A Home Equity Line of Credit (HELOC) lets you borrow against the equity in your home while keeping your first mortgage in place. Think of it as a revolving credit line — you can draw funds when you need them, pay them back, and use them again. It’s similar to a credit card, but with much lower interest rates and higher limits.
With a HELOC, you’ll only pay interest on the amount you use, giving you flexibility to manage expenses like home renovations, debt consolidation, or large purchases over time. It’s an excellent option for homeowners who want access to cash without refinancing their current mortgage.
How a HELOC Works
Most HELOCs have two phases — the draw period and the repayment period. During the draw period, which typically lasts up to 10 years, you can borrow and repay funds as needed, only paying interest on what you use. Once the draw period ends, the repayment phase begins — usually over 10–20 years — when you’ll start repaying both principal and interest. You can learn more about how draw and repayment periods work on our HELOC page where we break down line options for primary residences, second homes, and investment properties.
This flexible setup makes a HELOC ideal for phased projects, like remodeling your kitchen in stages or completing seasonal upgrades. It’s also useful for consolidating higher-interest debts into one manageable payment.
When a HELOC Can Be a Smart Move
A HELOC can be a powerful financial tool when used strategically. It might make sense if you:
- Want to renovate or upgrade your home without refinancing your existing loan.
- Need to consolidate high-interest credit cards or personal loans into one manageable payment.
- Prefer flexible access to funds for recurring or long-term expenses.
When a HELOC Might Not Be the Best Fit
While HELOCs offer flexibility, they aren’t ideal for everyone. You may want to explore other options if:
- Your income varies significantly month to month, making repayment less predictable.
- You plan to sell your home soon — you’ll need to close the line before selling.
- You find it difficult to manage open credit lines — a HELOC’s revolving structure can lead to overspending if not managed carefully.
Basic HELOC Qualification Guidelines
Every lender has different qualification standards, but here’s what VP Capital Lending generally looks for:
- Home Equity: enough equity to support a minimum line of $25,000+.
- Debt-to-Income Ratio: ≤50% of your income going toward debt payments.
- Credit Score: minimum 640 (higher scores may qualify for better terms).
- Closing Costs: typically 2%–6% of the total line amount, similar to a standard mortgage.
At VP Capital Lending, HELOCs are available for primary residences and second homes, with select options also available for investment properties. See our Home Equity Line of Credit page for more details on eligibility and current program requirements.
Is a HELOC Right for You?
If you’ve built equity in your home and want a smart, flexible way to access it — a HELOC could be the perfect fit. It’s ideal for homeowners who want to make improvements, consolidate debt, or prepare for big expenses without losing their low mortgage rate.
Want to see how much equity you could tap into? Try our Home Equity Calculator to estimate your potential line of credit.
Frequently Asked Questions
What credit score do I need for a HELOC?
Most programs start around 640 or higher, but a stronger credit profile can help you qualify for better rates and larger line amounts.
Can I use a HELOC on a second home or investment property?
Yes. VP Capital Lending offers HELOCs for primary residences and second homes, with limited options for investment properties.
Do I have to refinance my mortgage to get a HELOC?
No. A HELOC lets you access your equity while keeping your existing mortgage and rate.
Are there closing costs?
Typically between 2–6% of the line amount, depending on property type and loan size.
How much can I borrow?
Your available line depends on your home’s value, your mortgage balance, and your debt-to-income ratio. Use our Home Equity Calculator to estimate your potential borrowing power.
