HELOC Benefits
Flexible Access to Funds
Draw funds as needed, not all upfront. Use only what you need, when you need it, and only pay interest on what you borrow.
Revolving Credit Line
As you repay, your available credit replenishes. Borrow again during the draw period without a new application.
Interest-Only Payment Options
Many HELOCs allow interest-only payments during the draw period (typically 5–10 years), giving you lower payments and more flexibility early on.
Potentially Tax-Deductible Interest
If used for home improvements, interest may be tax-deductible (consult your tax advisor).
Higher Borrowing Limits
Borrow up to 85% of your home’s value (minus what you owe), making HELOCs ideal for large expenses.
Lower Interest Rates
HELOCs are secured by your home, so rates are often lower than credit cards or personal loans.
HELOC Eligibility Requirements
Home Equity
Typically need 15–20% equity. Most lenders allow borrowing up to 80–85% of your home’s value, minus your remaining mortgage.
Credit Score
Minimum 620–660 for most lenders. Higher scores mean better rates and terms.
Debt-to-Income Ratio
DTI should be 43% or lower, including all debt and the max potential HELOC payment.
Income Verification
Stable, reliable income required. Most lenders want two years of income/employment history.
Property Type
Most HELOCs are for primary residences. Second homes/investments may qualify with stricter requirements.
Payment History
Lenders prefer no late mortgage payments in the last 12–24 months. Responsible credit history is key.
HELOC Application Process
Initial Application
Apply online and tell us about your property, needs, and goals.
Documentation Submission
Submit income docs, tax returns, mortgage statements, and info on debts/assets.
Home Appraisal
We order an appraisal to confirm your property’s market value.
Underwriting
Our team reviews your credit, income, DTI, and property to finalize your loan terms.
Closing
Sign final documents and get access to your HELOC funds.
HELOC vs. Home Equity Loan
| Feature | HELOC | Home Equity Loan |
|---|---|---|
| Fund Distribution | Draw as needed during draw period | One-time lump sum |
| Interest Rate | Variable rate (typically) | Fixed rate |
| Monthly Payment | Variable during draw period | Fixed monthly payments |
| Term Structure | Draw period (5–10 years) + repayment period (10–20 years) | Fixed term (5–30 years) |
| Best For | Ongoing or uncertain expenses | One-time large expenses |
| Interest Accrual | Only on amount drawn | On full loan amount |
| Closing Costs | Often lower | Typically higher |
HELOC Ideal For:
- Phased or ongoing home projects
- Paying only for what you use
- Flexible, revolving credit needs
- Variable interest rate is acceptable
- Emergency or unpredictable expenses
Home Equity Loan Ideal For:
- One-time, large expenses
- Predictable, fixed monthly payments
- Fixed interest rates preferred
- Debt consolidation
- Budget-conscious borrowers
What Our Clients Say
Richard & Susan K.
Portland, Oregon
Michael J.
Chicago, Illinois
Jennifer L.
Austin, Texas
Frequently Asked Questions
What is a HELOC and how does it work?
A HELOC is a revolving credit line secured by your home equity. You borrow what you need, repay, and can borrow again during the draw period. You pay interest only on your outstanding balance, not your entire limit.
How much can I borrow with a HELOC?
Usually up to 80–85% of your home’s appraised value minus your existing mortgage balance. Example: if your home is $400,000 and you owe $250,000, you might qualify for a $70,000 HELOC at 80% LTV.
What’s the difference between a HELOC’s draw period and repayment period?
During the draw period (typically 5–10 years), you can borrow and often make interest-only payments. Repayment period (10–20 years): can’t borrow more, must repay principal + interest.
Are HELOC interest rates fixed or variable?
Most HELOCs have variable rates that change with market conditions. Some lenders let you lock in a fixed rate on portions of your balance for stability.
What can I use a HELOC for?
Home improvements, debt consolidation, education, emergencies, major purchases—whatever you need, but using it for value-building projects is often best.
Are there any fees with a HELOC?
Application, origination, annual fees, possible early closure fee, plus third-party costs like appraisal or title search. Some lenders waive certain fees in exchange for a higher rate.
Is HELOC interest tax-deductible?
Interest is generally deductible only if you use HELOC funds for home improvements. Consult your tax advisor for your specific case.
