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How to get equity out of your home without refinancing
In this article:
- 1. Home equity loan
- 2. Home equity line of credit (HELOC)
- 3. Reverse mortgage
- 4. Second-lien reverse mortgage
- 5. Sale-leaseback agreement
- 6. Home equity investment or home equity agreement
- Comparing your home equity options
- How to choose the right way to access your home equity
- Final thoughts on home equity options
- FAQs about your home equity options
Quick answer: There are several options to access home equity without refinancing, including a home equity loan, a HELOC, a reverse mortgage, a second-lien reverse mortgage, a sale-leaseback agreement, or a home equity investment agreement.
Key Points
A refinance or cash-out refinance resets the terms of your mortgage, which may mean paying a higher interest rate or resetting the length of your mortgage.
If you want to keep your current mortgage in place, you may have several options to access your home equity, including a home equity loan, HELOC, reverse mortgage, second-lien reverse mortgage, sale-leaseback, or home equity investment agreement.
The right approach depends on factors such as your available equity, how much money you need, your ability to manage payments, and your long-term retirement plans.
If you bought a home during the COVID era (or even earlier), you may have a mortgage rate that’s significantly lower than rates available today. That can create what’s sometimes called the “golden handcuffs”: You’ve built equity in your home, but you may be reluctant to refinance and give up a low interest rate to access it.
But refinancing isn’t the only way to unlock your home equity. Depending on your situation, you may be able to access some of that equity while keeping your existing mortgage—and its interest rate—in place.
This article explores several ways to access home equity without refinancing, including how each option works and the potential pros and cons to consider.
1. Home equity loan
A home equity loan allows borrowers to take out a loan against their home equity, without replacing their existing mortgage. It provides a lump sum upfront and is repaid over time through set monthly payments, typically at a fixed interest rate.
One advantage of a home equity loan is predictability—fixed payments often make it easier to budget over time because you know exactly what the payment will be. This may work well for expenses with a known cost, such as home improvements or paying down higher-interest debt.
Because the loan is secured by your home, failing to meet repayment terms may put your property at risk. It also adds a second monthly payment alongside your existing mortgage.
May be a good fit if: You need a specific amount of funds upfront and prefer consistent monthly payments over time.
Potential drawbacks: Requires monthly loan payments.
Finance of America does not offer home equity loans.
2. Home equity line of credit (HELOC)
A home equity line of credit (HELOC) is a revolving line of credit that may allow you to borrow against your home equity to access cash as needed, similar to a credit card. It does not replace your existing mortgage; instead, it functions as a separate loan secured by your home.
HELOCs typically include a draw period, during which you may access funds as needed, followed by a repayment period when principal and interest payments are required. The flexibility to borrow, repay, and borrow again may be helpful for ongoing or unpredictable expenses. However, HELOCs generally require monthly payments, and variable interest rates may cause monthly payments to change over time.
In some cases, HELOCs may offer lower upfront costs, making them a suitable option for some homeowners, depending on their needs and financial situation. The CFPB provides additional information about how home equity loans compare to home equity lines of credit.
May be a good fit if: You have the ability to make additional monthly mortgage payments and want flexible access to funds over time.
Potential drawbacks: Generally have adjustable interest rates, and payments increase after the draw period.
Finance of America does not currently offer HELOCs.
3. Reverse mortgage
A reverse mortgage could allow older homeowners to access a portion of their home equity without required monthly mortgage payments. Borrowers must continue to meet the loan obligations, including living in the home as a primary residence, maintaining the home, and paying taxes, insurance, and other fees. Instead of paying the lender each month, the loan balance increases over time as interest accrues; as a result, the available home equity decreases.
The loan generally becomes due when the borrower or last eligible non-borrowing spouse sells the home, moves out, passes away, or otherwise fails to meet the loan terms. Depending on the reverse mortgage product, funds may be received as a lump sum, line of credit, or monthly payments. However, many reverse mortgages require repayment of your traditional mortgage, which can reduce the equity available to you.
Note that there is more than one type of reverse mortgage. The most common is a Home Equity Conversion Mortgage (HECM), which is insured by the Federal Housing Administration (FHA) and only available to homeowners 62+ who meet other borrower, property, financial assessment, and counseling requirements. Proprietary reverse mortgages may have different eligibility requirements and rules.
May be a good fit if: You are an older homeowner and want to increase financial flexibility without taking on additional payments.
Potential drawbacks: The loan balance grows over time, leaving less equity available for later expenses or for your heirs. Additionally, traditional reverse mortgages often require paying off your existing mortgage.
→ To learn more, see our guide, What is a reverse mortgage and how does it work?
The borrower must meet all loan obligations, including living in the property as the principal residence and paying property charges, including property taxes, fees, and hazard insurance. The borrower must maintain the home. If the homeowner does not meet these loan obligations, then the loan will need to be repaid.
4. Second-lien reverse mortgage
A reverse second mortgage, such as HomeSafe Second, allows eligible homeowners to access a portion of their home equity while keeping their existing mortgage in place. Unlike a traditional reverse mortgage that replaces your current loan (or is taken out on a paid-off house), this option is structured as a second lien on the home.
With HomeSafe Second, borrowers are not required to make monthly mortgage payments on the reverse mortgage, as long as they continue to meet all loan obligations, including making payments on the first-lien mortgage, paying property taxes, maintaining homeowners insurance, and keeping the home in good condition.
May be a good fit if: You are an older homeowner, want to access your home equity without making additional monthly mortgage payments, and want to keep a current mortgage in place.
Potential drawbacks: Like a traditional reverse mortgage, the loan balance grows over time, so there may be less equity available later in life or for your heirs.
The borrower must meet all loan obligations, including living in the property as the principal residence and paying property charges, including property taxes, fees, hazard insurance. The borrower must maintain the home. If the homeowner does not meet these loan obligations, then the loan will need to be repaid. HomeSafe products are only available in certain states. Terms and conditions on the first lien loan apply. Must meet combined loan value requirements based on a satisfactory appraisal.
5. Sale-leaseback agreement
A sale-leaseback agreement involves selling your home to a company or investor and then renting it back, allowing you to access your home equity while continuing to live in the property. After the sale, you become a renter and no longer own the home.
One advantage of a sale-leaseback agreement is that it may provide access to cash without taking on a loan. However, you will still have to make ongoing rent payments, which may increase over time depending on the terms of the agreement, and you may have less control over the property.
A sale-leaseback agreement may be a good fit for homeowners who want to access a significant portion of their home equity and are comfortable transitioning from ownership to renting while remaining in the home.
May be a good fit if: You want to access your home equity without taking on more debt and stay in your home.
Potential drawbacks: You give up homeownership and must continue making rent payments to remain in the home.
6. Home equity investment or home equity agreement
A home equity investment (HEI), sometimes called a home equity agreement, allows you to receive a lump sum of cash in exchange for giving an investment company a share of your home’s future value. Unlike a traditional loan, an HEI generally does not require monthly loan payments or charge interest in the same way a mortgage or home equity loan does.
Instead, you typically repay the investment when you sell the home, reach the end of the agreement term, or choose to buy out the investment company’s share. The amount you owe may depend on how your home’s value changes over time and the specific terms of the agreement. If your home increases substantially in value, the amount you repay could be significantly more than the amount you originally received.
May be a good fit if: You want to access equity without taking on a traditional monthly loan payment and are comfortable giving up a portion of your home’s future value.
Potential drawbacks: You may give up a significant portion of future home appreciation, and agreements can have complex costs and repayment terms.
Finance of America does not offer home equity investments or home equity agreements.
Comparing your home equity options
Each home equity option has different costs, repayment structures, and long-term implications. Understanding these differences may help you evaluate which approach aligns best with your financial situation and housing goals.
One of the most important considerations is costs, including interest rates and closing costs, when applicable. Closing costs for home equity loans and HELOCs typically run 2%–5% of the loan amount. For a home equity conversion mortgage (HECM), the lender may charge an origination fee based on HUD’s formula, subject to a $6,000 maximum. Other costs can include mortgage insurance premiums, third-party closing charges, interest, and applicable servicing fees.
Costs can vary by lender and product, so make sure to compare the total upfront cost to how long you plan to stay in the home. That will help you decide whether an option makes financial sense for you.
The table below offers a side-by-side comparison:
| Option | How funds are received | Monthly payments | Interest rate type | Ownership impact | When it’s repaid |
| Home equity loan¹ | Lump sum | Required (fixed) | Typically fixed | You retain ownership | Repaid over a set term |
| HELOC | As needed (revolving line of credit) | Required (may vary) | Often variable | You retain ownership | Repaid during the repayment period |
| Reverse mortgage (first lien) | Lump sum, line of credit, or monthly payments | No monthly mortgage payment* | Typically fixed or variable | You retain ownership | Due when the borrower moves, sells, passes away, or doesn’t comply with the loan terms |
| Second-lien reverse mortgage (like HomeSafe Second) | Lump sum | Not required on the second lien** | Typically fixed | You retain ownership | Due when the borrower moves, sells, passes away, or doesn’t comply with the loan terms |
| Sale-leaseback agreement | Lump sum from home sale | Rent payments required | Not applicable | You no longer own the home | No loan repayment (home is sold) |
| Home equity investment | Lump sum | No | Varies by agreement | You retain ownership of the home (but agreement may require selling at the end of a term) | At end of the term or upon sale of the home; varies by agreement |
| Refinancing | Lump sum (only with cash-out refinance) | New mortgage payments | Typically fixed; may be higher than the current rate | You maintain ownership | Set monthly mortgage payments |
*The borrower must meet all loan obligations, including living in the property as the principal residence and paying property charges, including property taxes, fees, and hazard insurance. The borrower must maintain the home. If the homeowner does not meet these loan obligations, then the loan will need to be repaid.
**The borrower must meet all loan obligations, including meeting those under the first lien mortgage, living in the property as the principal residence and paying property charges, including property taxes, fees, hazard insurance. The borrower must maintain the home. If the homeowner does not meet these loan obligations, then the loan will need to be repaid.
Finance of America does not currently offer HELOCs, home equity loans, or home equity agreements.
How to choose the right way to access your home equity
Each option comes with different eligibility requirements, costs, and long-term considerations. Factors such as credit score, income, and available equity may affect which products are available to you.
When comparing your options, it may help to consider:
- Can you afford any required monthly payments? Some options, such as home equity loans and HELOCs, require ongoing payments, while others may not.
- Do you meet the eligibility requirements? Lenders may evaluate factors such as credit history, income, and available equity when determining eligibility.
- What are your long-term plans for your home equity? Accessing equity now may reduce what is available later or affect future borrowing options.
- How long do you plan to stay in your home? Some options may be more suitable for homeowners planning to stay in their homes long term. Closing costs and fees may also impact how long it takes for an option to make financial sense.
- What do you need the funds for? A one-time expense may call for a different solution than ongoing or unpredictable costs.
- How important are tax deductions? Each loan type has different tax implications. If you use a HELOC for home improvements, the interest may be tax-deductible. Reverse mortgage interest is generally not deductible until repayment. Consult a tax professional about your specific situation.
- How much equity do you have? Understanding your current equity can help you estimate how much you may be able to access.
→Learn more about loan options in our guide, HELOC alternatives: 7 ways to access cash.
Final thoughts on home equity options
Accessing your home equity without refinancing can increase your financial flexibility without resetting your loan terms. Options such as home equity loans, HELOCs, reverse mortgages, second-lien reverse mortgages, and sale-leaseback agreements each have different structures, requirements, and trade-offs.
The right approach depends on your financial goals, how you plan to use the funds, and your comfort with the responsibilities involved. Comparing options, understanding the costs, and evaluating how each choice may affect your long-term plans can help you make a more informed decision about how to access equity in your home.
If you’re considering whether a reverse mortgage or a second-lien reverse mortgage may be a good fit, try our reverse mortgage calculator to estimate how much you may be able to access based on your home value and age.
FAQs about your home equity options
What can you use home equity for?
Home equity may be used for a variety of expenses, including home improvements, medical bills, everyday living costs, or paying down higher-interest debt. How funds are used depends on your goals and financial situation.
How much equity do you need to access your home equity?
It depends on the product. Most lenders require homeowners to retain some of their equity after borrowing. The exact amount you will be able to access depends on your home’s value, mortgage balance, and lender guidelines.
Does accessing home equity affect your mortgage?
It depends on the loan type. Home equity loans and HELOCs do not replace your existing mortgage—they are separate loans. Reverse mortgages and second-lien reverse mortgages do not require monthly mortgage payments as long as loan obligations are met, but they change how and when the loan is repaid. A sale-leaseback agreement is not a loan—you sell your home and lease it back, so you no longer own the property.
The borrower must meet all loan obligations, including living in the property as the principal residence and paying property charges, including property taxes, fees, and hazard insurance. The borrower must maintain the home. If the homeowner does not meet these loan obligations, then the loan will need to be repaid.
Finance of America does not offer home equity loans.
Do you have to make monthly payments on home equity options?
Some options, such as home equity loans and HELOCs, require monthly payments. Others, like reverse mortgages and second-lien reverse mortgages, do not require additional monthly mortgage payments as long as loan obligations are met. However, if you choose an option that keeps your first mortgage in place, you will need to continue meeting those terms.
The borrower must meet all loan obligations, including living in the property as the principal residence and paying property charges, including property taxes, fees, and hazard insurance. The borrower must maintain the home. If the homeowner does not meet these loan obligations, then the loan will need to be repaid.
Can I get a HELOC or home equity loan if my credit score is low?
Your credit score can affect your eligibility for a HELOC or home equity loan, but it’s not the only factor lenders consider. Because your home secures these loans, lenders may also look at your available home equity, debt-to-income ratio, income, and overall credit history. Requirements vary by lender, and a lower credit score may result in a higher interest rate, a lower borrowing limit, or fewer loan options.
Finance of America does not currently offer HELOCs.
Which is better: a refinance or a home equity loan?
Neither option is better for everyone. A home equity loan lets you access equity while keeping your existing mortgage and adds a second monthly payment. A refinance replaces your current mortgage with a new loan, which may make sense if you also want to change your interest rate or loan terms. The right option depends on your current mortgage, available rates, borrowing needs, and budget.
Is a reverse mortgage better than a HELOC?
There is no one right answer for everyone. A HELOC provides a revolving line of credit and generally requires monthly payments, while a reverse mortgage allows eligible older homeowners to access equity without required monthly mortgage payments, as long as they meet the loan obligations. The better fit depends on factors such as your age, financial goals, ability to make monthly payments, and how you want to access your equity.
The borrower must meet all loan obligations, including living in the property as the principal residence and paying property charges, including property taxes, fees, and hazard insurance. The borrower must maintain the home. If the homeowner does not meet these loan obligations, then the loan will need to be repaid.
Does accessing home equity affect your credit?
Accessing home equity may affect your credit depending on the option and how the account is managed. Applying for a loan may result in a credit inquiry, and missed payments could negatively impact your credit over time.
What are the risks of using home equity?
Using home equity involves risks, including the potential for foreclosure if you do not meet loan terms, since your home is used as collateral. Borrowing also reduces your available equity and may affect future financial flexibility.
About the author
is the Web Content Manager at Finance of America and a journalist with more than 10 years of experience whose work has appeared in MoneyWise, MSN, Yahoo! Finance, and The Motley Fool. She specializes in making complex financial topics accessible and is passionate about advancing financial literacy.
Disclaimer
This article is intended for general informational and educational purposes only and should not be construed as financial or tax advice. For tax advice, please consult a tax professional. For more information about whether a reverse mortgage fits into your retirement strategy, you should consult your financial advisor.
