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Home Equity Loans

Considering a HELOC for debt consolidation? Look at these 6 details before choosing a lender

Jun 27, 2025

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Written by

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Reviewed by

Key takeaways:

  • Your home equity sets your borrowing power. Home equity is your home’s value minus the amount you owe on the mortgage.

  • Your credit score is a factor when you apply. You might qualify with a lower credit score if you’re borrowing to consolidate debt.

  • HELOCs let you borrow, repay, and borrow more repeatedly up to your limit for the first few years after loan approval.

  • Compare more than just interest rates when you shop. Look at the type of interest rate, the fees, and the lender’s reputation.

You’ve built something wonderful—a home with real value. Your home equity is like a financial superpower. You could use it to create a better financial future for yourself and those who are a part of the home you’ve built. 

A home equity line of credit could be the key that unlocks the power of your equity. Think of a HELOC as your home giving you a high-five and saying, “Let’s team up to make your life even better.” 

Here are some factors to consider as you compare HELOC lenders. 

1. Credit score requirements for a HELOC

Review the credit score requirements for each HELOC lender to help you determine if you're a good candidate. The minimum credit score could be anywhere from 600 to 700, with many lenders landing somewhere in between. A higher score is sometimes needed when you want cash, but you might qualify with a lower score if you’re borrowing to consolidate debt.

Knowing your credit score could help you make an informed choice on which lender to use. 

2. How much can you borrow with a HELOC?

How much you can borrow with a home equity loan depends on your home’s value, how much you owe on your mortgage, your financial situation, and the lender’s loan limits. 

Most lenders won’t approve a loan for the full value of your home. Your loan limit will largely be based on a calculation called the combined loan-to-value ratio, or CLTV.

The CLTV is your total home debt (including your mortgage and the HELOC you want) compared to the home’s appraised value. The CLTV is expressed as a percentage. To calculate CLTV, add your mortgage balance to the amount you want to borrow and divide it by your home’s current market value.

Most lenders cap your CLTV at 80-85% of your home’s value. Here’s how that might work:

Home value

$300,000

Mortgage balance

$100,000

80% CLTV loan limit

$240,000

HELOC limit

$140,000

In this example, if the lender’s CLTV limit is 80% and you still owe $100,000 on your mortgage, you could apply to borrow another $140,000. 

Review each lender’s maximum CLTV and do the math to determine if you have enough home equity to borrow the money you need to pay off your debt. You’ll also have to meet the lender’s income and credit requirements.

3. Interest rates on a HELOC

When you explore using a home equity loan to pay off debt, you should compare interest rates, including what kinds of rates they are. Variable-rate HELOCs are most common. This means your rate could change throughout the life of the loan.

A HELOC may start with an introductory interest rate. That’s a tantalizingly low interest rate that rises significantly after a few months or a year. Intro rates are designed to be attractive in the moment you get your loan. But HELOC repayment usually lasts many years, so a low intro rate isn’t likely to save you a lot of money over time.

Fixed-rate HELOCs never change their rates. A fixed-rate HELOC protects you from rate increases. Though they can be harder to find, fixed-rate HELOCs do exist. Achieve offers fixed-rate HELOCs. 

Since it's a secured loan backed by your home, HELOC interest rates tend to be lower than credit card or personal loan interest rates. That’s true even if you don’t have stellar credit. A fixed-rate HELOC for debt consolidation could be a great tool for paying off high-interest credit card debt. 

4. Draw periods and repayment periods for a HELOC

During the draw period, you can borrow, repay, and borrow again as often as you like, up to your limit. Draw periods usually last five to 10 years.

Some lenders require that you borrow a minimum amount of money on the first draw, or possibly on every draw.

During the draw period, you’ll make payments. Some lenders require interest-only payments. Others require a full principal plus interest payment. Your payment amount could change as you pay down your balance or borrow more.

Once the draw period ends, the repayment period begins and you won’t be able to borrow more. Your monthly payments should now stay the same, and be set to fully repay your loan by the end of your loan term. Repayment periods usually last 10 to 30 years.

Draws, minimum draws, payment amounts, and repayment terms are important details to ask about before you choose a lender.

5. HELOC fees 

Fees affect the total cost of your loan. Ask the lender about all of the fees associated with the loan, including penalties such as:

  • Late fees 

  • Prepayment fee if you pay your loan off early

  • Inactivity fee if you don’t borrow often enough

Here’s an overview of some typical HELOC fees: 

  • Appraisal fee

  • Title search fee

  • Origination fee

  • Loan recording fee 

  • Credit report fee

  • Notary fee 

6. HELOC lender reputation 

Of course you want a reputable lender. One way to get a better understanding of a lender’s reputation is by reading customer reviews. Resources like the Better Business Bureau and Trustpilot make it easy to find out how companies treat their customers, and how much customers enjoyed the service they received.  

Achieve has a Trustpilot score of 4.8 out of 5

What’s next 

If you’re interested in a HELOC for debt consolidation, your next steps are: 

  • Check your credit score. 

  • List your debts. Note the balances, interest rates, and the name of each creditor.

  • Review your mortgage balance and estimate your home's value. The lender will verify the value before approving your loan, but you can get a ballpark by checking a real estate website.

  • Prequalify for a HELOC. Get prequalified to compare rates. Look for lenders that perform a soft credit check that won’t impact your credit score. 

Author Information

natasha-etzel.jpg

Written by

Natasha is a contributing writer for Achieve. She has been a financial writer for nearly a decade. She excels at providing realistic strategies to help readers improve their knowledge and change their financial situations.

Jill-Cornfield.jpg

Reviewed by

Jill is a personal finance editor at Achieve. For more than 10 years, she has been writing and editing helpful content on everything that touches a person’s finances, from Medicare to retirement plan rollovers to creating a spending budget.

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Home Equity loans are available through our affiliate Achieve Loans (NMLS ID #1810501). Equal Housing Opportunity. Offers may vary and all loan requests are subject to eligibility requirements, application review, loan amount, loan term, income verification, and lender approval. Product terms are subject to change at any time. Offers are a line of credit. Loans are not available to residents of all states and available loan terms/fees may vary by state where offered. Line amounts are between $15,000 and $300,000 and are assigned based on product type, debt-to-income ratio and combined loan-to-value ratio. 10, 15, 20, and 30-year terms available. Minimum 600 credit score applies for debt consolidation requests (20 and 30 year terms require a minimum credit score of 640), minimum 700 applies for cash out requests. Other terms, conditions and restrictions apply. Fixed rate APRs range from 6.74% - 14.75% and are assigned based on underwriting requirements and offer APRs assume automatic payment enrollment which may provide a discount (autopay enrollment is not a condition of loan approval). All terms have a 5-year draw period with the remaining term being a no draw period. Payments are fully amortized during each period and determined on the outstanding principal balance each month. Closing fees range from $750 to $6,685, depending on line amount and state law requirements and typically include origination (3.5% of line amount) and underwriting ($725) fees if allowed by law. Property must be owner-occupied. Combined loan-to-value ratio may not exceed 80% (20 and 30 year debt consolidation requests may not exceed 75%), including the new loan request. Property insurance is required and flood insurance may be required if the subject property is located in a flood zone. You must pledge your home as collateral. Loan funding time is dependent on full application and documentation submission, average funding time is 11 business days for 2025, including rescission. Monthly/yearly savings claim is based on average monthly debt savings from originated loans for Q4 2024. Monthly/yearly savings varies based on each loan situation and can be more or less than $800/$10,000. Requirements to obtain 6.74% APR include: debt to income ratio <=15%; cumulative loan to value <= 50%, including new request; loan amount between $15,000 and $150,000; term of 10 years; FICO of 800+; and automatic payment enrollment. Contact Achieve Loans for further details

Affiliated Business Arrangement Disclosure: Achieve.com (NMLS #138464) and Achieve Loans are both wholly owned subsidiaries of Achieve Company. Because of this relationship, your referral to Achieve Loans may provide Achieve.com a financial or other benefit. Where permitted by applicable state law, Achieve Loans charges: 1) an origination fee of 3.50%, and 2) an underwriting fee of $725. You are NOT required to use Achieve Loans for a home equity line of credit. Please click here for the full Affiliated Business Arrangement disclosure form. Please click here for the full Affiliated Business Arrangement disclosure form.

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