How much a home equity sharing agreement could cost you
Key takeaways
- Home equity sharing agreements (HEAs) are costly and financially risky, requiring homeowners to give up a portion of their home’s future value for a lump-sum payment.
- Also known as home equity investments (HEIs), these products are an alternative for homeowners with poor credit or those who may not qualify for traditional home equity loans or HELOCs.
- These agreements are extremely complicated, with each company having its own formula and rules to determine how much the homeowner ultimately pays — and very little consumer protections for homeowners.
- You pay the investors after the home is sold or at the end of the 10- or 30-year period, which can add up to hundreds of thousands of dollars
They give you cash today, but you may not realize what it will cost you tomorrow.
Home equity sharing agreements (HEAs) offer a lump sum in exchange for a share of your home’s future value and are pitched to homeowners who may not qualify for a traditional HELOC or home equity loan. Also known as home equity investments (HEIs), these companies boast no monthly payments, no income requirements and no need for perfect credit. With homeowners collectively holding a record $35.8 trillion in equity as of the second quarter of 2026, what may sound like an attractive alternative to access that wealth is anything but.
Not only are the contracts incredibly complex, but homeowners also lack many of the same consumer protections they find with traditional home equity products, like HELOCs. The primary reason is that these 10- to 30-year agreements are characterized as investments, not loans.
At the end of the contract, you may owe tens or even hundreds of thousands of dollars if your home goes up in value. Even a decline in your home’s value doesn’t mean you will be walking away owning nothing. The only way to pay them is to come up with a huge amount of cash, refinance your mortgage or sell your home.
“That’s really what we’re worried about, that this could be another subprime crisis,” says Andrew Pizor, senior attorney at the National Consumer Law Center (NCLC). “People get these now, and in 10 to 30 years, depending on how long they keep it, all of a sudden they’re going to have to make these big balloon payments. People aren’t going to be thinking about it until they have reason to need to pay. If somebody decides they want to sell their home, they want to move in retirement, they get a payoff estimate, and they’re shocked.”
Types of home equity sharing agreements
There are two common types of home equity sharing agreements. In both cases, you receive a lump sum from your investor or lender. The difference is how they get compensated.
Share of appreciation model
With this model, you’re obligated to repay the home equity sharing company your initial loan amount, plus a predetermined percentage of your home’s future appreciation, if any.
Some companies require repayment of the original investment amount plus a percentage of the appreciated value. On a home worth $450,000, let’s say you receive $75,000. The contract says the company will receive 25% of your home’s future appreciation in 10 years, on top of its original investment. So if your home appreciated in value by $150,000, you’d need to repay a total of $112,500 — [$150,000 x 0.25%] + $75,000 — at the end of the decade.
Share of home value model
With this model, instead of repaying the original lump sum you receive, you just pay a percentage of the home’s value at sale. So, if your home declines in value, the percentage you’ll pay to the investor will decrease; you could even pay back less than your original loan.
Using our example from above, let’s say your home is now worth $600,000 (after appreciating in value by $150,000). If your agreement requires you to give the company 20% of your home’s total worth, you’d owe $120,000.
How does a home equity sharing agreement work?
Unlike a traditional mortgage or HELOC, home equity agreements give a homeowner a lump sum in exchange for your home’s value. Equity sharing agreements often have terms ranging from 10 to 30 years. While you won’t have to make monthly payments, you do have to pay the investor back at the end of the contract.
“It’s not a traditional 30-year amortizing loan with monthly payments, an installment loan, but it’s definitely a loan,” says Pizor. “The reason they argue it’s not a loan is a legal trick. Buried in the contract, they say they’re actually buying an option to participate in the ownership. They say at maturity, we might not exercise the option if your property value goes down. In practice, that’s not true, because the way the contracts are structured, you’d need a huge catastrophe for that not to be worth it to them to exercise the option.”
How do you qualify for a home equity sharing agreement?
You typically don’t have to jump through as many hoops to qualify for an home equity agreement as you would with a HELOC or home equity loan. But that should be viewed as a warning sign, not a benefit.
Most HEI companies won’t consider your debt-to-income ratio, and your minimum credit score can be as low as 500. But the biggest factor in your approval may be the home itself.
Often, you’ll need a greater amount of equity in your home, about 20% to 40%. The companies have their calculations to determine how much the homes may appreciate in value. However, they often lowball or “risk-adjust” your home’s appraisal value to compensate, so it’ll always seem like the home has appreciated to some degree.
“That’s their business model,” says Pizor. “They only make money if the property goes up in value a lot. As far as we can tell, they’re not going to be marketing in a community and not going to approve a loan in a community if their AVMs (automated valuation models) suggest that it’s either going to go down in the future or just basically not go up enough.”
At the heart of the debate is whether HEIs are loans disguised under different names that allow companies to sidestep traditional lending rules and consumer protections. HEI companies have faced lawsuits alleging they sold predatory and deceptive products. While Pennsylvania and North Carolina officials debate the future of HEIs, Maryland, Connecticut, and Illinois are among the states that have passed regulations characterizing the products as loans. Some of the passed regulations include additional payoff disclosures, payment caps or a requirement that consumers seek counseling before entering an agreement.
Risks of home equity sharing agreements
Before signing home equity sharing agreements, homeowners need to understand what they are giving up in return and what obligations could follow them for years.
Contract terms can be complicated
At the heart of the HEI agreement is that you are giving up a share of your home’s future value in exchange for a lump sum. However, there’s no standard industry practice on how HEI companies calculate that lump sum or how much your home is worth.
One company may determine your payout either by looking at the total value of the home or how much the value has changed. Another may take the appraised value of the home, then discount it and come up with a risk-adjusted “starting property value.” The formula for figuring the company’s return can be complex too.
“Your house would have to go down, depending on which company, 15% to 25% in value over several years for them to totally lose money and for you not to owe anything,” says Pizor. “That just doesn’t happen in the American housing market.”
You may face restrictions
With an HEA, the company has a financial stake in your home, and that can come with certain conditions.
Depending on the company, it may put a lien on your house. If you can’t pay the agreement back, there is a risk of foreclosure. The investment company might not be a completely silent partner, either. You typically need approval from the HEI company before renting out, selling the home or refinancing your existing mortgage. Additionally, you might also be charged a fee for that refinance.
Also, HEIs “follow the title,” not the borrower. That means if you die with the agreement still in place, anyone who inherits the home inherits the agreement too. Though not personally liable, they will have to settle the lien by paying it in full or selling the home, which could put them in a tough position.
You may lack consumer protections
HEI providers argue their products are not loans but investments and are not bound by the same rules as traditional lenders. Legislation like the Truth in Lending Act and the Dodd-Frank Act, designed to protect consumers from predatory practices, don’t apply. In short, you won’t get the protections that typically come with a traditional home loan.
“The Dodd-Frank Act said you cannot put a forced arbitration clause into a mortgage, which means consumers have the right to go to court if there’s a dispute over the terms of the mortgage,” says Pizor. “These [HEI] agreements have arbitration clauses. So if you want to go to court, dispute it, break the contract, and say ‘I was deceived,’ you get forced into arbitration most of the time.”
The differences don’t stop there.
Under TILA’s Regulation Z, mortgage lenders are required to make a good faith determination of a borrower’s ability to repay a loan by evaluating their income, assets and employment. But HEI providers sidestep those rules because their products are characterized as investments, not loans, in most states.
What companies offer home equity sharing agreements?
You won’t find home equity sharing agreements through banks or other traditional mortgage lenders. Some of the biggest companies include:
- Hometap
- Point
- Splitero
- Unison
- Unlock
As of April 2025, the top-five HEI originators were collectively originating around $600 million a month, according to Home Equity Lending News. The industry is growing as more companies expand their reach across the country and package these investments to sell to institutional investors.
How much does a home equity sharing agreement cost?
Home equity sharing agreements often come with a list of upfront fees, like transaction fees, origination fees, title fees, escrow fees and recording fees, along with the home appraisal. But these aren’t the main costs you should be most concerned about.
After the appraisal, some lenders may apply a risk adjustment to your home’s value. This figure is what the investor uses to calculate the sum they’ll give you and your home’s appreciation at payout time.
For example, Unison’s risk adjustment is 5% of the home’s starting value. If your home appraises for $500,000, the risk-adjusted value would be $475,000, a $15,000 difference. With Point, the adjustment is 27%, putting your starting value at $365,000. That’s $135,000 below your home’s value.
This risk adjustment means that, under the agreement, you may get less value out of your home’s equity than they’d thought. Whether your home rises or falls in value, you will have to pay out more to the investment company at the agreement’s end. That’s even with rate caps that limit how fast the repayment amount can grow.
“They’re a lot like subprime mortgages. They have a big balloon payment at the end,” says Pizor. “Imagine you’re going to get a mortgage and someone says, ‘There’s only one payment at the end. I can’t tell you what the payment is and what the interest rate is until [then].’ That’s kind of what these are like.”
Some companies also tack on multipliers, which give them a larger percentage of the home’s value than the homeowner initially accessed. Even if you try to repay the entire amount you owe before the contract ends, you may have no choice but to dip into savings, refinance your mortgage or seek financing from a lender.
Often, “there’s realistically little way to make the payment. No one knows the value your home is going to be,” says Pizor. “They say maybe some time in the future, maybe when you sell, you might owe something, and we don’t know what it is.”
When does a home equity sharing agreement make sense?
For most homeowners, the answer is almost never.
The type of borrower who might want an HEI is one who doesn’t qualify for traditional home equity financing, like home equity loans or HELOCs. But these agreements are an expensive way to get cash. You’re giving an investor a claim to your home’s future appreciation, which could add up to tens of thousands of dollars, if not more. Also, the agreements are extremely complicated. They lack the regulations you will find with some other lending options.
Before considering a home equity sharing agreement, look at these alternatives:
- Home equity loans allow you to borrow against your home equity, receive a lump sum, and repay the loan with fixed monthly payments over a set period
- HELOCs — home equity lines of credit — give you a borrowing limit and allow you to take money out as needed. Both home equity loans and HELOCs use your home as collateral.
- Personal loans don’t put your home on the line but can have higher interest rates — and less flexibility — than with home-secured loans.
Yes, you’ll have to pay interest for all these options, and they have higher credit standards, but the amount will be less than the appreciation you pay the shared-equity investor. Even if your home appreciates significantly, you may end up paying more in the long run than you would for a traditional home equity product.
“They’re hiding a lot of strings; that’s the problem,” says Pizor. “You’ve probably met a lot of people whose credit is worse than it is. They could shop around for a credit union and get a loan but just end up with something bad because they haven’t looked around. The other side of that is, if your financial situation is really that bad and you can’t get an affordable loan, what’s the long-term ability to keep your house? Maybe this is the time to sell, rather than taking on debt.”
If you are still convinced an HEI is the best for you, make sure you read the fine print. Each HEI company has different contracts, terms, calculations, and restrictions. This is not the type of agreement to go it alone. Before you sign, enlist the help of a housing counselor or real estate attorney who can go over the contract with a fine-toothed comb.
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