Learn how to tap into your home’s equity without refinancing through loans, home equity lines of credit, reverse mortgages, and niche alternatives to fit your goals.
- Home equity loans, home equity lines of credit (HELOCs), and reverse mortgages all allow you to access some of your home equity without refinancing your mortgage.
- If you want to access your equity without increasing debt, you might consider niche alternatives, such as home equity investments, sale-leaseback agreements, or fractional ownership arrangements.
- To determine the most suitable home equity-access option for you, consider your financial goals and repayment ability, as well as the cost and long-term effect on your home equity and housing stability.
Are you looking to free up funds for home renovation projects, debt consolidation, other large purchases, or even living expenses during retirement? Your home equity could provide a favorable source of funding.[1]
While a cash-out refinance may be a cost-effective way to convert some of your home equity into accessible funds under the right conditions, refinancing doesn’t always make financial sense. For example, if your current mortgage interest rate is lower than rates available today, refinancing to a higher rate could increase your mortgage payment and overall interest expense. Luckily, there are ways to access some of your home equity without refinancing your mortgage.
In this article, you’ll learn how to get equity out of your home without refinancing and how to choose the equity-access strategy that best suits your financial goals and lifestyle.
Popular Strategies for Taking Equity Out of Your Home Without Refinancing
Home equity loans, HELOCs, and reverse mortgages are useful tools for accessing home equity without refinancing or selling the property.
Home Equity Loan
A home equity loan allows qualified homeowners to borrow a lump sum of their home equity. This loan is repaid in installments of principal and interest, typically with a fixed interest rate that allows for predictable payments over time.[2]
While specific borrower requirements vary by lender, you typically need to have good credit, a history of on-time mortgage payments, and sufficient equity in your home to qualify for a home equity loan. For example, a lender may require that you retain at least 15-20% equity in your home. This means that your first mortgage plus your home equity loan cannot exceed 80-85% of the property’s current value (which may be determined by a home appraisal).
Importantly, home equity loans are secured, using the home as collateral, just like a primary mortgage. Failure to repay the home equity loan could potentially result in foreclosure. Before accepting a home equity loan, make sure you can comfortably afford to repay the loan as scheduled.
Home Equity Line of Credit
A HELOC offers a revolving line of credit, allowing you to borrow funds as needed. This flexible option may work well for homeowners who are unsure about how much they may need. For example, it may be difficult to estimate the cost of a home improvement project, even with a home renovation calculator, so you might choose a HELOC to fund your remodel. This may prevent you from borrowing more than you need (and paying the interest on that extra principal) or from borrowing less than you need (and having to apply for another loan).[2]
HELOCs have a draw period, followed by a repayment period.[2] The draw period is the timeframe during which you may borrow against the open credit line. This period may last for several years and may allow for low monthly payments, such as interest-only payments. The repayment period is the timeframe during which principal and interest payments are made to repay the debt balance.
Traditionally, HELOCs offer variable interest rates, in which the rate may change based on market conditions.[2] However, some lenders offer HELOCs with fixed-rate locks options, which allow you to “lock in” the current rate for more consistent monthly payments.
Like home equity loans, HELOCs are secured using the home as collateral, so it is important to confirm that you are comfortable with the repayment terms to avoid default, which could result in foreclosure. Also like home equity loans, HELOCs typically require good credit, solid mortgage payment history, and sufficient home equity for borrowers to qualify.
Reverse Mortgage
A reverse mortgage is a special type of home loan that allows homeowners aged 62 or older to access a portion of their home’s equity without making monthly installment payments to repay the loan.[1]
Unlike a traditional mortgage, in which the homeowner pays the lender, in a reverse mortgage, the lender pays the homeowner through a lump sum, monthly payments, or a combination of these options. The homeowner retains ownership of the property, but the loan balance increases over time as interest and fees accumulate.[1] The loan does not have to be repaid until the homeowner sells the home, moves out permanently, or passes away. At that point, the proceeds from the home’s sale are typically used to pay off the loan, and any remaining equity goes to the homeowner or their heirs. Heirs may also have the option to turn the title to the property over to the lender to satisfy the debt.[1]
This strategy provides a way for senior homeowners to remain in their homes while receiving funds that may be needed to support them in retirement. It’s worth noting that because the money received from the lender is a loan, rather than income, it is not taxable as income.
Home Equity Loan vs. HELOC vs. Reverse Mortgage
Here is a chart to help you compare home equity loans, HELOCs, and reverse mortgages.
| Home Equity Loan | HELOC (Home Equity Line of Credit) | Reverse Mortgage | |
| Payout type | Lump sum | Revolving line of credit (draw as needed) | Lump sum, monthly payments, or combination |
| Repayment | Fixed monthly payments (principal + interest) | May be interest-only during draw period, then amortized principal and interest during the repayment period | No payments due until you move out, sell, or pass away |
| Interest rate | Typically fixed | Typilcally variable (some offer fixed-rate options) | Typically variable |
| Eligibility | Sufficient home equity and good credit/income | Sufficient home equity and good credit/income | Age 62+, primary residence, sufficient equity |
| Loan term | Typically 5-30 years | Draw period (5-10 yrs) plus repayment period (10-20 yrs) | No set term; ends when you leave the home |
| Effect on heirs/estate | Debt must be repaid upon sale or transfer | Debt must be repaid upon sale or transfer | Loan is due at death; equity may be reduced for heirs |
Check out Reverse Mortgage vs. Home Equity Loan or HELOC for a more detailed look at the pros and cons of each option.
Niche Alternatives to Accessing Equity Without Refinancing
In addition to the popular home equity loan, HELOC, and reverse mortgage options, there are a few alternative ways to get equity out of your home.
Home Equity Investment
A home equity investment, also called a shared appreciation agreement, allows homeowners to access cash by selling a portion of their home’s future value to an investment company. When you sell or refinance the property, the company receives its original investment plus a share of any appreciation in the home’s value.[3]
This option may be attractive to homeowners who want to access equity without taking on debt or increasing their monthly expenses. It may also be an option for homeowners who don’t have high enough credit scores to qualify for a home equity loan or HELOC. However, it may be more costly in the long run if the property’s value significantly appreciates.
Sale-Leaseback Agreements
A sale-leaseback agreement involves selling your home to a company or investor and then leasing it back, essentially staying in the home as a renter rather than as an owner.
This arrangement frees up your full home equity while avoiding the need to move right away. It may be used by homeowners facing financial hardship or credit challenges who need liquidity quickly but are not ready to relocate. However, it means giving up ownership of the home, and paying rent to the new owner may detract from the financial benefits.[4]
Fractional Ownership or Partial Sale of Property Rights
Fractional ownership or partial sale of property rights is a more niche option in which a homeowner sells a stake or fraction of their property to investors while retaining partial ownership. This allows you to unlock some of your equity without taking on debt or fully giving up the home.
These arrangements may be structured in various ways, sometimes similar to home equity investments or as co-ownership models.
While fractional ownership may provide flexibility, this is still an emerging market with complex agreements that require careful legal and financial consideration.
How To Choose the Right Equity-Access Strategy for You
To determine the best non-refinance home equity option for you, consider the following:
What are your financial goals? Do you need a lump sum, recurring income, or a credit line for flexible withdrawals?
- What is your financial capacity to repay a loan? Can you afford to make monthly payments to repay a debt? If so, how much are you comfortable committing to?
- Can you qualify? Which options could you be eligible for?
- What are the costs? You may want to get estimates from multiple lenders to find out about loan origination expenses, any prepayment penalties, and any other closing costs, as well as options for paying these costs upfront, rolling them into the loan, or paying a higher interest rate rather than itemized closing costs.
- How will your future equity and lifestyle be affected? Which solution best matches your long-term plans relating to where you will live during retirement and estate planning?
Home Equity FAQs
Can You Take Equity Out of Your House Without Refinancing?
Absolutely. Home equity loans, HELOCs, and reverse mortgages (in select states) all offer access to home equity without a refinance, as do home equity investments, sale-leaseback agreements, and fractional ownership/partial sale agreements.
Is It a Good Idea to Take Equity Out of Your House?
Taking equity out of your house may make financial sense in some cases, such as funding home improvements or debt consolidation. However, equity-access strategies may increase debt and may result in foreclosure if the debt is not repaid. Make sure you have a clear purpose for accessing equity, as well as a plan to repay any debt and long-term housing security.
What Is the Cheapest Way to Get Equity Out of Your House?
HELOCs and home equity loans are among the most affordable ways to access home equity.
Which Is Better, a Refinance or a Home Equity Loan?
It depends on market conditions and your financial position. If you can secure a lower interest rate on your primary mortgage by refinancing, that may be the better option. However, if interest rates are higher today than the rate on your current mortgage loan, you may be better off taking a HELOC or home equity loan without refinancing.
How Do I Know How Much Equity I Have in My Home?
Your home equity is the current value of your home minus any debt owed on the home (such as primary mortgages and second mortgages). You may use an online home equity calculator to help you determine your current equity and how much you may be able to borrow against it.
Take the First Step Toward Unlocking Your Home’s Equity
Deciding how to access your home equity without refinancing isn’t just about choosing the lowest rate or easiest option. It’s about aligning the strategy with your financial goals and future plans.
Consider speaking with a financial advisor or mortgage professional to review your eligibility, calculate potential costs, and understand how each option could affect your long-term wealth. Arming yourself with information may help you make better financial decisions for a stronger financial future.
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