Couple calculating healthcare bills at home using laptop and calculator

Home Equity Loans

Your home equity could help cover healthcare expenses

Jul 28, 2024

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Written by

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Reviewed by

Key takeaways:

  • Home equity loans let you borrow against your equity (your home’s value minus what you owe on your mortgage). 

  • A home equity loan could be used to cover a range of healthcare expenses.

  • Get rate quotes and shop around to help you find the right home equity loan for your needs.

Illness or injury can take a toll on your physical health. If insurance doesn't cover the cost of your care, financial stress could follow. 

Tapping into your home equity can ease some of the stress of medical bills. Equity is the difference between what you owe on your home and what it's worth. 

A home equity loan could give you the cash you need to pay healthcare expenses while you focus on what's most important—your recovery. Here's a look at how it works. 

Can you use a home equity loan to pay medical expenses?

Home equity loans let you turn some of your home's value into money you can spend. You can use that money any way you like, which includes paying medical bills. 

For example, you might use a home equity loan to cover:

  • Deductibles

  • Copays or coinsurance 

  • Prescriptions 

  • Healthcare expenses not covered by insurance

  • Day-to-day living expenses if you're unable to work because of an illness or injury

  • Travel expenses to and from hospitals or doctor's offices

Home equity loans offer flexibility since you can use them in so many ways. And you get peace of mind knowing your medical expenses are covered if your insurance falls short or you don't have health insurance. 

Homeowners, get help with your high-interest debt

Use the equity in your home to consolidate debt, lower your monthly payments, and reduce your stress.

Benefits of using home equity loans for healthcare expenses

Home equity loans have several features that make them an attractive option for paying medical bills. 

Here are some benefits of using your home equity to cover healthcare costs.

  • Home equity loans can offer fixed interest rates that are typically lower than what you'd pay for a credit card. 

  • Loan limits are usually higher compared to personal loans. For example, Achieve lets you borrow up to $150,000 against your equity, which is helpful if you or a family member needs expensive treatments or surgery. 

  • Fixed rates mean your monthly payments are also fixed, so you have some predictability when budgeting for repayment. 

  • You could get a home equity loan in as little as two weeks. 

  • Home equity loans don't change the terms on your existing mortgage, and you don't need to refinance your current home loan

You'll need to meet minimum requirements to get a home equity loan. Lenders consider your credit scores, your equity, and other factors when making approval decisions. 

Assuming you've checked off all of a lender's boxes, a home equity loan could put cash in your bank account relatively quickly. That means you can focus on things other than mounting medical bills. 

Are there any downsides to using home equity to pay healthcare expenses?

The main thing to know about using home equity loans to pay healthcare expenses is that you're trading unsecured debt for secured debt

Unsecured debt isn't backed by any collateral. Collateral means something of value you own, like a car or a house. You qualify for an unsecured loan based on your credit standing and your financial situation. 

Secured debt is tied to collateral. With a home equity loan, the collateral is your home. 

So what does that mean for you? If you don't pay back a home equity loan, you could lose your home. That's a worst-case scenario, however, and one that's avoidable if you choose a loan with repayment terms that comfortably fit your budget

How to get a home equity loan to pay for healthcare expenses

Getting a home equity loan for medical bills starts with shopping around for a lender. As you compare lenders, it's helpful to look at:

  • Interest rates

  • Loan limits

  • Minimum credit score requirements

  • Equity requirements

  • Fees

  • Repayment terms

Get home equity loan rate quotes so you can get an idea of how much you might be able to borrow and what you'll pay. 

If you've found a lender you want to work with, the next step is applying for a home equity loan. You'll need to:

  • Fill out the lender's application

  • Agree to a hard credit check

  • Complete a home appraisal, if the lender requires one

  • Review the loan agreement and sign the paperwork, if approved

  • Tell the lender which bank account you want the loan funds sent to

The entire process could take just a couple of weeks, which is less time than it takes to close on a traditional mortgage loan. Once the money is in your bank account you could use it to pay medical bills and other expenses related to your illness or injury. 

Home equity loan alternatives for medical bills

A home equity loan is just one option you might explore if you need money for healthcare expenses. Some of the other possibilities to consider:

  • Use a credit card to pay healthcare expenses

  • Get medical financing through your providers

  • Take out a medical loan

  • Borrow from your 401(k) at work

  • Ask friends and family for a loan

  • Apply for financial assistance through the hospital, if you have hospital bills

  • Set up a payment plan with your providers

  • Negotiate down what you owe

  • Find out if you’re eligible for Medicaid

Each one has pros and cons. 

Credit cards, for example, often have double-digit interest rates, and in-house medical financing may require a very high monthly payment. Medicaid and hospital assistance programs don't require you to go into debt but you might not qualify for these types of aid if you're above a certain income threshold.

Home equity loans, on the other hand, typically have a lower interest rate compared to other types of borrowing. And the longer repayment term (typically 10 to 30 years) could get you an affordable monthly payment. If you’re a homeowner with sufficient equity, a home equity loan could be the financial tool that helps you manage healthcare expenses for yourself and your family, while avoiding more costly debt.

Author Information

Rebecca-Lake.jpg

Written by

Rebecca is a senior contributing writer and debt expert. She's a Certified Educator in Personal Finance and a banking expert for Forbes Advisor. In addition to writing for online publications, Rebecca owns a personal finance website dedicated to teaching women how to take control of their money.

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 Lender. All loan requests are subject to eligibility requirements, application review, loan amount, loan term, 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. Minimum 640 credit score applies for debt consolidation requests, minimum 700 applies for cash out requests. Other terms, conditions and restrictions apply. Fixed rate APRs range from 8.75% - 15.00% and are assigned based on underwriting requirements; offer APRs include a .50% discount for automatic payment enrollment (autopay enrollment is not a condition of loan approval). Example: average HELOC is $57,150 with an APR of 12.75% and estimated monthly payment of $951 for a 15-year loan. 10, 15, 20, and 30-year terms available (20 and 30 year terms only available for cash out requests). 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 and combined loan-to-value ratio may not exceed 80%, 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. Contact Achieve Loans for further details. Monthly savings claim is based on average monthly debt savings from originated loans for 2023. Monthly savings varies based on each loan situation and can be more or less than $800.

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