Ways to get equity out of your home

There are six main ways to turn home equity into cash. They differ in who you repay, when, and what it costs.

Reviewed by Shawn Way, NMLS #1007298★ 4.9 from 111 reviewsUpdated October 28, 2026

Borrow against it and keep your mortgage

A HELOC is a revolving line of credit secured by your home. You draw what you need during a draw period, often 10 years, then repay over a repayment period, often 20 years. The rate is usually variable and tied to the prime rate, currently 7.00%. You pay interest only on what you've drawn. See what a HELOC is.

A home equity loan is a lump sum at a fixed rate with a fixed monthly payment. It fits a one-time cost with a known price, like a roof or paying off a set amount of debt. Compare the two in HELOC vs. home equity loan.

Both are second liens, so your first mortgage and its rate stay in place. Most lenders cap the combined loan-to-value (all loans on the home ÷ its value) at about 80%–85%.

Replace your mortgage with a bigger one

A cash-out refinance pays off your current mortgage with a new, larger one and hands you the difference. You end up with one loan and one payment, but the whole balance is repriced at today's rate, and closing costs are figured on the full new loan. If your current rate is low, that's usually the expensive way to get cash. Run the math in HELOC vs. cash-out refinance.

Get cash with no monthly payment

A reverse mortgage (most are FHA-insured HECMs) is for homeowners 62 and older. You receive a lump sum, monthly payments or a line of credit, and the balance grows instead of shrinking. It's repaid when you sell, move out or pass away. You must keep paying property taxes, insurance and upkeep. See HELOC vs. reverse mortgage.

A home equity agreement, also called a home equity investment, pays you a lump sum in exchange for a share of your home's future value. There's no interest rate and no monthly payment; you settle when you sell, refinance or reach the end of the term. If your home appreciates, the cost can be far higher than a loan. See home equity agreements.

Sell or downsize

Selling turns all of your equity into cash with no new debt. The trade-off is real: agent commissions, closing costs, moving, and the price and rate of whatever you buy or rent next. Downsizing makes sense when the house no longer fits your life, not usually as a way to fund a single project.

Side-by-side comparison

For a deeper look at the three loan options, read HELOC vs. home equity loan vs. cash-out refinance.

Example: $60,000 three ways

Illustrative numbers. A homeowner has a $500,000 home and owes $300,000 at 3.5%. She needs $60,000.

• How much is available? At an 85% combined limit: $500,000 × 0.85 = $425,000, minus $300,000 owed = $125,000 of borrowing room. At 80%: $400,000 − $300,000 = $100,000.
• HELOC or home equity loan: she keeps the $300,000 at 3.5% and borrows $60,000 at an assumed 8%. Her blended rate is ($300,000 × 3.5% + $60,000 × 8%) ÷ $360,000 = ($10,500 + $4,800) ÷ $360,000 = 4.25%.
• Cash-out refinance: she replaces everything with a $360,000 loan. If that loan were priced at 6.5% (an assumption for illustration), she'd pay 6.5% on all $360,000, versus 4.25% blended. Closing costs of 2%–5% would add $7,200–$18,000.
• Home equity agreement: no payment, but if the home appreciates the settlement can run well above $60,000 plus loan interest.

Here the second-lien options win clearly because her first-mortgage rate is low. To size your own line, use the how much can I borrow calculator.

How to pick

• Low first-mortgage rate and good credit: start with a HELOC or home equity loan.
• High first-mortgage rate or a very large need: price a cash-out refinance too.
• 62 or older, staying put, and a payment is the problem: look at a reverse mortgage.
• Can't qualify for a loan payment and under 62: a home equity agreement, with the contract read closely.
• House no longer fits: selling may beat any loan.

Any loan secured by your home puts the home at risk if you can't pay, and variable rates can rise. Numbers here are examples, not an offer.

To see your own numbers, get your HELOC rate from Shawn.

Questions people ask

What is the cheapest way to get equity out of your home?

If you have a low first-mortgage rate, a HELOC or home equity loan is usually cheapest because only the new money is priced at today's rates. A cash-out refinance can be cheaper if your current rate is already at or above market.

Can I get equity out of my house without refinancing?

Yes. A HELOC, home equity loan, reverse mortgage (62+) or home equity agreement all leave your first mortgage in place.

How much equity can I take out of my home?

Most HELOC and home equity lenders allow combined borrowing up to about 80%–85% of the home's value, minus what you owe. A conventional cash-out refinance on a one-unit primary home is capped at 80%.

Can I get equity out of my home with no monthly payments?

Yes, a reverse mortgage (age 62+) or a home equity agreement lets you get equity out of your home with no monthly payment. Both cost more over time because the amount owed grows or is tied to your home's value.

Is a HELOC or a cash-out refinance better for getting equity out?

A HELOC is usually better than a cash-out refinance when your first-mortgage rate is low, because only the new money is priced at today's rates. Compare the blended rate of your mortgage plus the HELOC with the cash-out rate; if the blend is lower, the HELOC usually wins.

More in HELOC guides

• HELOC vs. cash-out refinance
• HELOC vs. home equity loan
• HELOC vs. reverse mortgage
• HELOC vs. 401(k) loan
• HELOC vs. credit card
• Paying off your mortgage with a HELOC
• HELOC or home equity loan for debt consolidation?
• Paid-off home: HELOC or cash-out refinance?

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