HELOC for home improvements
A HELOC can fund nearly any home improvement project. Many homeowners tap their more than $310,000 in home equity9: Navigates to numbered disclaimer for projects with high ROI or that improve their daily lives.
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Why use a HELOC for home renovations?
Low interest rates
A HELOC may offer lower interest rates Opens in a new window. than credit cards or personal loans.8: Navigates to numbered disclaimer
Fast funding
Some lenders can fund HELOCs in as few as five business days.3: Navigates to numbered disclaimer
Tax deductions
Interest paid on a HELOC used for home improvements may be tax-deductible for qualified borrowers.*: Navigates to bottom disclaimer
What is a home equity line of credit (HELOC)?
A home equity line of credit (HELOC) is a flexible loan secured by your home's equity8: Navigates to numbered disclaimer, allowing you to borrow funds for renovations. Your home equity is the difference between your home's current market value and your outstanding mortgage balance.
How a HELOC works for renovations
During the draw period, you can withdraw funds as needed to cover all aspects of your project. As you pay down the principal, you can reborrow up to 100% of your credit line for additional renovations. Once the draw period ends, you'll enter the repayment period and won't be able to access additional funds.
To qualify for a HELOC, you'll typically need:
- Sufficient home equity
Most lenders require at least 15% to 20% equity10: Navigates to numbered disclaimer remaining after the loan.
- A qualifying credit score
Requirements vary, but many lenders look for scores of 600 or higher.11: Navigates to numbered disclaimer
- Verifiable income
Lenders want to confirm your ability to repay.
- An acceptable debt-to-income (DTI) ratio
This helps lenders assess your overall financial health.
HELOC vs. home equity loan for home improvement
When deciding between a home equity loan or a line of credit for renovations, neither is inherently better. The right choice depends on your project's needs.
Home equity loan
Provides a lump sum upfront, typically with a fixed interest rate and predictable monthly payments (though variable-rate options may be available). It may suit homeowners who know the exact cost of their renovation upfront.
Home equity line of credit
Offers more flexible access to funds, allowing you to draw money during a five-to-10 year draw period multiple times. It may suit phased renovation projects or multiple use cases, like debt consolidation.
| Feature | HELOC* | Figure HELOC* | Home equity loan* |
|---|---|---|---|
| How you receive funds | Draw as needed during draw period | One-time lump sum at closing | One-time lump sum at closing |
| Interest rate | May be variable or fixed | Fixed or variable | May be fixed or variable |
| Monthly payments | May fluctuate; some offer interest-only draw periods | Depends on rate type | Fixed and predictable |
| Flexibility | Can borrow, repay, and borrow again | One-time disbursement but can also borrow, repay, and borrow again | One-time disbursement |
| Best for | Ongoing expenses uncertain costs | Multiple uses | Known, one-time expenses |
- * Your home is used as collateral for this loan. Failing to make payments could result in the loss of your property.
Figure offers both fixed-rate1: Navigates to numbered disclaimer and variable-rate HELOCs2: Navigates to numbered disclaimer, giving borrowers the predictable payment options typically associated with home equity loans combined with the flexibility of a HELOC.
Benefits and risks of using a HELOC for home improvement
- Lower interest rates
Because HELOCs are secured by using your home as collateral, they typically offer lower interest rates Opens in a new window. than credit cards or personal loans.
- Fast access to funds
Modern lenders, like Figure, can approve applications in as few as five minutes and fund loans in as few as five business days.3: Navigates to numbered disclaimer
- Possible tax deductions
Interest paid on a HELOC may be tax-deductible if the funds are used to "buy, build, or substantially improve" the home that secures the loan.6: Navigates to numbered disclaimer
- Your home serves as collateral
A HELOC is a secured loan, which means your home backs the debt. If you're unable to make payments, you risk the lender foreclosing on your home.
- Extended repayment may increase total interest
Longer repayment terms could lower monthly payments, but they may increase total interest paid. Consider the total borrowing cost when choosing a loan.
Best renovation projects to fund with a HELOC
Additions
Adding extra square footage may increase property value
*Source: Cost vs. Value Report 2025 Opens in a new window.. All return on investment (ROI), cost recovery, and home value estimates are based on illustrative examples and are not guaranteed. Actual results will vary. Examples provided are not representative of typical outcomes.
How much can you borrow for a home remodel?12: Navigates to numbered disclaimer
The amount you can borrow is determined by your lender based on your combined loan-to-value (CLTV) ratio.
CLTV is the ratio of all loans secured by your property (including your primary mortgage and the new HELOC) to the property's current appraised value. Most lenders cap CLTV at around 90%, though state regulations may impose stricter limits (i.e., Texas caps CLTV at 80%).
Adjust the chart below to create the custom amount that relates to you.
$800,000
Current Home Value
$550,000
Remaining Mortgage Amount
In this scenario, you could qualify to borrow up to
$90,000
Check my HELOC rate*Based on borrowing 80% of your current home value
What to consider before taking a HELOC for renovations
Your renovation budget and timeline
Determine how much to borrow and when you'll need to access the funds.
Your ability to make monthly payments
Confirm you can afford payments alongside existing obligations.
How long you plan to stay in your home
Consider renovation ROI, as the HELOC may require repayment before you sell.
Current interest rate environment
Interest rates impact your total HELOC cost. Fixed-rate options offer payment stability, while variable rates may provide savings if rates decline.
How to get a HELOC for home improvements
A HELOC can be a smart way to fund home improvements by accessing your home's equity without refinancing your primary mortgage. With Figure, you can:
- Select the rate, terms, and loan amount that fit your needs best
- Check your HELOC rate without impacting your credit score7: Navigates to numbered disclaimer
- Get approved in five minutes, funding in as little as five days3: Navigates to numbered disclaimer
Ready to explore your options?
Real Figure customers, real results
*Individual experiences may vary and are not guaranteed. Customers received a gift card for sharing their story.
FAQs about using a HELOC for home improvement
Minimum credit score requirements vary by lender, but many require a score of at least 620 to 680. For qualified borrowers, Figure accepts credit scores as low as 6005: Navigates to numbered disclaimer for primary residences.
Traditional lenders may take several weeks to approve and fund a HELOC. Digital-first lenders like Figure could fund in as few as five business days3: Navigates to numbered disclaimer for qualified applicants.
Neither is universally better. HELOCs offer flexibility for ongoing projects with uncertain costs, while home equity loans provide a predictable lump sum with fixed payments. Some lenders, like Figure, offer fixed-rate HELOC options1: Navigates to numbered disclaimer that combine the benefits of both.
Yes, most lenders allow HELOC funds to be used for a wide variety of home improvements, from kitchen remodels to roof replacements. Using the funds to substantially improve your home may also make the interest you pay tax-deductible for qualified borrowers6: Navigates to numbered disclaimer.
Bank HELOCs take two to six weeks and require appraisals and paperwork. Figure’s streamlined process can approve in minutes and funding in as few as 5 business days3: Navigates to numbered disclaimer for qualified borrowers.
A HELOC can be a smart financing option for home improvements if you have sufficient equity and can afford the monthly payments. It typically offers lower interest rates than credit cards or personal loans8: Navigates to numbered disclaimer, and the interest may be tax-deductible when used for substantial home improvements.