Best Home Equity Loans of May 2025: Top Lenders and How to Choose

A home equity loan lets you tap into the equity you’ve built to fund major purchases, make renovations, or finance other financial goals. Finding the best home equity loan means finding the interest rate, term, and features that are most important for your situation. 

Here’s exactly what you need to know about home equity loans to get the best deal for you. 

What are home equity loans?

Home equity loans use the equity of your home to underwrite a loan using your property as collateral. Money is disbursed in a lump sum and repaid in monthly installments. A home equity loan offers a lower interest rate compared to personal loans or credit cards, but if you’re unable to make payments, the lender can start foreclosure proceedings. 

You’ll find home equity loans available from most traditional lenders, such as banks and credit unions. You’ll want to shop a variety of sources for home equity loans to find one that fits your credit profile and financing needs. 

What are the best home equity loan lenders of May 2025?

Not every lender will be a good fit for your credit profile, financing needs, and location. Shopping around for a home equity loan with local and national lenders can help you find one that works for you. 

With that in mind, some nationwide home equity loan lenders you may want to look at include the following:

Discover Home Loans: Discover Home Loans offers a consumer-friendly experience. It discloses rates upfront and provides several calculators to help you see how much equity you have and what your payment could be. Discover Home Loans also charges no appraisal or origination fees, and there are no costs due at closing. 

Rocket Mortgage: Rocket Mortgage’s application and documentation process is all online, which is attractive if you prefer convenience. However, the lender doesn’t disclose rates until you’ve submitted an application, which makes it harder to shop. Online reviews are generally positive, though there are some people who express disappointment in the follow-through and lack of attention from Rocket Mortgage lenders. It’s also notable that it discloses its fees as 2% to 6% of the loan amount, which is higher than other lenders charge. 

U.S. Bank: U.S. Bank is one of the few national banks offering a home equity loan. Rates start at 7.65% and you can prequalify online. Loan amounts go up to $750,000, and there are no closing costs. 

Navy Federal Credit Union: Navy Federal Credit Union has great rates, large loan amounts, and no closing costs. It also allows you to borrow up to 100% of the home’s equity, which is more than most other lenders. The downside is that not everyone will qualify for membership with Navy Federal. 

How do home equity loans work?

The process of obtaining a home equity loan is similar to applying for any loan. One notable difference is your home’s value is essential to loan approval. Additional appraisals and other requirements make the loan process take longer.

This is the process you can expect to go through when you get a home equity loan:

1. Determine how much equity you have: Home equity is the market value of your home less the amount you still owe on your mortgage. You can use an online loan-to-value (LTV) calculator to help you determine this number. 
2. Research different lenders for home equity loans: When you’re shopping around for a home equity loan, take a look at rates, fees, funding time, convenience, and reviews when selecting a lender. 
3. Apply for a home equity loan: Go through the formal application process with your top choices. Submit the lender’s required documentation. 
4. Order an appraisal: Your lender will order a home appraisal to find the value of your home. Many homes in the U.S. qualify for desktop or automated valuation model appraisals, which expedites the process. 
5. Close on the loan: Review the documents to ensure the loan is exactly what you want, sign, and close on the loan. 
6. Receive your funds: Your money will be disbursed as a lump sum into an account you specify.
7. Start paying back the loan: You’ll start making your installment payments immediately. 

The new lender will record the home equity loan as a second mortgage with your county recorder’s office. A deed of trust is issued, which grants your lender the right to sell your home if you don’t make payments. 

If you need to sell your home for any reason, both your first and second mortgages will need to be repaid before the next buyer takes title. 

What are the pros and cons of home equity loans?

Before you borrow against your home, make sure you’re comfortable with the risks.

According to Erin Hermany, senior vice president of Consumer Lending Operations at Members 1st Federal Credit Union, you may want to consider the following factors:

See also: Home equity loan vs. reverse mortgage

How to qualify for a home equity loan

It’s important to know the qualifications for a home equity loan so you can prepare in advance. Requirements for getting a home equity loan include:

• Credit score: A FICO credit score above 660 gives you the best odds of approval and can get you access to the best home equity loan rates. 
• Debt-to-income ratio (DTI): Many lenders require a DTI below 43%. 
• Income: Make sure your income is sufficient to cover the payment. 
• Amount of equity in your home: Most lenders require at least 20% equity, meaning your total outstanding loans (your mortgage plus a home equity loan) can’t exceed 80% of the home’s value.
• Other lender requirements: Check with your lender to see if it has any other qualifications. 

If you have more specific questions about qualifying for a home equity loan, you may want to contact a lender. 

How to choose the best home equity loan

“You of course want to heavily consider the financial difference between lenders,” says Adam Hamilton, co-founder of REI Hub. “Ideally, you want to select the best rate offered, and you want to encounter as minimal of fees as possible.”

“Beyond that, you also want to consider what the lender offers in terms of reliability, expertise, and security. For example, traditional banks might be more reliable than an online lender you come across that is very new. You might also get special deals or discounts from the banks or credit unions you are a member of, so make sure to check those out,” he says.

Home equity loan alternatives

When you take out a home equity loan, you get a lump sum of cash to use for whatever financial goal you have. However, depending on how much you need to borrow and the purpose, there are other options you can consider, including:

• HELOC: This type of loan also lets you tap the equity you’ve built in your home. Instead of a lump sum, you get a line of credit you can use during the draw period, typically five to 10 years. After the draw period, you enter repayment — you won’t be able to borrow against it anymore, and you’ll repay it over a period set by the lender (often 20 years). This may be a better option than a home equity loan if you don’t know the total amount you want to borrow and you prefer some flexibility. 
• Cash-out refinance: A cash-out refinance replaces your existing mortgage and lets you borrow a lump sum from the equity in your home, all in one loan. Refinancing can be helpful if you qualify for a lower interest rate, can improve your loan terms, or want to change your mortgage for a different type (such as exchanging an adjustable-rate loan for a fixed-rate one). 
• Personal loan: Personal loans and home equity loans have quite a few differences, but can be great tools for consolidating several smaller debts into one convenient payment. Personal loans are often unsecured, and you might have a higher annual percentage rate (APR) or more stringent qualifications to offset the risk.
• Credit card: Credit cards typically have higher interest rates than other loan types, but they can be a viable option depending on your goals. If you open a credit card that has a 0% introductory APR, you can use it to pay off a higher-interest debt or consolidate several smaller debts with higher interest rates. To make the most of this option, set up a plan to pay off the new credit card before the introductory period ends and the regular interest rate kicks in. 

The right loan for you depends on what your goals are and how you plan to repay the loan. Decide whether you need a lump sum to cover a large expense or flexible access to funds over time. Also, consider whether you’re comfortable using your home as collateral or taking on unsecured debt. Finally, take into account your future plans. A zero-interest credit card can be useful, but make sure you can handle the interest costs after the introductory period ends or can pay off the balance before then.