A HELOC (home equity line of credit) or home equity loan is a second mortgage that lets you borrow against your equity while keeping your existing first mortgage and its rate. A HELOC works like a credit line you draw from as needed; a home equity loan pays a lump sum at a fixed rate. Lenders set how much you can borrow by combined loan-to-value, credit and income.
HELOC vs. home equity loan vs. cash-out refinance
| Option | How you get money | Best when |
|---|---|---|
| HELOC | Draw as needed | Ongoing projects or flexible access; you want to keep a low first-mortgage rate |
| Home equity loan | Lump sum, fixed payment | One known expense; you want a fixed rate |
| Cash-out refinance | Replaces your first mortgage | Current rates are near or below your existing rate |
Common uses
- Renovations and ADUs
- Down payment on an investment property
- Paying off higher-interest debt
Many lenders allow a combined loan-to-value of 80%–90% on a primary residence and lower on rental properties. Exact limits depend on the lender, your credit and the property.
See also: refinance options.
Common questions
Can I get a HELOC on a rental property?
Some lenders offer HELOCs or home equity loans on investment properties, usually at lower combined loan-to-value limits than on a primary residence.
Will a HELOC change my first mortgage rate?
No. A HELOC is a separate second mortgage, so your existing first mortgage and its rate stay in place.

