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%Start Best HELOC Lenders of 2022 - NerdWallet Advertiser disclosure
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So how do we make money? Our partners compensate us. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research.
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Our partners cannot pay us to guarantee favorable reviews of their products or services. Here is a list of our partners.BEST OF
Best HELOC Lenders of 2022
A HELOC lets you tap your home's equity. Compare our selections for best HELOC lenders.Taylor Getler Oct 3, 2022 Many or all of the products featured here are from our partners who compensate us.
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This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own.
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Here is a list of our partners and here's how we make money. A home equity line of credit, or HELOC, is a second mortgage that lets you borrow against the value of your home. You tap some of your equity as needed and pay back only what you borrow.
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Borrowers often use HELOCs to finance home improvement projects, educational expenses or debt consolidation. The interest rate on a HELOC tends to be lower than rates on credit cards and personal loans. Lenders use your loan-to-value ratio, or LTV, to decide if you have enough equity for a HELOC.
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NerdWallet has chosen some of the best HELOC lenders to help you find the one that's right for you. A home equity line of credit, or HELOC, is a second mortgage that lets you borrow against the value of your home.
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You tap some of your equity as needed and pay back only what you borrow. Borrowers often use HELOCs to finance home improvement projects, educational expenses or debt consolidation.
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The interest rate on a HELOC tends to be lower than rates on credit cards and personal loans. Lenders use your loan-to-value ratio, or LTV, to decide if you have enough equity for a HELOC. NerdWallet has chosen some of the best HELOC lenders to help you find the one that's right for you.
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Best HELOC Lenders
LenderNerdWallet rating NerdWallet's ratings are determined by our editorial team. The scoring formulas take into account multiple data points for each financial product and service.National / regionalMax LTVMin. credit score Minimum credit score on top loans; other loan types or factors may selectively influence minimum credit score standardsLearn more Flagstar NMLS#417490Read review 5.0/5 Best for borrowers with a lot of equityNational80%680 HEL:680HELOC:680Read reviewSan Diego County Credit Union NMLS#580585Read review 5.0/5 Best for avoiding feesRegional70%620 HEL:620HELOC:620Read reviewBank of America NMLS#399802Read review 4.5/5 Best for long-term financial planningNational85%660 HELOC:660Read reviewUS Bank NMLS#402761Read review 4.5/5 Best for fixed-rate optionNational80%620 HELOC:620HEL:620Read reviewState Employees Credit Union NMLS#430055Read review 4.5/5 Best for large withdrawalsRegional90%640 HELOC:640Read reviewPenFed NMLS#401822Read review 4.0/5 Best for fixed-rate optionNational80%N/A HEL:N/AHELOC:N/ARead reviewAlliant NMLS#197185Read review 4.0/5 Best for large withdrawalsNational90%N/A HELOC:N/ARead reviewRead reviewFlagstar NMLS#417490
5.0NerdWallet rating NerdWallet's ratings are determined by our editorial team.
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The scoring formula takes into account loan types and loan products offered, online conveniences, online mortgage rate information, and the rate spread and origination fee lenders reported in the latest available HMDA data.National / regionalNational
Max LTV80%
Min. credit score680
HEL:680HELOC:680
View details Read reviewView details Min. credit score
680
Why we like it
Flagstar can be a solid option for HELOC borrowers with at least 20% equity in their home.
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Pros
Borrowing limit up to 80% CLTV. Annual fees of $75. Cons
No fixed-rate option.Read Full ReviewRead review
San Diego County Credit Union NMLS#580585
5.0NerdWallet rating NerdWallet's ratings are determined by our editorial team.
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The scoring formula takes into account loan types and loan products offered, online conveniences, online mortgage rate information, and the rate spread and origination fee lenders reported in the latest available HMDA data.National / regionalRegional
Max LTV70%
Min. credit score620
HEL:620HELOC:620
View details Read reviewView details Min. credit score
620
Why we like it
San Diego County Credit Union is a good choice for California borrowers who want to avoid annual fees.
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Pros
No annual fees. Cons
Borrowing limit is 70% CLTV.
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No fixed-rate option.Read Full ReviewRead review
Bank of America NMLS#399802
4.5NerdWallet rating NerdWallet's ratings are determined by our editorial team. The scoring formula takes into account loan types and loan products offered, online conveniences, online mortgage rate information, and the rate spread and origination fee lenders reported in the latest available HMDA data.National / regionalNational Max LTV85% Min.
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credit score660
HELOC:660
View details Read reviewView details Min. credit score
660
Why we like it
Bank of America's lack of annual fees and fixed-rate option makes it an ideal choice for borrowers who prioritize definitive long-term financial planning.
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Pros
Offers a fixed-rate option. Borrowing limit up to 85% CLTV.
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No annual fees. Cons
Best rates assume an initial withdrawal at opening.Read Full ReviewRead review
US Bank NMLS#402761
4.5NerdWallet rating NerdWallet's ratings are determined by our editorial team. The scoring formula takes into account loan types and loan products offered, online conveniences, online mortgage rate information, and the rate spread and origination fee lenders reported in the latest available HMDA data.National / regionalNational Max LTV80% Min.
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credit score620
HELOC:620HEL:620
View details Read reviewView details Min. credit score
620
Why we like it
US Bank can be a good fit for borrowers interested in taking advantage of a fixed-rate option. Pros
Offers a fixed-rate option.
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Cons
Loans with a CLTV over 70% may not qualify for the best rates. Annual fees are up to $90.Read Full ReviewRead review
State Employees Credit Union NMLS#430055
4.5NerdWallet rating NerdWallet's ratings are determined by our editorial team.
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The scoring formula takes into account loan types and loan products offered, online conveniences, online mortgage rate information, and the rate spread and origination fee lenders reported in the latest available HMDA data.National / regionalRegional
Max LTV90%
Min. credit score640
HELOC:640
View details Read reviewView details Min.
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credit score
640
Why we like it
State Employees Credit Union may be a strong match for qualified North Carolina borrowers looking to tap a lot of their equity. Pros
Long draw period of 15 years. Borrowing limit of 90% CLTV.
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Cons
Credit union membership is limited by restrictive requirements.Read Full ReviewRead review
PenFed NMLS#401822
4.0NerdWallet rating NerdWallet's ratings are determined by our editorial team. The scoring formula takes into account loan types and loan products offered, online conveniences, online mortgage rate information, and the rate spread and origination fee lenders reported in the latest available HMDA data.National / regionalNational Max LTV80% Min. credit scoreN/A HEL:N/AHELOC:N/A View details Read reviewView details Min.
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credit score
N/A
Why we like it
PenFed is a strong choice for borrowers who want to take advantage of a fixed-rate option from a credit union. Pros
Offers a fixed-rate option.
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Borrow up to 80% CLTV. Cons
Annual fee of $99.Read Full ReviewRead review
Alliant NMLS#197185
4.0NerdWallet rating NerdWallet's ratings are determined by our editorial team. The scoring formula takes into account loan types and loan products offered, online conveniences, online mortgage rate information, and the rate spread and origination fee lenders reported in the latest available HMDA data.National / regionalNational Max LTV90% Min.
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credit scoreN/A
HELOC:N/A
View details Read reviewView details Min. credit score
N/A
Why we like it
Alliant's high borrowing limit makes it an ideal choice for borrowers who need to access a large amount of funds or who haven't built up a lot of equity yet.
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Pros
Borrowing limit up to 90% CLTV. Cons
Annual fee of $50. No fixed-rate option.Read Full Review
Current average HELOC rate
Average High Low 4.870%.
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5.650%. 4.040%. » MORE: Current HELOC rates
How a HELOC works
A HELOC works like a credit card: You’re able to borrow up to a certain limit, repay some or all of what you took out, then do it again as needed.
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The lender uses your home’s value to set the HELOC limit. You may borrow during a draw period that lasts for several years and pay interest only on the balance.
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After the draw period ends, you may no longer take money out, and you pay the principal plus interest. To obtain the best HELOC rates, make sure you comparison shop, preferably among at least three lenders. By shopping around, you're likely to find the combination of features and interest rate that make the best home equity line of credit for your needs.
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» MORE: Understanding home equity lines of credit
Pros and cons of HELOCs
A HELOC can have a variable interest rate, which means it can go up or down over time. When the interest rate rises, the minimum monthly payment may increase, too. Less commonly, some lenders offer a fixed-rate HELOC option, meaning that you can lock in some or all of the loan balance at a specific APR.
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A HELOC's main advantage is that it offers flexibility. During the draw period, the minimum monthly payment covers just the interest on the balance, so you don't have to pay principal if you don't want to. There are two major disadvantages to a HELOC: The interest rate can rise, and you can get in over your head if you're not careful.
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You may end up borrowing so much that you can't comfortably afford the principal and interest during the repayment period. HELOCs typically have lower interest rates than credit cards.
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But defaulting on a HELOC could put your home at risk of foreclosure. » MORE: Pros and cons of HELOCs and home equity loans
Alternatives to HELOCs
A HELOC is not your only option for tapping your home's equity. If you know exactly how much you need to borrow, you may consider a home equity loan, which you receive as a lump sum and pay back at a fixed rate.
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» MORE: Best home equity loan lenders
If you need to borrow more money than you'd qualify for with a HELOC or home equity loan, a cash-out refinance may be the right choice for you. This replaces your original mortgage with a larger one, and you receive the difference between the value of the loan and the amount you currently owe in cash. » MORE: Best lenders for a cash-out refinance
Finally, if you cannot qualify for a HELOC, a shared appreciation agreement may be worth exploring.
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This transaction allows you to sell off a stake in your future equity earnings to a company in exchange for an advance on some of your current equity. This type of agreement is typically for homeowners with a lot of equity but little cash reserves, and most consumers are better served by a HELOC if they can get one. More from NerdWallet
How much is your house worth?
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HELOC basics
Tips for getting the best HELOC rates
Last updated on October 3, 2022
Methodology
The star ratings on this page reflect each lender's overall star ratings. Read more about how we determine those ratings. The lenders on this page are chosen using this methodology: NerdWallet reviewed nearly 60 mortgage lenders, including the majority of the largest U.S.
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mortgage lenders by annual loan volume (lenders had to have at least a 1% market share), lenders with significant online search volume and those that specialize in serving various audiences across the country. For inclusion on this roundup, lenders must offer a HELOC and publish information on NerdWallet’s evaluated HELOC factors online. Evaluated factors are: whether or not a lender offers a fixed-rate option, maximum and intro APRs, CLTV borrowing limits and annual fees.
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NerdWallet solicits information from reviewed lenders on a recurring basis throughout the year. All lender-provided information is verified through lender websites and interviews.
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We also utilized 2020 HMDA data for origination volume, origination fee, rate spread and share-of-product data. To recap our selections...
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NerdWallet' s Best HELOC Lenders of 2022
Flagstar: Best for borrowers with a lot of equitySan Diego County Credit Union: Best for avoiding feesBank of America: Best for long-term financial planningUS Bank: Best for fixed-rate optionState Employees Credit Union: Best for large withdrawalsPenFed: Best for fixed-rate optionAlliant: Best for large withdrawalsFrequently asked questions
Are banks still offering HELOCs? Yes, banks are still offering HELOCs. At the beginning of the COVID-19 pandemic, some lenders suspended underwriting new HELOCs.
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Now, some have resumed HELOC lending and some haven't.What credit score do you need for a HELOC? Lender requirements vary, but typically you'll need a credit score of 620 or higher.
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Taking out a HELOC will probably reduce your credit score temporarily when it appears on your credit report.Is a HELOC tax-deductible? The interest you pay each year on a HELOC is tax-deductible up to a limit as long as the borrowed money is used to buy, build or substantially improve the home, according to the IRS.
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About the author
Taylor Getler
Taylor Getler is a home and mortgages writer for NerdWallet. She previously covered design trends for Branding Times, and has been quoted in such outlets as Adweek. Taylor is enthusiastic about financial literacy and helping consumers feel empowered to make smart, informed choices with their money.
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