(727) 226-1040 (303) 645-4615 (470) 682-4763 (865) 263-3724 Apply

Home Equity Line of Credit (HELOC)

A revolving line of credit secured by your home. Draw what you need for renovations, tuition, debt consolidation or a rainy-day reserve, pay interest only on what you use, and leave your existing mortgage exactly as it is.

Get a HELOC quote Check your home value

Licensed in Florida, Tennessee, Georgia and Colorado. NMLS 222883.

10 yrs
Typical draw period
Interest only
Minimum payment during the draw period
Up to 80-90%
Combined loan-to-value, generally
Keep
Your first mortgage and its rate

How a HELOC works

A HELOC works like a credit card backed by your house. You are approved for a credit limit based on the equity you have built, then borrow against it as needed. Interest is charged only on the balance you actually carry, not on the whole line. Pay it down and the credit becomes available again without reapplying.

The line has two phases. During the draw period, commonly 10 years, you can borrow, repay and borrow again, and the minimum payment is typically interest only. When the draw period ends, the line closes to new borrowing and you repay the balance in principal-and-interest payments over a repayment period, commonly 20 years. HELOC rates are variable, generally tied to the prime rate plus a margin, so the payment can rise or fall as rates move.

The other way to turn equity into cash is a cash-out refinance, which replaces your first mortgage with a larger loan at a new fixed rate and hands you the difference. A HELOC sits behind your first mortgage instead, so if you locked in a low rate a few years ago, you keep it. Homeowners commonly use a HELOC for home improvements, consolidating higher-rate debt, education costs, emergencies and investments. Because it is secured by the home, rates are generally lower than credit cards or personal loans, and the interest may be tax deductible when the funds are used to buy, build or substantially improve the home. Consult a tax advisor about your situation.

Is it right for you?

A good fit if

  • You have meaningful equity and a first-mortgage rate you do not want to give up
  • Your costs will arrive in stages, such as a renovation, tuition or a project with an uncertain final price
  • You want a reserve you can tap for emergencies without paying interest until you use it
  • You are consolidating credit cards or personal loans at a higher rate than a secured line would carry

Look at something else if

  • You need one large lump sum and want a fixed payment, or your current mortgage rate is already high (cash-out refinance)
  • A variable rate that could rise over the draw period would strain your budget (30 year fixed or 15 year fixed refinance)
  • Your equity is thin; most lenders generally cap the combined balance of both loans at 80% to 90% of the home's value
  • You are not comfortable putting your home up as collateral for spending that will not add to its value

What it takes to qualify

HELOC guidelines vary more from lender to lender than first-mortgage guidelines do. These are the typical ranges; your loan officer will confirm what applies to you.

Home equity
The main requirement. Your existing mortgage balance plus the new line generally cannot exceed 80% to 90% of the appraised value, depending on the program and your credit. Not sure what your home is worth? Check your home value.
Credit score
Most lenders generally want a score of 680 or better for the best terms. Lower scores may still qualify, often with a lower credit limit or a higher margin over prime.
Debt-to-income ratio
Your monthly debts, including the payment on the full line, generally need to stay under about 43% to 50% of gross monthly income.
Income and payment history
Standard income documentation, plus a clean recent history on your current mortgage. A steady record matters because the HELOC is a second lien behind that loan.
Closing costs
Usually low compared with a full refinance. Expect an appraisal or valuation and some lender and recording fees; there is no mortgage insurance on a HELOC.
Property
Primary residences are the most common. Second homes and investment properties may be eligible with more equity and tighter guidelines.

Guidelines are the program's typical requirements, not a commitment to lend. Your loan officer will tell you exactly what applies to your file.

How it compares

The other way to use your equity is a cash-out refinance into a new fixed-rate first mortgage, such as a 30 or 15 year fixed. A HELOC makes sense when you want to keep a low existing first-mortgage rate and borrow in stages. A cash-out refinance suits one large lump sum, a fixed payment, or a situation where your existing rate is already high enough that replacing it costs you little.

Loan Minimum down Rate Term Mortgage insurance Best for
HELOC This page None; secured by existing equity Variable Draw period, then repayment None Homeowners who want to draw on their equity as they need it, without touching their first mortgage.
30-year fixed Conventional As little as 3%; 5% is typical Fixed for the life of the loan 30 years Until you reach 20% equity The lowest fixed monthly payment, and the loan most first-time buyers start with.
15-year fixed Conventional As little as 3%; 5% is typical Fixed, usually lower than a 30-year 15 years Until you reach 20% equity Owning your home outright in half the time, if the higher payment fits your budget.

Compare all eight programs

Getting started

Three steps, and the underwriters, processors and closers all sit in the same office as your loan officer.

  1. Complete the HELOC application

    Tell us about the home, what you owe on it and roughly how much you would like available. It takes a few minutes online or by phone.

  2. Receive a custom quote

    A loan officer reviews your equity, credit and income and comes back with a proposed credit limit, rate and draw terms based on your situation.

  3. Sign your loan agreement

    Once the valuation and documents are in, you review and sign the line-of-credit agreement. Closing costs are usually low compared with a refinance.

  4. Your HELOC funds

    After any required waiting period the line opens and you can draw what you need, when you need it, for the length of the draw period.

Get a HELOC quote See the full process

HELOC loan questions, answered

What is the difference between a HELOC and a home equity loan?

A HELOC is a revolving line: you borrow as needed, pay interest on the balance and can reuse the credit as you repay it, usually at a variable rate. A home equity loan pays out one lump sum at a fixed rate with a set monthly payment. A HELOC suits staged or uncertain costs; a lump-sum loan suits a single known expense.

How much can I borrow with a HELOC?

It depends on your equity, credit and income. Lenders generally allow your existing mortgage plus the new line to total up to 80% to 90% of the home's appraised value. On a $400,000 home with a $250,000 mortgage, an 80% cap would allow a line of about $70,000; a 90% cap about $110,000.

What happens when the draw period ends?

The line closes to new borrowing and the balance converts to principal-and-interest payments over the repayment period, commonly 20 years. Because you are now paying down principal, the payment typically rises, sometimes significantly, so it pays to plan for that jump ahead of time or pay down the balance during the draw period.

Is HELOC interest tax deductible?

It may be, but generally only when the money is used to buy, build or substantially improve the home that secures the line, and subject to overall mortgage interest limits. Interest on funds used for other purposes, such as debt consolidation or tuition, is generally not deductible. Consult a tax advisor about your own situation.

Can a HELOC be frozen or reduced?

Yes. Because the line is secured by the home, a lender can generally freeze or reduce an unused portion if the home's value falls significantly or your financial situation changes materially. Money you have already drawn is unaffected, but the line is not a guaranteed reserve in every market.

Will a HELOC change my current mortgage?

No. A HELOC is a separate second lien behind your existing first mortgage. Your current loan, its rate and its payment stay exactly as they are. That is the main advantage over a cash-out refinance, which replaces the first mortgage at whatever rates are today.

Further reading

Other loan programs

Get your HELOC quote

Tell us a little about your home and the amount you have in mind. A loan officer will review your equity and credit and come back with a custom quote: proposed credit limit, rate and draw terms. No obligation, and no credit pull until you ask for one.

CPF Mortgage
10710 FL-54 c101
Trinity, FL 34655
(727) 226-1040

Licensed mortgage lender and broker in Florida, Tennessee, Georgia and Colorado. NMLS 222883.

Name
Privacy Policy | Terms of Use