How Do I Apply For a Home Equity Loan?

Home equity lenders can offer a variety of repayment options.

Home equity lenders can offer a variety of repayment options.

Do you have some bills that need to repaid? Perhaps there is a renovation you have always wanted to make to your kitchen. You can apply for a home equity loan to repay those bills or remodel your kitchen. Home equity loans are revolving credit lines that can be drawn on to pay for education expenses, pay down debt or make improvements to land. The application process includes a credit check and a home appraisal.

Items you will need

  • Proof of income
  • Monthly payments on debts and liabilities
  • Credit report
  • Internet access

Research the lenders -- online and brick-and-mortar financial institutions, including commercial banks, credit unions and savings and loans -- that offer home equity loans. Consult work colleagues and friends to get the names of financial institutions they have used for home equity lines of credit.

Choose the financial institution that suits you. Use criteria such as interest rate, frequency of interest adjustments, caps or ceilings on interest, closing fees, length of time for credit line and repayment terms to inform your decision. Consider the quality of any relationships you have had with the institutions.

Request your credit report from one of the major credit bureaus and identify any potentially negative information that needs to be removed or explained in your application. Good credit scores exceed 700. Scores below that figure could mean higher interest rates.

Gather documents needed for the application process. Proof of income, such as a paycheck, a current federal income tax return and bank account statements are useful to demonstrate your monthly income. Be prepared to show credit card statements and other monthly payments for debts, including car payments.

Apply for the loan. If you are applying online, submit the necessary documents electronically; otherwise, meet with your loan officer to provide all information. Be sure to sign the documents and include information about any co-signers, including your spouse.

Comply with additional requests from the lender. Many financial institutions will want to appraise the property to determine the total amount of the credit line. Cooperate with any requests for additional documentation and make your home available for appraisals or inspections.

Attend the closing. When your line of credit is approved, attend the closing to sign the home equity loan agreement. The bank will provide the loan equity check or transfer the loan equity funds to your account at the closing.


  • Some possible non-traditional lenders include online home equity financing institutions and credit unions.
  • Lenders will calculate a loan-to-value ratio for your home. This ratio should be less than 80 percent. For example, if you owe $100,000 on a house that's now valued at $200,000, you could get an equity loan of up to $60,000.


  • When entering into a home equity loan, remember to carefully consider whether you can repay the loan. Default on the home equity loan may result in the seizure of your house.

About the Author

Trudie Longren began writing in 2008 for legal publications, including the "American Journal of Criminal Law." She has served as a classroom teacher and legal writing professor. Longren holds a bachelor's degree in international politics, a Juris Doctor and an LL.M. in human rights. She also speaks Spanish and French.

Photo Credits

  • Stockbyte/Stockbyte/Getty Images