What are the guidelines, limits and requirements for a HELOC?​

HELOCs allow homeowners to access the equity they have built up in their homes. Understanding what goes into a HELOC can help prepare you for getting one to access your equity. 

A HELOC, or home equity line of credit*, offers borrowers a credit line based on the amount of equity they own in their homes. Homeowners can access this equity through a  line of credit for a set number of years while only paying interest on the amount they borrowed, like a credit card.  

After those years, borrowers will need to pay back their principal and interest without the ability to make additional draws. This is how a HELOC differs from other loans that access your home equity, like a home equity loan. 

Is a HELOC the right option for you? Start your HELOC application today! 

What are the credit score requirements for a HELOC? 

Some lenders set a minimum credit score requirement at 600 for a HELOC, though some may look for borrowers to have slightly higher scores. 

Credit scores range from 300 to 850. A higher credit score could help you qualify for more HELOCs with various lenders. A higher credit score could also get you a better rate on your HELOC. 

Will a HELOC affect my credit score?​ 

When you apply for a HELOC, you will notice a slight dip in your credit score. This is due to a hard credit check during the application process. 

After you open your HELOC, the effect it has on your credit score depends on how you manage it. Having a HELOC could increase your credit mix, and making payments on time could show creditworthiness, both of which could boost your credit score. 

Does a HELOC require an appraisal?​ 

HELOCs require a current home valuation to determine your property value and the equity you have in your home. 

This valuation does not always require a home appraisal. If you have a good credit score or recent property valuation, some lenders may approve a HELOC without a new home appraisal. 

For those who need a home appraisal, here are a few types of appraisals lender rely on. 

• In-person appraisal: These will require a professional appraiser to inspect both the interior and exterior of the home and compare it to similar properties in the area. 

• Exterior-only appraisal: As the name suggests, these are not interior appraisals. Professionals will evaluate the exterior of the home and look at comparable properties in the neighborhood. 

• Automated Valuations Model (AMV): Instead of in-person appraisals, public data and information are used to evaluate the home without an in-person visit. 

How much equity do I need to get a HELOC?​ 

To get a HELOC, most lenders will need you to have at least 15% equity in your home. If you have less home equity than that, there are products with Owning  for 5% home equity.  

You can find out how much equity you have in your home by taking your home’s current value and subtracting your remaining mortgage balance. From there, use the number you got and divide by your home’s current value. Finally, take that number and multiply it by 100 to get the percentage of equity you have in your home. 

What do I need to apply for a HELOC?​ 

There are several documents you will need to apply for a HELOC. 

Here are some of the documents you will need to complete your HELOC application. 

• Identity verification: This is a government-issued ID, Social Security number, current address and employer information. 

• Proof of income: You can use recent pay stubs, W-2 forms or tax returns as proof of income. 

• List of assets: Banks statements, investment accounts, savings and a list of any other assets with their estimated value are all assets you could include on your HELOC application. 

Where can I find HELOC rates?​ 

You can find current HELOC rates through a professional lender’s website. The rates shown on these sites are updated regularly and will give you an idea of the base rate you could get with a HELOC through them. 

How can I apply for a HELOC today? 

You can apply for a HELOC today through an online application. 

When starting an online HELOC application, you will be connected to a professional Loan Officer. The Loan Officer can help you through the application process, tell you what documents you need and give you an idea of what kind of appraisal you will need. 

Ready to apply for a HELOC? Begin your HELOC application today! 

_{*Owning home equity line of credit (HELOC) is an open-end product where the full loan amount (minus the origination fee) will be 100% drawn at the time of origination. The initial amount funded at origination will be based on a fixed rate; however, this product contains an additional draw feature. As the borrower repays the balance on the line, the borrower may make additional draws during the draw period. If the borrower elects to make an additional draw, the interest rate for that draw will be set as of the date of the draw and will be based on an Index, which is the Prime Rate published in the Wall Street Journal for the calendar month preceding the date of the additional draw, plus a fixed margin. Accordingly, the fixed rate for any additional draw may be higher than the fixed rate for the initial draw. This product is currently not offered in the states of New York, Kentucky, West Virginia, Delaware and Maryland. The HELOC requires you to pledge your home as collateral, and you could lose your home if you fail to repay. Property insurance is required as a condition of the loan and flood insurance may be required if your property is located in a flood zone. Borrowers must meet minimum lender requirements in order to be eligible for financing. Available for primary, second homes and investment properties only. Dependent on minimum credit score and debt-to-income requirements. Occupancy status, lien position and credit score are all factors to determine your rate and max available loan amount. Not all applicants will be approved. Applicants subject to credit and underwriting approval. Contact Owning for more information and to discuss your individual circumstances. Restrictions Apply.} 

_{Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Refinancing your mortgage may increase costs over the term of your loan. Restrictions may apply.}  

_{All information provided in this publication is for informational and educational purposes only, and in no way is any of the content contained herein to be construed as financial, investment, or legal advice or instruction. Owning does not guarantee the quality, accuracy, completeness or timelines of the information in this publication. While efforts are made to verify the information provided, the information should not be assumed to be error-free. Some information in the publication may have been provided by third parties and has not necessarily been verified by Owning. Owning its affiliates and subsidiaries do not assume any liability for the information contained herein, be it direct, indirect, consequential, special, or exemplary, or other damages whatsoever and howsoever caused, arising out of or in connection with the use of this publication or in reliance on the information, including any personal or pecuniary loss, whether the action is in contract, tort (including negligence) or other tortious action.}