8Twelve Mortgage US
Home equity line of credit

HELOC.
Your equity, on tap.

A HELOC, or home equity line of credit, is a revolving line secured by your home that you draw on as needed while your first mortgage stays in place. You pay interest only on what you use, usually at a variable rate. Lower credit scores and self-employed income are considered on select programs, with less leverage.

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3-minute form. A soft-credit rate estimate.

Last updated: October 2026

Draw
Only what you need
First mortgage
Stays in place
40+
Lender network

A HELOC is the tool we reach for most often when a homeowner has a low first-mortgage rate and a reason to borrow. It leaves that rate alone, prices only the money you actually draw, and stays open for the next project. Where it gets harder is credit and income documentation, and that is where placing the file with the right lender in our network makes the difference.

Who it's for

A fit if you're…

  • Holding a low first-mortgage rate you want to keep
  • Funding a renovation or tuition in stages
  • Wanting a standby source of funds without paying interest until you use it
  • Rebuilding credit and declined by a bank on score alone
  • Self-employed, with tax returns that understate your income

Keep your first mortgage

Your existing rate, term and balance are not touched.

Interest on what you draw

An open line with nothing drawn costs nothing in interest.

Lower credit considered

Select programs consider lower scores, usually with lower combined loan-to-value.

Alternative documentation

Bank statement HELOCs and second liens exist for self-employed borrowers.

Fixed-rate lock options

Many lines let you fix part of the balance if rates move against you.

Fixed alternative

Prefer one lump sum at a fixed rate? A home equity loan does that.

How a HELOC works

The lender values the home, sets a maximum combined loan-to-value, subtracts your first mortgage and opens a line for the difference. During the draw period, commonly 10 years, you borrow and repay as you like, and minimum payments are often interest-only. After that the line closes to new draws and the balance amortizes, commonly over 20 years. The rate is usually variable, tied to an index such as the Prime Rate plus a margin, so the payment moves with the market.

Illustrative example only

Round numbers, chosen to show the math rather than to reflect any particular lender or file. Your figures, program and pricing will differ.

Illustrative HELOC sizing on a $700,000 home
Home value$700,000
Lender combined cap (85% in this example)$595,000
Existing first mortgage$320,000
Available HELOC line$275,000
Drawn in year one for a kitchen$50,000

Interest accrues on the $50,000 drawn, not the $275,000 line. The first mortgage at $320,000 stays exactly as it was.

For illustration only. Not a commitment to lend, a rate lock or an offer of credit. Terms vary by lender, by property and by file.

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HELOC with a bad credit score

Banks that only offer their own HELOC tend to have one credit cut-off, and if you are below it the answer is no. Across a lender network the picture is wider. Lower scores are considered on select programs, and the usual trade is less leverage and higher pricing. What moves a lower-score file from declined to approved is everything around the score: plenty of equity left after the line, no late payments on the first mortgage in the last 12 months, a debt-to-income ratio with room in it, and credit problems that are old rather than recent.

  • Expect a lower combined loan-to-value cap than a strong-credit file
  • A clean 12-month mortgage history often matters more than the score
  • Paying revolving balances down before applying can lift the score quickly
  • Bankruptcy and foreclosure waiting periods vary by lender
  • If no line fits, a fixed home equity loan or FHA cash-out may
See what you qualify for

HELOC with no tax returns

People search for a no-doc HELOC, but nothing in today's market is truly no documentation. What does exist is alternative documentation: HELOCs and second liens that qualify a self-employed borrower on 12 or 24 months of bank statements instead of tax returns, much like a bank statement first mortgage. Credit, the property and your equity are still verified, and pricing is higher than a full-documentation line. Fewer lenders offer them, so availability depends on the property and loan size. Our non-QM home loans page lists the other alternative-income routes.

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HELOC, home equity loan or cash-out refinance

A HELOC suits costs that arrive over time, or money you want available but may not use. A home equity loan suits one known cost and a borrower who wants a payment that never changes. A cash-out refinance makes sense when your current first-mortgage rate is no better than today's, so replacing it costs little. The cash-out refinance calculator runs the refinance side with your own rate. For a rental or a second home, see HELOC on an investment property.

See My HELOC Options

Good and bad uses

The strongest uses build or protect wealth: renovations that add value, paying off higher-rate balances (see our cash-out for higher-rate debt guide), a down payment on a rental, or bridge funds to buy before you sell. The weakest are everyday spending, because the line is secured by your home and a variable rate can rise. More plain-English explainers are in the mortgage guides.

Talk to a loan specialist

Things to weigh

  • Variable-rate lines move with the market. Test the payment at a higher rate before you rely on it.
  • The payment can rise sharply when the draw period ends and principal repayment starts.
  • A HELOC is secured by your home. Missed payments put the home at risk.
  • Lenders can freeze or reduce a line if the home's value falls significantly.
  • Credit minimums, combined loan-to-value caps and documentation rules vary by lender. Terms are available across our lender network, and nothing here is an offer to lend.
FAQ

Questions buyers actually ask

Can I get a HELOC with a bad credit score?+

Sometimes. Lower scores are considered on select programs across our lender network, usually with a lower combined loan-to-value and higher pricing. Lenders weigh the rest of the file heavily: how much equity remains, a clean 12-month payment history on your first mortgage, and your debt-to-income ratio. A recent late mortgage payment hurts more than an old collection.

Is there a no-doc HELOC?+

Not in the sense of no documentation at all. What exists are alternative-documentation HELOCs and second liens, mostly for self-employed borrowers, that qualify you on bank statements or other records instead of tax returns. Credit, the property and your equity are still verified, and pricing is higher than on a full-documentation line.

HELOC or home equity loan: what's the difference?+

A HELOC is a revolving line you draw from as needed, usually at a variable rate. A home equity loan pays one lump sum at a fixed rate with a fixed payment. Choose the line for spending spread over time; choose the loan for one known cost.

How much can I borrow with a HELOC?+

Lenders cap the combined loan-to-value: your first mortgage plus the line, divided by the home's value. Caps commonly sit in the 80% to 90% range on a primary home for strong files, lower for weaker credit and for second homes and rentals. Multiply the value by the cap and subtract your mortgage balance.

Is a HELOC rate variable or fixed?+

Most HELOCs are variable, set as an index such as the Prime Rate plus a margin. Many lenders let you lock part of the balance at a fixed rate. We do not publish rates; your margin depends on credit, combined loan-to-value, line size and the lender.

How do the draw and repayment periods work?+

During the draw period, commonly 10 years, you borrow and repay as you like and the minimum payment is often interest-only. After that, the line closes to new draws and the balance is repaid with principal and interest, commonly over 20 years. The payment can rise noticeably at that switch, so plan for it.

Do HELOCs have closing costs?+

Some do and some do not. Lenders that advertise no closing costs usually recover them through a higher margin or require you to keep the line open for a minimum period. Compare the margin and the fees together, not one or the other.

Can I get a HELOC on a rental or second home?+

On select programs. Fewer lenders offer them, and leverage is lower. Our HELOC on an investment property page covers rentals and second homes in detail.

Should I get a HELOC if my first mortgage rate is low?+

That is exactly when a HELOC tends to make the most sense. It leaves your low-rate first mortgage untouched and charges interest only on what you draw. A cash-out refinance would reprice the whole balance.

Use your equity without touching your rate.

A 3-minute application. A soft-credit rate estimate. We structure and place your file with the lender that fits it.

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