Trustpilot
Loading...
Loading...Loading...
It can feel like you found money you didn't know you had when you tap into the value of your home after paying your mortgage for a few years. Every day, AmeriSave helps homeowners who need money for big costs like college tuition, home repairs, medical bills, or debt consolidation. They find that home equity loans are the answer. What's the catch? It takes time to do. You could think of it this way: you're getting a second mortgage, which means you'll need to go through the same paperwork, underwriting, and approval steps.
According to data from major lenders in 2025, home equity loans usually take two to six weeks from application to funding. However, your timeline will depend a lot on how ready you are financially and how quickly you respond to lender requests. As of December 10, 2025, the average interest rate on a home equity line of credit (HELOC) in the United States is 7.81%. For borrowers with a loan-to-value ratio of 60% or less, the average interest rate on a home equity loan is 7.15%. Home equity products are becoming more and more popular because American homeowners have record amounts of equity and many of them don't want to refinance their low-rate primary mortgages.
This means that if you need money right away, you should start getting ready now. According to data from the Home Mortgage Disclosure Act, almost half of HELOC applications are turned down. This makes it very important to be ready. What is the most common delay? Not enough paperwork. People who own homes apply thinking they'll get approved quickly, but then they spend weeks looking for bank statements, tax returns, and proof of homeowners insurance.
This guide goes over every step of getting a home equity loan in 2026, gives realistic timeframes for each step, lists things that can cause delays, and gives tips on how to speed up your application. If you're thinking about getting a traditional home equity loan or a home equity line of credit (HELOC), knowing how the process works can help you plan ahead and avoid annoying surprises.
A home equity line of credit (HELOC) offers a revolving line of credit similar to a credit card, typically with a variable interest rate. You can withdraw money as needed during a draw period (usually 10 years), repay those funds to replenish your available balance, and then draw again. The national average HELOC rate sits at 7.81% as of December 10, 2025, with rates ranging from 7.20% to 10.85% APR depending on credit score, loan-to-value ratio, and whether you maintain a checking account with the lender.
During the 10-year draw period, most HELOCs require only interest-only minimum payments, keeping monthly costs low while you're using the funds. After the draw period ends, the repayment period begins-typically 20 years-when you must pay both principal and interest. BECU HELOCs, for example, offer interest-only payments during the draw period with the option to lock in fixed rates on up to three loan amounts, providing flexibility for borrowers who want some payment predictability.
Home equity loans suit borrowers who know exactly how much they need and prefer fixed payments. If you're replacing a roof for $30,000 or consolidating $45,000 in credit card debt, the lump sum and predictable payments make budgeting straightforward. HELOCs work better when you're funding multiple expenses over time or aren't certain of the total amount needed-think ongoing home improvement projects, college tuition payments spread across several years, or keeping emergency funds available.
You typically need a credit score of at least 680 to qualify for a home equity loan, though some lenders accept scores as low as 620 with additional requirements like higher equity or lower debt ratios. A credit score of 740 or higher helps you secure the best interest rates, potentially saving thousands over the loan's life. For perspective, a borrower with a 740+ FICO score might qualify for a 7.15% APR, while someone with a 680 score could face rates of 8.50% or higher on the same loan amount.
Before applying, pull your credit report from all three bureaus through AnnualCreditReport.com. Review for errors-disputed late payments, accounts that aren't yours, incorrect balances-and file disputes if needed. Dispute resolution takes 30-45 days, so address credit issues well before applying. If your score is below 680, consider waiting a few months to improve it through on-time payments, paying down credit card balances below 30% utilization, and avoiding new credit applications.
Your debt-to-income (DTI) ratio shows how much of your gross monthly income goes toward paying off your debts, such as your mortgage, car loans, credit cards, student loans, and the payment on your new home equity loan. Most lenders want DTI ratios to be less than 43–50%, but 36% is the best number for conventional lending.
To find your DTI, add up all of your monthly debt payments ($2,000 for your mortgage, $400 for your car, $200 for your credit cards, and $300 for your student loans) and divide that by your gross monthly income ($7,000). Your DTI is 41.4%. If you want a $50,000 home equity loan with monthly payments of $450, your new DTI will be 47.9%. This is probably still acceptable, but it's at the high end. Paying off your current debts before applying can lower your DTI and possibly get you better rates.
Lenders require proof of stable income to ensure you can repay the loan. W-2 employees need pay stubs from the past 30 days, W-2 forms from the past two years, and federal tax returns for the previous two years. Self-employed borrowers face additional scrutiny-lenders typically require bank statements from the past 12-24 months to assess income consistency, along with profit-and-loss statements and business tax returns. Bank statement HELOCs have become popular with self-employed homeowners who can document income through deposits rather than traditional verification.
You'll need your current mortgage statement showing your outstanding balance and monthly payment, proof of homeowners insurance with declarations page showing coverage amounts, property tax bills from the past year, and potentially a copy of your recorded deed. Some lenders also request HOA documentation if you live in a community with association dues. Having these documents organized before applying can save days or weeks-track down your homeowners insurance agent now if you're not sure where your policy documents are.
Expect to provide bank statements from checking and savings accounts for the past 60 days, statements for investment accounts (401(k), IRA, brokerage accounts), and documentation of any other assets like vehicles or additional properties. The lender also wants a complete picture of your liabilities: credit card statements showing current balances, auto loan documentation, student loan statements, and any other outstanding debts. Complete financial transparency helps underwriters assess your ability to manage the additional payment.
You don't have to get your home equity loan from your primary mortgage lender-shopping around often reveals better terms, lower fees, or more favorable rates. Interest rate differences of just 0.50% can cost thousands over a 10-year loan. On a $75,000 home equity loan, the difference between 7.15% and 7.65% APR equals $1,900 in additional interest payments over the loan term. Compare at least three lenders to understand the competitive landscape.
Some lenders are known for efficiency-processing loans in 2-3 weeks-while others take 6-8 weeks. If you need funds quickly, ask about typical processing times, whether they offer automated valuations instead of full appraisals, and if electronic closings are available. Read reviews about customer service responsiveness, as delays often stem from lenders taking days to respond to questions or process submitted documents.
Most lenders offer streamlined online applications that take 30-60 minutes to complete. You'll provide personal information (Social Security number, date of birth, employment details), property information (address, purchase price, current estimated value), financial details (income, assets, debts), and the loan amount you're requesting. Be accurate-discrepancies between your application and supporting documents raise red flags that slow underwriting.
Since your home secures the loan, lenders need an independent assessment of its current market value to calculate your loan-to-value ratio and determine maximum borrowing capacity. Even if you bought the property recently, market conditions change-appreciation could increase your equity, or market softening could reduce it. The appraiser examines your home's condition, compares it to recent sales of similar properties in your area, and provides a formal valuation report.
Scheduling depends on appraiser availability in your area. In markets with high refinancing or home buying activity, wait times stretch to 2-3 weeks. The inspection itself takes 30 minutes to a few hours depending on property size and complexity. The appraiser measures rooms, photographs the property, notes condition and updates, and reviews comparable sales. Appraisal reports typically arrive 6-20 days after the inspection, though some lenders receive them within 3-5 days if the appraiser uses digital reporting systems.
Underwriting is where lenders verify everything. They calculate your debt-to-income ratio including the new loan payment, verify employment by calling your employer or reviewing pay stubs and tax returns, confirm assets by reviewing bank statements and investment accounts, perform title searches to identify any liens or legal claims against the property, and assess overall credit profile including payment history and credit utilization. The thoroughness explains why underwriting takes 1-4 weeks.
Expect the underwriter to request additional documentation or clarification. Common requests include explanations for large bank deposits (gift funds, bonuses, or asset transfers), letters of explanation for recent credit inquiries or late payments, verification of irregular income like bonuses or commissions, documentation of employment gaps or job changes, and proof of mortgage payment history. The faster you respond to these requests, the quicker underwriting progresses.
Underwriters prioritize straightforward applications. High credit scores (740+) with clean payment histories move fastest. Low debt-to-income ratios (under 36%) require less scrutiny. Substantial equity cushions-borrowing 50% of available equity rather than maximizing at 80-85% LTV-reduce risk concerns. W-2 employees with steady employment get approved faster than self-employed borrowers requiring extensive income documentation. If your application is strong across these factors, you might clear underwriting in 3-7 days instead of 2-4 weeks.
Once underwriting approves your loan, the lender prepares the Closing Disclosure-a detailed breakdown of your loan terms, interest rate, monthly payment, and all closing costs. Federal law requires lenders to provide this document at least three business days before closing, giving you time to review and ask questions. Compare the Closing Disclosure to your original Loan Estimate. While some differences are normal (especially if the appraisal came in differently than estimated), significant changes warrant explanation.
Verify the interest rate matches what you were quoted. Confirm the loan amount and monthly payment calculations are correct. Check closing costs for unexpected fees-origination charges, title insurance, recording fees, and any prepaid interest should match or be lower than the Loan Estimate. Review the total amount you'll pay over the loan's life. If you spot errors or unexplained charges, contact your lender immediately. Don't feel pressured to close if you're uncomfortable with the terms.
At closing, you'll sign the promissory note (your promise to repay), the deed of trust or mortgage document (giving the lender a security interest in your home), the Closing Disclosure, and various disclosures required by federal and state law. You'll pay closing costs if any are due-some borrowers roll these into the loan amount, while others pay out of pocket. After signing, you enter the three-business-day rescission period.
Home equity loans disburse the full amount via wire transfer to your bank account or lender check. Most borrowers receive funds within 24-48 hours after the rescission period ends. HELOCs work differently-you receive access to your credit line through checkbook, electronic transfers, in-branch withdrawals, or debit cards linked to the account. You can draw funds as needed during the 10-year draw period, making HELOCs more flexible for ongoing expenses.
Documentation issues cause the most common delays. Submit bank statements missing pages or from wrong months, and underwriting stops until you provide complete statements. List income that doesn't match tax returns, and you'll explain the discrepancy with additional documentation. Make errors on the application-wrong employer name, incorrect mortgage balance, transposed Social Security digits-and corrections delay processing. Double-check every document before submission. In my MSW program, we learned about attention to detail's role in reducing client stress-the same principle applies here. Taking an extra hour to verify documents upfront prevents weeks of delays.
Self-employed borrowers typically face longer underwriting. Lenders scrutinize 12-24 months of bank statements, profit-and-loss statements, and business tax returns to verify income stability. Recent job changes require employment verification letters and potentially explanations about income continuity. Multiple income sources-W-2 employment plus freelance work plus rental property income-demand additional documentation for each stream. Co-borrowers double the documentation requirements since lenders review both applicants' complete financial profiles.
Before applying, gather all required documents in one folder. Create a checklist: most recent two pay stubs, W-2 forms from the past two years, federal tax returns for two years including all schedules, bank statements for all accounts from the past 60 days, current mortgage statement, proof of homeowners insurance, recent property tax bill, driver's license or state ID, Social Security card if name doesn't match perfectly on all documents. Having everything ready when the lender requests it keeps the process moving.
Research lenders known for efficient processing. Some online lenders specialize in quick turnarounds-2-3 weeks from application to funding versus 6-8 weeks at traditional banks. Ask prospective lenders about average processing times during your initial inquiries. Request information about their appraisal processes-lenders offering AVMs or desktop appraisals for qualified borrowers can save 1-2 weeks. Inquire about electronic closings if you want to avoid in-person signing appointments.
When the underwriter requests additional documentation or clarification, respond within 24-48 hours. Delays accumulate-if you take three days to provide requested pay stubs, then another three days for bank statement explanations, then four days to schedule employment verification, you've added two weeks to your timeline. Set up email alerts for messages from your lender. Check your application portal daily. Provide complete responses the first time rather than partial information that generates follow-up requests.
Month-end closings mean you'll owe less prepaid interest-interest accrues daily from your closing date until your first payment date. Closing on the 30th versus the 5th saves 25 days of prepaid interest. On a $75,000 loan at 7.15% APR, daily interest is approximately $14.70. Closing on the 30th saves $368 in prepaid interest compared to closing on the 5th. While not enormous, every reduction in closing costs helps.
Getting a home equity loan takes two to six weeks on average, though your timeline depends on preparation, lender efficiency, and application complexity. The eight-step process moves from verifying eligibility (1-3 days) through documentation gathering (1-7 days), lender shopping (2-7 days), application submission (1 day), appraisal (1-3 weeks), underwriting (1-4 weeks), document review (3-5 days), and closing with fund access (3-7 days). Each phase has specific requirements and potential delays that you can mitigate through proper planning.
Just breathe-the process seems overwhelming at first, but breaking it into manageable steps makes it achievable. Start by ensuring you meet minimum requirements: 15-20% equity remaining after borrowing, credit score of 680+ (740+ for best rates), DTI ratio below 43-50%, and stable verifiable income. Gather all documentation before applying rather than scrambling when the lender requests it. Shop multiple lenders to compare rates, fees, and processing times-the extra week spent comparing can save thousands in interest.
The most common delays come from incomplete documentation, complex financial situations requiring additional verification, appraisal scheduling in high-demand markets, and title issues uncovered during the search. You control many of these factors. Prepare documents thoroughly, respond promptly to underwriter requests, maintain clean credit during the application period, and choose lenders known for efficient processing. Borrowers with high credit scores, low debt ratios, and substantial equity cushions move through underwriting fastest.
Current market conditions favor home equity borrowing. American homeowners hold record equity levels, most preserve low-rate primary mortgages they don't want to refinance, and home equity loans provide cash access without disturbing existing favorable terms. The national average HELOC rate of 7.81% and home equity loan rates around 7.15% for qualified borrowers remain attractive options for funding major expenses, especially compared to credit card rates often exceeding 20%.
Whether you choose a home equity loan's predictable fixed payments or a HELOC's flexible draw period depends on your needs. One-time expenses like home renovations, debt consolidation, or large purchases suit lump-sum loans. Ongoing expenses spread over time-college tuition, phased home improvements, or emergency fund reserves-work better with HELOC flexibility. Both options give you access to your home's equity without refinancing, preserving your primary mortgage while addressing financial needs.
Yes, some borrowers close in as little as two weeks, but this takes a lot of planning and cooperation.
You can get the fastest timelines if you have great credit (740 or higher), a lot of equity (borrowing 50% or less of available equity), a simple W-2 job with years at the same company, and all your paperwork in order before you apply.
Choosing lenders who use automated valuations instead of traditional appraisals can save you 7 to 14 days. Online lenders that focus on quick processing can get applications through underwriting faster than regular banks.
But it's not always a good idea to rush the process. Spending time comparing rates from different lenders can save you thousands of dollars in interest over the life of your loan.
Think about whether a home equity loan is the best way to get money if you really need it in two weeks. Personal loans and credit cards, on the other hand, are more expensive but can be funded in a few days.
Planning ahead is the best way to go. If you know you'll need home equity funding in six months, start the application process now instead of waiting until you're under pressure.
Lenders who process thousands of applications each year say that missing paperwork is the biggest cause of delays.
Homeowners often don't understand what documentation means. For example, they send in two months' worth of bank statements when the lender needs three, or they send in recent pay stubs but forget W-2s from previous years. They also list rental income without tax schedules to back it up.
Each missing document stops underwriting until you provide it, and it takes time to get all the paperwork together when you have to search through file cabinets or ask your boss for copies.
In markets where demand is high, the second most common delay is scheduling an appraisal. When there is a lot of refinancing or home sales, appraisers are booked up for 2 to 3 weeks.
You can't change the weather, but you can make sure your paperwork is ready.
Before you apply, make a complete file folder with the last two pay stubs, the last two years' W-2s, all of your federal tax returns with all of their schedules, 60 days' worth of bank statements for all of your accounts, your current mortgage statement, proof of homeowners insurance, and your most recent property tax bill.
When you have everything ready when asked, your application will move through each step without any problems.
Closing costs for a home equity loan usually range from $500 to $2,000, which is a lot less than the costs of refinancing your main mortgage.
These costs include the appraisal fee (usually $300–500), the title search and title insurance (usually $400–800), the recording fees to register the new lien with your county (usually $50–200), and possibly origination or processing fees, depending on your lender.
Some lenders offer "no closing cost" home equity loans, but be careful with the terms. They usually add costs to higher interest rates or bigger loan amounts.
HELOCs often have different fee structures, with annual maintenance fees of $75 to $100. However, many lenders will waive these fees if you keep checking accounts with them.
If you close a HELOC within 24 to 30 months, you will have to pay an early closure fee, which is usually 1% of the original credit line.
Instead of just looking at interest rates, look at the total costs from several lenders. If you borrow small amounts, a loan with 7.25% APR and $500 in fees costs less over time than one with 7.15% APR and $2,000 in closing costs.
HELOCs are better when you're not sure how much money you need or when you need it.
If you want to renovate your home in stages, like updating the kitchen this year and the bathrooms next year, a HELOC lets you take out money as you need it instead of borrowing a large amount and paying interest on money that is sitting around.
In the same way, HELOC flexibility saves you money if you're using equity to pay for college tuition semester by semester or to keep emergency funds for possible expenses.
You only pay interest on the money you borrow, not the whole amount of credit you have. The draw period usually lasts ten years, which gives you more time to get to your money.
But HELOCs have the risk of interest rates going up. The average HELOC rate in the US is 7.81%, but this can change based on how the market is doing.
When you borrow money at low rates and the Federal Reserve raises rates a lot, your payments go up. Some lenders let you lock in a rate on part of your balance, which gives you stability.
If you know you need a certain amount of money right away, think about getting a home equity loan instead. The fixed rate and predictable payment make it easier to plan your budget, even if you have to pay interest on the full amount right away.
Yes, but usually only for a short time and not very much.
When you apply for a home equity loan, the lender does a hard credit check to look at your credit history, payment history, and amount of debt. This question usually lowers your score by 5 to 10 points for a few months before it goes back up.
But if you shop around with a lot of lenders in a short amount of time (usually 14 to 45 days, depending on the credit scoring model), it only counts as one inquiry. So don't worry about comparing offers.
How you handle the loan in the long run is more important than the temporary drop in your score. Making payments on time is the most important thing for credit scores because it builds a good payment history.
If you handle your home equity loan responsibly, it can actually help your score over time.
Not paying your bills on time is the worst thing you can do to your credit score. It hurts your score a lot and stays on your report for seven years.
Before you apply, make sure you can easily pay the new payment on top of your current mortgage and debts. If taking out a home equity loan makes your debt-to-income ratio too high or makes it hard to stick to your monthly budget, the effect on your credit score becomes less important than the stress it could cause.
Yes, but you may need to provide more paperwork and the underwriting process may take longer.
Lenders have to look more closely at self-employed borrowers because they can't check their income with just pay stubs and W-2s.
Generally, you'll need business tax returns from the last two years, including all schedules, profit-and-loss statements for the current year, 12 to 24 months of business and personal bank statements showing regular income deposits, and maybe a letter from a CPA confirming your income.
Lenders look closely at your income trends. They want to see that your earnings are stable or rising, not that they go up and down a lot from year to year.
Some lenders focus on self-employed borrowers and offer bank statement HELOCs or home equity loans. Instead of looking at tax returns, they look at deposit patterns to figure out how much money the borrower makes.
These programs are especially helpful for business owners who can claim a lot of tax deductions that lower their reported income on their tax returns.
Because of the perceived risk, you should expect to pay a little more than W-2 employees.
Keep your credit score high (740 or higher is very helpful), borrow carefully (leaving a lot of equity cushion), and make sure all your paperwork is in order before you apply.
Self-employed people can definitely get home equity loans. Getting ready ahead of time can make the difference between a smooth approval and a long wait.
If your appraisal comes in lower than you thought, you won't be able to borrow as much money because lenders use the appraised value, not your estimate, to figure out how much you can borrow.
If you thought your house was worth $400,000 and wanted to borrow $60,000 against it, but the appraisal says it's only worth $360,000, your maximum borrowing goes down by the same amount.
You can only borrow $68,000 now instead of $100,000 because your primary mortgage is $220,000 and your total debt is $288,000 ($360,000 times 80% equals $288,000 total debt allowed, minus $220,000 existing mortgage).
You have a lot of choices.
First, go over the appraisal report carefully to look for mistakes like wrong square footage, missed improvements, or sales that aren't good comparisons. If you find real mistakes, ask for a reconsideration of value and include proof.
Second, give more sales data from similar homes that show higher values if recent sales in your area back up your claim.
Third, pay for a second appraisal, even though this will cost more and take more time.
Fourth, change the amount of your loan to match what the appraisal says.
Finally, wait and apply again later after you have made changes or when the market gets better.
Most borrowers agree with the appraisal and make changes to their plans, but it makes sense to challenge an appraisal if you have strong evidence that the values are higher.
Home equity loan rates are currently around 7.15% for qualified borrowers.
This is still a good deal compared to other borrowing options, even though interest rates are generally higher right now.
Credit cards charge 20–25% APR or more, personal loans usually cost 10–15%, and cash-out refinancing means giving up low-rate primary mortgages that many homeowners got in 2020–2021.
If you have a first mortgage with a rate of 3% or 4%, it makes sense to keep that low rate and get equity through a second mortgage, even if the second mortgage has a rate of 7% to 8%.
It depends on your situation whether now is a good time.
If you're combining high-interest debt, the home equity loan will save you money right away, no matter what happens to rates.
If you need to make home improvements that will add value or keep it from getting damaged, putting them off will cost you more than the possible savings on interest rates.
If you can be flexible with your timeline and aren't trying to pay off a lot of debt at once, it makes sense to keep an eye on rate trends.
But trying to perfectly time interest rate markets almost never works. Rates could go down, but they could also go up.
Don't worry about predicting future rate changes that you can't control. Instead, think about whether the home equity loan will meet your financial needs at a rate you can afford.
Fact Checked
