What it is:
A Home Equity Line of Credit (HELOC) is a revolving credit line secured by the equity in your home. Unlike a Home Equity Loan that provides a lump sum, a HELOC allows you to borrow as needed during a draw period—similar to using a credit card—with interest only on the amount used. It’s often used for ongoing expenses like home improvements, tuition, or emergency funds.
General Requirements:
- Sufficient Home Equity: Typically at least 15%–20% equity in the home
- Good to Excellent Credit Score: Generally 660 or higher
- Stable Income and Employment: Proof of consistent income to repay the loan
- Low Debt-to-Income Ratio: Preferably under 43%
- Home Appraisal: To determine the property’s current market value
Who Qualifies:
- Homeowners with significant equity in their home
- Individuals needing flexible access to funds over time
- Borrowers with solid credit and steady income
- Those seeking a lower-interest borrowing option compared to credit cards or personal loans
A HELOC is ideal for those who want flexibility in borrowing and repayment, especially for ongoing or variable expenses.