Home Equity Line of Credit

A home equity line of credit, or HELOC, is a revolving line of credit. Instead of receiving a one-time loan amount as you do with a traditional loan, a HELOC gives you a borrowing limit (or credit limit). As you repay the balance, you can withdraw money from the credit line as you would with a credit card when you need it.

There are lenders that offer both variable rate and fixed interest rate home equity lines of credit. Figure’s HELOC is a fixed-rate^{1: Navigates to numbered disclaimer} line of credit. A fixed-interest rate HELOC can provide payment predictability and peace of mind for borrowers.

To qualify for a HELOC, you must have sufficient equity in your home, meaning the amount you owe must be less than the home's current value. Lenders typically allow borrowing up to 85% of the home's value minus what you owe. Besides equity, lenders consider factors like credit score, credit history, employment, income, debt payments, and debt-to-income ratio to determine approval, credit line amount, and interest rate. The qualification process is similar to applying for a mortgage, so it's important to research and ensure you meet specific lender requirements before applying.

You may be able to deduct interest paid on a home equity product if the loan is used for home improvement. You should consult a tax advisor regarding the deductibility of interest and charges.

Most applicants can complete the application in 5 minutes and you'll receive the results of your prequalification request immediately. However, final approval is subject to verification of income and employment, as well as the condition of the property.

A home equity loan provides a lump sum with fixed payments and interest, usually over 5 to 20 years, and is often used for major home repairs or debt consolidation. In contrast, a traditional HELOC offers a flexible credit line for ongoing expenses, allowing you to borrow as needed over a set period. Figure's HELOC gives you the full amount upfront with a fixed interest rate, but like a traditional HELOC, you can borrow again once part of the principal is repaid.