and set up automatic payments. Credit unions: Credit unions can also offer competitive home equity loan rates, but all of their products, including home equity loans, are only available to members. Many credit unions have very flexible membership requirements, however, so it might be easier to join one than you think. Non-bank lenders: Non-bank lenders are typically online-only operations with streamlined processes that translate to fast funding. They might offer higher or lower rates than a bank, so compare options. If you have an existing relationship with a bank, it may be best to start your search there, but it’s always a good idea to shop around with a few lenders to compare rates, fees and loan terms. A good way to do this is by taking advantage of prequalification forms, which let you see your potential rates and eligibility with a lender without impacting your credit score. Be sure to confirm this with your lender, however; some prequalifications do in fact involve a hard credit pull, which affects your score slightly.

When is a good time to use a home equity loan?

A home equity loan may be a good option if you've been planning a large home renovation or if you need to consolidate debt and you spot a good rate. If you’ve been considering a home equity loan, now might be a good time to lock in your rate before they rise further.

What are the minimum requirements?

Many lenders have fixed LTV ratio requirements for their home equity loans, meaning you'll need to have a certain amount of equity in your home to qualify. Lenders will also factor in your credit score and income when determining your rate and eligibility. Minimum requirements generally include a credit score of 620 or higher, a maximum loan-to-value ratio of 80 percent or 85 percent and a documented source of income.

Are home equity loan rates higher than mortgage rates?

Home equity loan rates are typically higher than first mortgage rates because home equity loans are considered second mortgages. In the event of a foreclosure, the lender of a second mortgage will be paid only after the lender of the first mortgage has been paid in full. To make up for this risk, lenders offering second mortgages will charge higher interest rates. Since home equity loan rates are higher than first mortgage rates as a baseline, as of early October 2022, you can expect to find home equity loan rates starting around 7 percent.

What is the three-day cancellation rule?

Unlike other loans, such as personal loans, home equity loans must go through a closing period. During this period, all home equity loans are legally subject to a three-day cancellation rule, which states that you have the right to cancel your home equity loan until midnight of the third business day after you sign your contract. Changes to the contract, as well as funds disbursement, cannot occur during this time.

What is the difference between a home equity loan and a cash-out refinance?

Home equity loans and cash-out mortgage refinances are both potential ways to get money for home renovations or unexpected expenses. That said, both options have their pros and cons. While a home equity loan is a "second mortgage" that allows you to borrow additional funds for nearly any purpose, a cash-out refinance replaces your existing mortgage. With a cash-out refinance, you'll take out a new mortgage for more than your outstanding loan balance, and then withdraw the difference in cash. Because of this, a home equity loan is typically best if you already have a good rate and terms on your current mortgage. A cash-out refinance only makes sense if you can qualify for a better interest rate on your mortgage and you don't mind resetting your repayment term.

How fast can I get a home equity loan?

Because home equity loans typically require appraisals, it can take longer to get a home equity loan than a personal loan. From application to funds disbursement, the process typically takes two to four weeks — although some new online lenders are trying to shorten that process.

How much equity can I borrow from my home?

The exact amount you can borrow varies depending on the lender, but you can generally borrow up to 80 or 85 percent of your home’s appraised value.

Best home equity loan lenders for December 2025

Written by

Linda Bell,

Edited by

Katie Lowery,

Reviewed by

Mark Hamrick,

Expert verified

Updated on Dec 17, 2025

If you’re considering a home equity loan, look no further than our list of top-rated lenders. Using insights from our Bankrate Awards, scoring system and lender reviews, we’ve highlighted seven standout options.

On This Page

Best home equity loan lenders in December 2025

Lender	Bankrate Score	Loan Amount	National/Regional	Best for
BMO	4.5/5	$25,000-$150,000	National	Product lineup
Third Federal Savings and Loan	4.3/5	$10,000-$300,000	Regional (29 states & DC)	Rate guarantee
U.S. Bank	4.1/5	$15,000-$750,000 (or $1 million in California)	National	High loan amounts
Fifth Third Bank	4.4/5	$10,000-$500,000	Regional (12 states)	Customer support
Connexus Credit Union	4.2/5	Starting at $5,000	National (except Alaska, Texas, Maryland, Hawaii)	Small or short-term loans
Regions Bank	4.4/5	$10,000-$250,000	Regional (15 states)	South/Midwest borrowers
TD Bank	4.0/5	Minimum of $10,000	Regional (15 states)	East coast borrowers

Regions Bank has almost 1,300 banking offices throughout the South and Midwest. Its low interest rates and lack of closing costs result in highly competitive APRs, consistently below the Bankrate average.
- Regions pays all closing costs
- Many in-person branches
- Up to 89% loan-to-value, or minimally 11% equity needed in your home
- Property must be located in a state where Regions has retail branches
- 5% fee for late payments ($29 minimum, $100 maximum)
- Only available in 15 states

TD Bank: Best home equity loan lender for East Coast borrowers

Bankrate Score

Overview

TD — which stands for “Toronto Dominion” — is a successor to the Bank of Toronto, which was founded in 1855. Since then, there have been several mergers and acquisitions. TD Bank is currently headquartered in Cherry Hill, NJ, advertising itself as “America’s most convenient bank.”

TD Bank has more than 1,100 locations across the Eastern seaboard of the U.S. Many branches offer extended hours and are open on weekends.
- Autopay rate discount worth 0.25 percentage points
- Many in-person branches
- Offers 5- to 30-year loan terms
- Home equity products are only available in select states
- Charges a $99 origination fee
- Loans smaller than $25,000 can only be used for primary residences

Bankrate’s methodology for choosing the best home equity loan lenders

In choosing the financial institutions featured here, we began with our Bankrate Scores. Each scores strongly among home equity lenders offering home equity loans.

5.0

Overall Score

Affordability 33%
Availability 33%
Borrower experience 33%

Learn more: Our Bankrate Score methodology

Then, going beyond the Bankrate Score, we took a deeper look at the standout characteristics of these lenders, like overall value, low costs, availability and product range, to pinpoint which ones excelled in specific areas or for specific features. We also took into consideration data used in choosing our Bankrate Award winners. From there, we created the Best Home Equity Loan Lenders list.

What to consider when choosing a home equity loan lender

When shopping for a home equity loan, the interest rate is top-of-mind for most potential borrowers. But there are several other factors to consider when deciding on a lender:

- Availability: Research not only which lenders serve your area, but what products they offer. While some lenders may have a presence in your state, they may not offer home equity loans there.
- Financial requirements: Since there are no government-backed home equity loans, the criteria aren’t as standardized as those of mortgages. Carefully check each lender’s eligibility requirements, including those for credit score, debt-to-income ratio and loan-to-value ratio.
- Fees: Fees can vary significantly between lenders and impact the overall cost of your loan.
- Contact options: Is it important that your lender has in-person branches nearby? Do they offer weekend customer service hours? Is their online banking system robust and accessible? It’s good to know how you can contact a lender with an issue before getting a loan from them.
- Customer reviews: Reading other borrowers’ experiences with a lender can help you uncover recurring problems or red flags. Conversely, consistently great customer reviews can give you peace of mind. Third-party review sites like the Better Business Bureau and TrustPilot may help inform your decision.

Choose a home equity loan if cost predictability and a defined borrowing goal are more important. Treat a home equity loan like you would a first mortgage by approaching it carefully and choosing the option that minimizes both upfront costs and long-term interest.
Stephen Kates, Bankrate financial analyst

Requirements for a home equity loan

Qualifying for a home equity loan depends on both your financial profile and the lender’s specific criteria. Typically, lenders will consider your credit score, how much equity you’ve built in your home and your debt-to-income ratio.

While credit score requirements vary, some lenders will accept 620, though a score of 700 or higher will help you secure the best rates. As for your equity stake, some lenders may require at least 20% equity, while others will accept 15%. You’ll also want to be prepared for costs like appraisal fees, origination fees and closing costs, which can vary by lender.

How to get the best home equity loan rate

Getting the best rate starts with research. Shop around — don’t settle for the first offer you receive or a lender with whom you already do business (though do ask yours if it offers discounts for existing clients). Banks, credit unions and online lenders all vary widely in what they charge. Comparing at least three options can save you thousands in interest over the life of the loan.

Your rate is tied to your perceived creditworthiness. So, improving your credit score before you apply can also make a big difference. Paying down debts, catching up on late payments and lowering credit card balances can boost your score and help you qualify for better rates.

Frequently asked questions

Also known as a second mortgage or second lien, a home equity loan works by letting you borrow against the equity you have in your home. Typically, they are loans with fixed interest rates and terms range from five to 30 years. You’re given the funds in a lump sum once you close on the loan, and you’ll begin repaying the loan right away. Like your mortgage, they’re secured by your home, so failure to pay can result in foreclosure and the loss of your home.

Explore more: What is a home equity loan?
Usually, you’ll need at least 20% equity to get a home equity loan. But to obtain a substantial sum, you’ll probably need more; how much more depends on how much you want to borrow — and how big your mortgage is. Your equity stake is essentially the value of your home, minus the outstanding mortgage balance.

Most lenders require a combined loan-to-value ratio (CLTV) of 80% or less. That means all your home-based debt — your mortgage plus the home equity loan you want — can’t exceed four-fifths of the property’s worth. For example, say you have a home valued at $400,000. Twenty percent equity in this home is $80,000. If you have $100,000 in equity, subtract $80,000 from it to get how much you can borrow — $20,000.
While banks offer advantages like a wide range of products, higher loan limits and rate guarantees, there’s no single “best” bank for everyone. The right choice depends on your financial goals, credit profile and overall situation. That’s why it’s essential to shop around --- always compare options and get quotes from at least three lenders before deciding.
It depends on how you plan to use the money. A HELOC can be a good choice if you need flexibility and won’t borrow everything at once, since you only pay interest on what you use --- but rates are variable, making it difficult to budget for repayment. A home equity loan can make more sense if you want a lump sum with predictable monthly payments, but if you need additional funds, you must reborrow. The best choice comes down to how much certainty versus flexibility you need.

Home equity lenders reviewed by Bankrate

Meet our Bankrate experts

Written by: Linda Bell, Senior Writer, Home Lending

For more than two decades, I have covered the housing market, including in-depth coverage of the 2008 residential real estate collapse. To increase my knowledge of home equity and HELOCs, I earned a Certified HELOC Specialist designation from the National Association of Mortgage Underwriters (NAMU). Throughout my career, I have won more than two dozen awards, most notably from the National Association of Real Estate Editors (NAREE) and the New York Association of Black Journalists (NYABJ) for an investigative series I produced on minorities and the housing industry.

Best home equity loan lenders in December 2025

BMO: Best home equity loan lender product lineup

Overview

Why we say it's the best product lineup

Pros

Cons

Third Federal Savings and Loan: Best home equity loan lender for rate guarantees

Overview

Why we say it's the best for rate guarantees

Pros

Cons

U.S. Bank: Best home equity loan lender for high loan amounts

Overview

Why we say it's the best for high loan amounts

Pros

Cons

Fifth Third Bank: Best home equity loan lender for customer service

Overview

Why we say it’s the best for customer service

Pros

Cons

Connexus Credit Union: Best home equity loan lender for small or short-term loans

Overview

Why we say it's the best for small or short-term loans

Pros

Cons

Regions Bank: Best home equity loan lender for the South/Midwest

Overview

Why we say it’s the best for the South and Midwest

Pros

Cons

TD Bank: Best home equity loan lender for East Coast borrowers

Overview

Why we say it’s the best for East Coast borrowers

Pros

Cons

Bankrate’s methodology for choosing the best home equity loan lenders

What to consider when choosing a home equity loan lender

Requirements for a home equity loan

How to get the best home equity loan rate

Frequently asked questions

How does a home equity loan work?

How much equity do I typically need to have in my home before I can get a home equity loan?

What bank has the best home equity loan?

Should I get a home equity loan or a HELOC?

Home equity lenders reviewed by Bankrate

Meet our Bankrate experts