How to Get Equity Out of Your Home Without Refinancing
Key Takeaways
Check your best options to tap home equity. Start here
You can get equity out of your home without refinancing your current mortgage. Options include a home equity loan, home equity line of credit (HELOC), home equity agreement, reverse mortgage, and other financing strategies.
These alternatives may be especially worth considering if you already have a low mortgage rate and don’t want to replace it with a new loan. Below, we explain seven ways to access your home equity without a cash-out refinance, including how each option works and when it may make sense.
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How to get equity out of your home without refinancing
There are several options available that allow you to tap into your home equity while keeping your current mortgage intact.
- Home Equity Loan: Borrow a fixed lump sum using your home’s equity as collateral, with predictable monthly payments and a fixed interest rate.
- Home Equity Line of Credit (HELOC): Access a revolving line of credit based on your home equity, allowing you to borrow as needed with variable interest rates.
- Home Equity Agreement (HEA): Partner with an investor who provides cash upfront in exchange for a share of your home’s future appreciation.
- Sale-Leaseback Agreement: Sell your home to an investor and lease it back, freeing up cash while continuing to live in your home.
- Rate-and-Term Loan with a Second Mortgage: Take out a second mortgage to tap equity without changing the terms of your original loan.
- Reverse Mortgage: Available for homeowners aged 62 and older, lets you convert home equity into tax-free funds without monthly repayments.
- Personal Loan: Unsecured loans based on your creditworthiness that don’t require your home as collateral, typically with higher interest rates but quicker access to cash.
If you currently have a low, fixed-rate mortgage or are nearing payoff on your existing loan, a cash-out refinance may not be the best option. Instead, explore these alternative ways to access your home equity without refinancing:
1. Home equity loan
For homeowners who want to borrow against the equity in their homes without refinancing their current mortgages, a home equity loan is an enticing choice. It’s often the cheapest way to access your home’s equity, thanks to lower interest rates and minimal closing costs compared to other options. This type of loan grants you a lump sum upfront, based on the equity you’ve built in your home, which you then pay back over time with fixed monthly payments.
Check your home equity loan options. Start here
Home equity loan quick facts
| Loan amount | 80% to 85% of your home’s appraised value minus current mortgage balance |
| Funding timeline | 2 to 6 weeks |
| Repayment term | 5 to 30 years, with 10 to 15 years being most common |
| Requirements | 15% to 20% equity, a 620 credit score or higher, a max DTI of 45%, and sufficient income |
Benefits
- One of the most affordable equity options: Home equity loans are typically cheaper than cash-out refinancing, with lower interest rates and closing costs.
- Fixed interest rates: Enjoy predictable monthly payments and protection from rate hikes—ideal for long-term budgeting.
- Lump sum funding: Get the full loan amount upfront, perfect for major expenses like renovations or large purchases.
- Potential tax benefits: Interest may be tax-deductible when the loan is used for qualified home improvements.
- No spending restrictions: Use the funds however you like, from home upgrades to education costs or even a second home down payment.
What experts are saying
Thomas Brock, CFA, CPA
“If you’re trying to tap $50,000 to $100,000 in home equity while holding onto a low-rate mortgage, the decision really comes down to your time horizon, where you think interest rates are headed, and how much flexibility you need in your monthly cash flow. A HELOC can make sense for short-term, flexible borrowing—especially if rates may fall. A home equity loan is better if you want predictable, fixed payments in a rising-rate environment. And an HEI is typically a last resort, only worth considering when avoiding interest costs outweighs the long-term tradeoff of giving up a share of your home’s future value.”
Home Equity Loan vs. HELOC: What’s Best for You?
A home equity loan is ideal for borrowers with a specific project and set budget who need a lump sum upfront, like for a major home renovation. A HELOC works better for those who want flexible access to funds over time, such as for ongoing or unpredictable expenses.
2. Home equity line of credit (HELOC)
A home equity line of credit, or HELOC, is a smart financing strategy for those who don’t want to refinance their primary mortgage. It operates similarly to a credit card but uses your home’s value as collateral, which enables lower interest rates. For many, a HELOC is considered one of the cheapest ways to get equity out of a house without having to restructure their existing mortgage.
Check your HELOC options. Start here
HELOC quick facts
| Loan amount | 80% to 85% of your home’s appraised value minus current mortgage balance |
| Funding timeline | 2 to 6 weeks |
| Repayment term | 5- to 10-year draw period, followed by a 10- to 20-year repayment period |
| Requirements | 15% to 20% equity, a 620 credit score or higher, a max DTI of 45%, and sufficient income |
Key Benefits
- Borrowing flexibility: Withdraw and repay funds as needed within the draw period.
- Lower interest rates: Secured by home equity, they offer more favorable rates.
- Interest-only payments: Pay interest only on the amount borrowed during the draw period (not the full credit limit).
- Interest deductibility: Interest paid on the loan may be tax-deductible if used for home improvements.
- Lower costs: Typically, less expensive than cash-out refinancing, with lower closing costs and quicker processing.
- No usage restrictions: Use the funds for any purpose, from home improvements to education.
- Efficiency: Faster to set up compared to alternatives, providing quick access to funds.
Cheapest way to get equity out of a house?
If you’re looking for the cheapest option to get equity out of your home, a HELOC may be the best choice for you as it offers flexible access and often lower upfront costs, with variable rates and interest-only options during the draw period.
3. Home equity agreement (HEA)
Home equity agreements (HEAs), offer a unique method for homeowners to tap into their home’s value without taking on additional debt. Through this arrangement, an investor buys a share of the home’s equity, determining the percentage based on the property’s current market price.
HEA quick facts
| Funding amount | Typically 5% to 20% of your home’s current market value |
| Funding timeline | 3 to 6 weeks |
| Term length | 10 to 30 years, or when you sell or refinance |
| Requirements | Significant home equity (often 20–30% minimum), good credit and no recent major delinquencies |
Key Benefits
- Debt-free access to cash: Receive a lump sum without taking on new debt or adding monthly loan payments.
- No monthly or interest payments: You won’t make monthly payments, and there’s no interest—though a small service fee may apply.
- Flexible term options: Agreements typically last 10–30 years, with multiple exit strategies like selling, refinancing, or buying out the agreement.
- Equity-based qualification: Approval is based mainly on your home’s equity, making these investments accessible to homeowners with lower credit scores or limited income.
- Freedom to use the funds: There are no restrictions on how you use the money—renovations, debt payoff, or other personal expenses.
- Best for certain homeowners: Home equity investments work well for those who can’t manage extra monthly payments or don’t qualify for traditional loans. Just be aware—they’re often not the lowest-cost way to access equity.
4. Sale-lease agreement
A sale-leaseback agreement provides an alternative route to access home equity without refinancing. This arrangement involves selling your home to another entity, allowing you to cash out the full value of your accrued equity, and then leasing your home back from the new owner.
Check your best options to tap home equity. Start here
Sale-lease agreement quick facts
| Funding amount | Typically the full market value of your home at the time of sale |
| Funding timeline | 2 to 6 weeks from agreement to closing |
| Term length | Lease terms often range from 1 to 5 years, with possible renewal or repurchase options |
| Requirements | Must own the home outright or have sufficient equity; agreement depends on buyer/investor approval |
Key Benefits
- Access full home equity upfront: Receive cash without taking on new debt or refinancing.
- Stay in your home as a tenant: Avoid moving by leasing back the property you sold.
- No monthly mortgage payments: Replaced by predictable rent payments.
- Bypass loan qualification: Easier access for homeowners with credit or income challenges.
- Flexible lease terms: Often include options to renew or buy back your home later.
5. Rate-and-term loan with a second mortgage
This two-step strategy offers a smart, cost-effective way to access your home’s equity without the high fees of a cash-out refinance. First, you refinance your existing mortgage at a better rate or term. Then, you take out a second mortgage, like a HELOC or home equity loan, to access your equity. This method can be one of the cheapest ways to borrow against your home’s value.
Check your best options to tap home equity. Start here
Rate-and-term + second mortgage quick facts
| Loan amount | Varies based on equity; second mortgage typically allows up to 80–85% of your home’s value minus your new first mortgage |
| Funding timeline | 3 to 6 weeks for both steps combined |
| Term length | First mortgage: 15–30 years; second mortgage: 5–30 years depending on product |
| Requirements | Sufficient equity (typically 15–20%), credit score of 620+, and ability to qualify for both loans |
Key Benefits
- Lower total borrowing costs: Avoids the high interest and fees of a cash-out refinance
- Improved mortgage terms: Refinance to a lower rate or shorter loan term
- Flexible equity access: Choose a HELOC or home equity loan that fits your needs
- More control over financing: separate the cost of borrowing from your first mortgage
- Potential eligibility for Streamline Refinance: FHA, VA, or USDA borrowers may save even more
6. Reverse mortgage
A reverse mortgage is a special type of home equity loan designed for homeowners aged 62 or older. It allows you to convert part of your home’s equity into cash—without monthly payments or refinancing. Instead of making payments to a lender, the lender pays you. Repayment is deferred until you sell the home, move out, or pass away.
See if you qualify for a reverse mortgage. Start here
Reverse mortgage quick facts
| Loan amount | Based on your age, home value, current interest rates, and FHA lending limits |
| Funding timeline | 4 to 6 weeks |
| Repayment term | No monthly payments; loan is repaid when the home is sold, vacated, or upon the homeowner’s death |
| Requirements | 62 or older, occupy the home as a primary residence, have substantial home equity |
Key Benefits
- No monthly mortgage payments: Reduces financial pressure in retirement
- Access home equity without refinancing: Receive cash as a lump sum, monthly payments, or line of credit
- Stay in your home: Maintain ownership while unlocking equity
- Flexible use of funds: Cover medical expenses, supplement retirement income, or pay off other debt
- Government-insured option available: Most reverse mortgages are backed by the FHA (Home Equity Conversion Mortgage or HECM), adding a layer of protection for borrowers
7. Personal loan
If you’re looking to access your home’s equity without refinancing or taking out a traditional home loan, a personal loan secured by your home may be an option. These loans use your home’s deed or equity as collateral, offering the benefits of secured borrowing, like lower interest rates and fixed payments, without the higher costs of cash-out refinancing.
Personal loan quick facts
| Loan amount | Typically ranges from $5,000 to $100,000, depending on credit, income, and equity |
| Funding timeline | As fast as a few days to 2 weeks |
| Repayment term | 1 to 7 years |
| Requirements | Good credit (often 660+), sufficient income, and potentially homeownership if the loan is secured |
Key Benefits
- Fixed interest rates: Predictable monthly payments over a short loan term
- Fast access to funds: Quicker funding than most home equity products
- No need to refinance: Avoid touching your primary mortgage
- Versatile use of funds: Suitable for debt consolidation, home repairs, medical bills, or other major expenses
- Can be secured or unsecured: Using your home as collateral may help lower your rate
What experts are saying
Thomas Brock, CFA, CPA
“It makes the most sense to take an unsecured personal loan rather than tapping home equity when you need a relatively modest amount of money, expect to repay it within a few years, and don’t want to put your home at risk. While the interest rate will inevitably be higher than home equity financing, the total borrowing cost can actually be lower – if the loan amount is small and the term is short. Generally, borrowing against home equity should be reserved for larger, well-planned borrowing needs. If you’re only borrowing a modest amount, expect to sell the home soon or have limited equity remaining after the loan, the costs and risks of using your home as collateral can easily outweigh the benefits.”
Video: How to get equity out of your home without refinancing
Is it a good idea to take equity out of your house?
Before tapping into your home’s equity, ask yourself these questions to see if it fits your current situation. Consider the pros and cons tied to each point:
Check your best options to tap home equity. Start here
1. Do I have a clear need for the funds?
Pros: Access cash for major expenses like home repairs, debt payoff, or emergencies.
Cons: Using equity for non-essential spending can lead to unnecessary debt.
2. Can I comfortably handle higher monthly payments?
Pros: If your budget allows, you can unlock significant cash without selling your home.
Cons: Increased payments might stress your finances, especially with rising interest rates.
3. Am I confident in my local housing market’s stability?
Pros: Stable or growing home values protect your equity and borrowing power.
Cons: Declining markets could leave you owing more than your home’s worth.
4. Do I have a plan for repayment or exiting the equity agreement?
Pros: Knowing when and how you’ll repay (or sell) reduces financial risk.
Cons: Uncertainty can lead to unexpected costs or rushed decisions.
5. Am I comfortable with reducing my home’s equity and future borrowing options?
Pros: Accessing equity now can meet pressing needs or opportunities.
Cons: Lower equity means less borrowing power later and less financial safety.
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FAQs: How to get equity out of your home without refinancing
Check your cash-out loan options. Start here
Yes, there are options other than refinancing to get equity out of your home. These include home equity loans, home equity lines of credit (HELOCs), reverse mortgages, sale-leaseback agreements, and Home Equity Investments. Each of these options allows you to tap into your amount of equity without having to refinance your existing mortgage loan.
Whether or not it’s a good idea to take equity out of your home depends on your personal finances and goals. If used wisely, equity can be a valuable resource for funding large expenses such as home improvements, which may increase the property value, or for purchasing an investment property. However, it’s essential to remember that your home is collateral for the loan. If the repayment period is not managed well, it could lead to foreclosure. It’s also important to consider the effect on your debt to income ratio.
Yes, there are risks to consider when taking out a home equity loan. The most significant risk is that if you fail to meet the repayment terms, you could lose your home to foreclosure. The loan terms may also include variable interest rates, which can lead to higher payments if interest rates rise. If you have bad credit, the terms of the loan may not be favorable.
Refinancing involves replacing your existing mortgage loan with a new one, often to reduce your interest rate or change your loan term. A home equity loan, on the other hand, is a separate loan that you take out in addition to your mortgage. It allows you to cash out your equity without refinancing the original mortgage. The amount you can borrow with a home equity loan is based on the amount of equity you’ve built up in your home.
A cash-out refinance is the best option when you’re aiming for long-term investments like home renovations or real estate transactions, have substantial home equity, and can secure a lower mortgage rate than your current one. Always consider comparing costs with other options through lender consultations.
The main disadvantage of a cash-out refinance is its higher closing costs (underwriting, title, and origination fees), which usually amount to 2% to 5% of the new, larger loan amount. Additionally, this type of loan usually comes with higher interest rates because of the increased risk to lenders. This is why cash-out refinancing is often the most expensive way to get equity from your home.
Additional resources
Looking to make the most of your home’s equity? The following articles can help you understand your options for tapping into home equity and using it to your advantage, whether for accessibility improvements, financial flexibility, or long-term planning.
What’s the Cheapest Way to Get Equity Out of My Home
Best Time to Take Equity Out of Your Home
What Are the Different Types of Home Equity Loans and Which Is Best?
Taking Equity Out of Your Home: Options to Unlock Cash
Can You Refinance a Home Equity Loan Without Refinancing Your Mortgage?
How to Use Home Equity to Your Advantage
Time to make a move? Let us find the right mortgage for you
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
By refinancing an existing loan, the total finance charges incurred may be higher over the life of the loan.
