What is a HELOC?
A HELOC (Home Equity Line of Credit) is a revolving credit line that lets you borrow against the equity in your home—similar to a credit card, but secured by your property. You can draw funds as needed (up to a set limit), repay, and borrow again during the draw period—typically 5 to 10 years. It’s a flexible option for home improvements, debt consolidation, emergencies, or other big expenses.
HELOC Requirements
- Credit Score: Typically 620+ (700+ for best rates)
- Home Equity: At least 15%–20% equity in your home
- Debt-to-Income Ratio (DTI): Generally below 43%–50%
- Stable Income: Proof of reliable income and employment
- Good Payment History on your existing mortgage (if any)
Why Choose a HELOC?
- You want flexible access to cash over time
- You’re planning ongoing home renovations
- You prefer interest-only payments during the draw period
- You want a reusable credit line—borrow, repay, and borrow again
- You only want to pay interest on the amount you use
Down Payment Options for a HELOC
- No traditional down payment is required
- What matters is how much equity you already have in your home
Benefits of a HELOC
- Borrow only what you need
- Flexible access to funds over time
- Lower interest rates than credit cards or personal loans
- Interest may be tax-deductible (if used for home improvement)
- Revolving credit—use and reuse the line during the draw period
