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7 Best HELOC Lenders to Consider in 2023
By Nathan Mahr MONEY RESEARCH COLLECTIVE
$15,000 - $400,000
5, 10, 15 and 30 years
620
$15,000 - $500,000
5, 10, 15 and 20 years
620
$15,000 - $750,000
10, 15 and 30 years
730
A home equity line of credit, or HELOC, allows you to tap into the equity you have in your home and use it to secure a revolving line of credit. The property serves as collateral for the loan. Unlike home equity loans, the credit line is replenished each time you pay down the balance.
You can use HELOCs for things like high-interest debt consolidation, home improvements, home renovations, or investing in a business venture. Under the right circumstances, a HELOC can help you achieve your personal and financial goals. Similar to credit cards, HELOCs can affect your credit score in both positive and negative ways (although they are excluded from credit utilization ratio calculations).
No matter what type of mortgage or loan product you’re considering, it’s always a good idea to research and compare lenders. Below is a list of HELOC lenders we think you should consider and why. But before we get to that, remember that although the information in this article was accurate when it was written, loan terms and lender policies change regularly. Check with each lender before deciding to borrow.
Our Top HELOC Lenders Picks for 2023
- Figure: Best for Quick Approvals
- Truist: Best Fixed-Rate HELOC
- US Bank: Best for US Bank Clients
- Citizens Bank: Best for Smaller HELOCs
- Navy Federal: Best for Higher LTVs
- Flagstar: Best for Large HELOCs
- BMO Harris: Best for Owner-Occupied Multifamily Properties
Best HELOC Lenders Reviews
Best for Quick Approvals: Figure
Why we chose this company: Figure stands out because of its short approval timeline and its 100% online application process. Their website offers a great deal of information and FAQs to help you make an informed decision about their HELOC products.
Figure’s website says that the application process takes less than five minutes and you can have a near-immediate decision on whether you’re approved. Once approved, you can receive funding within five days. The process is 100% remote and includes the use of an eNotary to close your loan.
- Application-to-closing can be done virtually
- Can redraw 100% of your original loan amount
- Application takes 5 minutes or less
- Loans are typically funded within 5 days.
- Only accepts ACH payments
- Maxes out at $400,000 per borrower and $400,000 per property
- You'll pay 0.25% more if you don't enroll in autopay
- Loan amounts
- $15,000 to $400,000
- Terms
- 5, 10, 15 and 30 years.
- Approval time
- 5 minutes or less
Best Fixed-Rate HELOC: Truist
Why we chose this company: Truist’s HELOC product is a pretty standard offering. The most notable feature, however, is the flexible repayment option. You can choose the payment plan that works best for you: variable, interest-only or fixed-rate.
The fixed-rate/fixed-term repayment option allows you to repay your HELOC over 60, 120, 180 or 240 months, which is ideal if you want a set, predictable monthly repayment amount over the life of your loan.
Another benefit of Truist’s HELOC is that you can use a vacation home or a second home as collateral. Investment properties, however, are not allowed.
- No closing cost option
- Application takes 5 minutes or less
- Three options for repayment
- If you close your loan account before three years, you'll have to reimburse closing costs
- Cannot use investment property as collateral
- Not all terms and available in all states
- Loan amounts
- $10,000 to $500,000
- Terms
- 10-year draw period and 20-year repayment
- Approval time
- 15-minute application process; loans close in 30-35 days on average
Best for US Bank Clients: US Bank
Why we chose this company: US Bank’s HELOC product also offers a fixed-rate option along with a discount for autopay. In most states, a US Bank personal checking account is required to receive the lowest rate but is not required for loan approval.
The $90 annual fee is also waived if you’ve got a US Bank Platinum Checking Package. So if you are looking to get the lowest rate possible on your loan, it helps to have an existing relationship with US Bank.
- Application can be done online, in-person or over the phone
- Option to convert all or a portion of your balance to the fixed rate option
- No upfront costs for fees
- Processing time can be longer for complex situations
- Higher interest rates may apply for loan amounts under $100,000
- You'll pay 0.50% more in interest if you don't use autopay
- Loan amounts
- $15,000 or up to $750,000 (up to $1 million for properties in California)
- Terms
- Draw period of up to 10 years
- Approval time
- Varies based on your circumstances
Regardless of whether you already have a relationship with US Bank, there are a few ways to get the best rate possible. For instance, if you’ve got a higher credit score and are willing to cover your monthly payment with autopay, you can get better HELOC terms.
Best for Smaller HELOCs: Citizens Bank
Why we chose this company: Citizens Bank offers a smaller HELOC option for those who don’t have as much equity in their home and don’t need more than $25,000.Their GoalBuilder home equity line of credit (HELOC) is a more affordable borrowing option than most credit cards or a personal loan.
Although Citizens Bank offers a regular, larger HELOC option, we are going to focus our review on the GoalBuilder product, as many of the terms are the same or very similar. We also like this smaller HELOC option because it’s low on fees, which makes it ideal for newer borrowers.
- No application fees or closing costs, annual fee or prepayment penalties
- Don't need a lot of equity in your home to qualify
- May offer a path to a larger HELOC with Citizens down the line
- HELOC is only offered in 14 states and Washington D.C.
- Interest rate is slightly higher than other HELOC products
- The property securing the loan cannot have been listed for sale within the past 90 days
- Loan amounts
- $5,000-$25,000 for GoalBuilder HELOC
- Terms
- 10-year draw period and 15-year repayment
- Approval time
- Not disclosed
Best for Higher LTVs: Navy Federal Credit Union
Why we chose this company: Navy Federal is a credit union that offers a HELOC with a borrowing limit of up to 95% of the combined loan-to-value ratio (or LTV) of all liens on the property. For instance, if you’ve got $100,000 of equity in your home, your credit limit could be up to $95,000.
Navy Federal is a credit union for those who have served in the armed forces. But there are other ways you can become a member, such as having an immediate family member who’s served, being a DoD contractor, living with a Navy Federal member and more.
We like Navy Federal’s HELOC because of the low fees, longer draw and repayment period along with the ability to access funds through the Visa Home Equity Line Platinum Card. The only downside we noticed was the estimated wait times for processing: 17-19 days for initial contact once your application is submitted and up to 90 days to close on your HELOC!
- No application, origination, annual or inactivity fee
- Up to 95% LTV
- 20-year draw & 20-year repayment
- Not everyone qualifies for Navy Federal membership
- Processing times are currently estimated to take 75 to 90 calendar days to close
- Closing costs can start at $300 and go up to $2,500 or more
- Loans less than $25,000 require a 1.00% increase in APR
- Loan amounts
- $10,000-$500,000
- Terms
- 20-year draw period and 20-year repayment
- Approval time
- Not disclosed
Best for Large HELOCs: Flagstar
Why we chose this company: Flagstar offers HELOCS of up to $1 million, making it an ideal option for large HELOC loans. There are no closing costs so long as your account remains open for 36 months. The $75 annual fee is waived for the first year.
- Can borrow up to $1 million
- No closing costs
- 1 to 4-unit properties, and modular homes are eligible
- $75 annual fee after first year
- Not available in Texas
- Loan amounts
- $10,000 - $1,000,000
- Terms
- 10-year draw period and 20-year repayment
- Approval time
- Not disclosed
Best for Owner-Occupied Multifamily Properties: BMO Harris
Why we chose this company: BMO Harris offers a HELOC with pretty standard terms, but one feature stands out: BMO Harris will pay closing costs for loans secured by an owner-occupied property up to four units.
Closing costs include appraisal charges, credit report(s), flood determination, title insurance, document recording fees, and mortgageå and government taxes. Some fees might be higher with a multi-family property, so a loan that covers these costs could be helpful. The only catch is that the property must also be owner-occupied since the bank doesn’t offer HELOCs on investment properties.
- APR will never exceed 18% or the maximum permitted by your state
- Fixed-rate option
- 5,10,15, 20, and 30-year repayment terms are available
- Online rates are only AZ, FL, IL, IN, KS, MN, MO and WI. All others must call for rates
- Not all transactions are eligible for remote closing
- No HELOCs for investment properties or second homes
- Bryant Denneryck Guardado
- Loan amounts
- Not disclosed
- Terms
- 5,10,15, 20 or 30-year repayment term
- Approval time
- Not disclosed
Other companies we considered
We also took a look at other banks that offered comparable HELOC products. They didn’t make our list as one of the best HELOCs, but here are some quick facts to peruse in case you’re considering one or more of these lenders.
PNC
- Offers HELOC and fixed and variable rate options
- Minimum draw amount in Texas is $4,000
- $150 cash for applications received before August 31, 2022
- $100 transfer fee each time borrowers opt for a fixed rate
- In Texas, only applicants with primary residences and LTVs under 80% are eligible
PenFed
- Borrow up to $1,000,000
- Annual fee waived if you pay $99 in interest over 12 months
- Most closing costs are covered
- Does not offer lines of credit for certain types of properties
- Properties must be livable and pass inspection
Bank of America
- No fees for converting a variable rate loan to a fixed rate
- Up to 1.50% rate discount for initial withdrawals (0.10% for every $10,000)
- Can't open more than three fixed-rate loans at the same time
- Maximum APR is not disclosed
Discover
- No origination, appraisal or application fees or mortgage taxes due at closing
- CT, MN, NC, NY, OK and TX residents are exempt from early payment penalties
- Only offers a home equity loan product, not HELOC
- Prepayment penalty of up to $500 applicable for 36 months after closing
- No information on available discounts
Guide to HELOC Lenders
The following guide provides you with all the information you need if you’re considering a HELOC.
Main things to know before choosing a HELOC lender
There are several factors to consider when choosing a HELOC lender, from the interest rate and repayment terms to the fees. Each lender’s terms, rates, and conditions can vary, so it’s important to shop around for the best deal before committing.
Interest rates
HELOCs are generally variable-rate loans with interest rates that can change over time. Some lenders allow you to lock in a fixed rate for a period of time, which can provide peace of mind knowing that your payments won’t increase during that time.
Some lenders also offer introductory rates for various time frames — such as six or 12 months — which can help lessen your monthly interest payments for the intro period. HELOC rates are generally higher than mortgage rates but lower than credit card or personal loan rates.
Loan terms and fees
HELOCs have two main timeframes: the draw period and the repayment period. The draw period typically lasts between five and 15 years. During this time, you can withdraw funds from your line of credit. Throughout the draw period, interest will accrue on any outstanding balances and you’ll only be required to make interest payments.
The repayment period begins as soon as the draw period ends and lasts between 10 and 20 years. During this time, you’ll be required to make both principal and interest payments on the loan and will not be able to draw any additional funds.
It’s also important to consider any fees associated with the loan, such as origination, loan recording, appraisal, underwriting, title search, notary and document preparation fees (attorney fees). Closing costs for HELOCs are typically between 2% and 5% of the loan amount, although some lenders may not charge any closing fees at all.
Eligibility requirements
Different banks have different requirements for a HELOC. The following are the most common criteria:
- Credit score: Most lenders require a minimum credit score in the mid-600s or higher.
- Credit history: Some lenders may also require a good credit history with few missed payments over the past few years.
- Property type: Many lenders will only approve HELOCs on owner-occupied primary residences, meaning investment properties and second homes are often ineligible.
- Equity: The borrower must have a sufficient amount of equity in the property to be approved for a HELOC. Lenders typically use a maximum loan-to-value (LTV) ratio to determine eligibility and usually require that you own at least 15% to 20% of the home equity (i.e. your home loan or mortgage balance should not exceed 80% to 85% of the value of your home).
- Debt-to-income (DTI) ratio: Generally, lenders won’t approve a HELOC if your DTI ratio is above around 43%, although the exact amount varies by lender and loan type.
What are the different types of HELOC lenders?
As with any other loan-based product, there are a few different types of lenders who offer HELOC loan options.
Banks and credit unions
Banks and credit unions are typically the largest lenders in terms of asset size and loan volume. They often offer competitive rates, but may have more stringent eligibility requirements.
Mortgage lenders
Mortgage lenders, such as Quicken Loans and LoanDepot, specialize in loans for homeowners and may offer HELOCs as part of their loan portfolio.
Financial Institutions
These lenders, such as SoFi and Marcus, are primarily online and offer HELOCs as part of their loan products.
How to apply for a HELOC?
The application process for a HELOC is similar to that of other loans. First, you’ll need to gather the necessary documents, such as pay stubs, tax returns, bank statements and proof of income. Next, you’ll need to fill out an application and submit it with the required documents.
Once your application is approved, you’ll be required to sign a loan agreement and provide any additional documentation requested by the lender. After that, you’ll be able to withdraw funds from your line of credit and begin making any required payments.
Tips for getting the best HELOC rates
When it comes to getting the best HELOC rate, there are a few things you can do. Out of all of the best practices, shopping around for the best available rate is one of the most important. Compare different lenders and their products to make sure that you’re getting the best rate and terms possible.
The following are additional strategies to consider:
Improving credit score
Most HELOCs have credit score requirements. Your credit score is one of the most important determining factors for a HELOC loan. Having good credit and improving your credit score can help you qualify for lower interest rates and better terms.
Reducing your DTI ratio
Your DTI ratio is another important factor. This ratio compares your monthly debt payments to your gross income. Lowering this figure can improve your chances of obtaining a better rate on the loan.
HELOC Lenders FAQ
What is the difference between a HELOC and home equity loan?
A home equity loan is a lump sum loan with fixed payments over a set period of time, while a HELOC is a line of credit with variable payments that are linked to a fluctuating interest rate.
What should be a good HELOC rate?
The answer to this question depends on your credit score, debt-to-income ratio and other factors. Generally, the better your financial health or collateral, the better rate you can expect. It also greatly depends on the general market conditions which play a central role in determining the average rates offered by lenders.
What is the eligibility for a HELOC?
HELOC loans have specific eligibility requirements set by lenders that include but are not limited to minimum credit scores, maximum DTI ratios, property type restrictions and LTV ratio limitations. When applying for a HELOC loan, you should thoroughly research the eligibility requirements set by the lender.
How to compare HELOC rates?
When comparing HELOC rates, look at the APR and other fees associated with each loan. Additionally, consider the terms and conditions of each loan before making a decision. Check for any prepayment penalties or other hidden fees that could raise the overall cost of the loan.
How often do HELOC rates adjust?
HELOC rates can adjust monthly depending on the prime rate (a rate set by commercial banks and based on the Federal Reserve's federal funds rate). As previously mentioned, some lenders may offer fixed-rate options for certain periods of time.
Summary of the Best HELOC Lenders to Consider in 2023
- Figure: Best for Quick Approvals
- Truist: Best Fixed-Rate HELOC
- US Bank: Best for US Bank Clients
- Citizens Bank: Best for Smaller HELOCs
- Navy Federal: Best for Higher LTVs
- Flagstar: Best for Large HELOCs
- BMO Harris: Best for Owner-Occupied Multifamily Properties