Get your debt all under one umbrella with these competitive HELOCs
Homeowners build equity through appreciation and with each monthly mortgage payment. While more equity gets you closer to being debt-free on your home, you can borrow against your home equity for any expense, including debt consolidation.
Most home equity loans and HELOCs have lower APRs than unsecured loans and lines of credit, such as credit cards. Therefore, it makes sense to tap into a HELOC for debt consolidation. This guide outlines the best HELOCs for debt consolidation and details to consider before approaching a lender. I have been doing deep dives on financial products for over five years and will share some of the top choices to consider.
5 Best HELOC Lenders for Debt Consolidation
- Best HELOC for Self-Employed Workers: Angel Oak Mortgage Solutions
- Best HELOC for Fixed Rates: New American Funding
- Best HELOC for Comparing Lenders: Credible
- Best HELOC for Accessing 90% of Home Equity: SoFi Mortgage
- Best HELOC for No Closing Costs: FourLeaf Federal Credit Union
Best HELOC for Self-Employed Workers: Angel Oak Lending
- Best For:Flexible Mortgage OptionsVIEW PROS & CONS:securely through Angel Oak Mortgage Solutions's website
Pros:
- You can qualify for a HELOC with business bank statements
- Borrow up to $750,000
- Loan terms range from 15 to 25 years
- Start with interest-only payments during the draw phase
Cons:
- Rates and fees may be higher
- The program is not available in Tennessee
Angel Oak Lending is a non-QM mortgage lender that makes it easier for self-employed workers to tap into their home equity. The company lets you use business bank statements to qualify for a HELOC while letting you access up to $750,000 in home equity.
The lender also offers generous term lengths, ranging from 15 to 25 years. During the draw period, you will have plenty of time to make interest-only payments before having to pay off some of the principal.
However, non-QM mortgage lenders charge higher rates and fees than the competition. Traditional lenders may reject a business owner based on their taxable income since self-employed workers tend to have more tax deductions. Non-QM mortgage lenders offer a unique solution, but they use that to their advantage when setting rates and fees. Tennesseans must look for a different option since Angel Oak Lending’s HELOCs are unavailable in their state.
Best HELOC for Fixed Rates: New American Funding
- Best For:Versatile Lending OptionsVIEW PROS & CONS:securely through New American Funding HELOC's website
Pros:
- Fixed-rate HELOCs
- Available for single-family homes, condos and townhouses
- HELOCs are available for primary residences, secondary residences and investment properties
Cons:
- $400,000 HELOC limit
- Not available in Hawaii, New York or West Virginia
New American Funding offers fixed-rate HELOCs and is available for various property types. While most HELOC lenders let you borrow against single-family homes, some don’t offer condos and townhouses. New American Funding offers HELOCs for those properties, and you can also borrow against a primary residence, secondary residence or investment property.
The lender only lets you borrow up to $400,000. This may be enough for some homeowners, but you can get a higher maximum with other lenders. Furthermore, you must look for other HELOCs in Hawaii, New York or West Virginia.
Best HELOC for Comparing Lenders: Credible Mortgage
Pros:
- Compare offers from multiple lenders
- Streamline your research
- Rates and terms are laid out
Cons:
- Rates and fees may be higher
- The customer experience varies greatly
Credible is a lending marketplace that connects homeowners with HELOC lenders. You can easily compare offers from multiple lenders, and Credible displays the rates and terms for each lender. Credible can potentially save you hours of research if you want to compare dozens of lenders.
However, you may have higher rates and fees if you use Credible. Each lender is different, and some of them have much higher rates. Of course, you can also find competitive rates, but you will have a greater range of rates.
Borrowers will also have varying levels of customer service since each lender has different support teams. Credible’s job is done once they pair you with a HELOC lender.
Best HELOC for Accessing 90% of Home Equity: SoFi Mortgage
- Best For:Current SoFi MembersVIEW PROS & CONS:securely through SoFi Mortgage Purchase's website
Pros:
- Access up to 90% of your home equity
- Competitive rates
- Terms are up to 30 years
Cons:
- You cannot access more than $500,000 of home equity
- No physical branches
SoFi has generous LTV ratios for homeowners. You can tap into up to 90% of your home equity, while most HELOC lenders limit you to 80%-85% of home equity. The online lender also offers competitive rates with terms that can be as long as 30 years.
However, SoFi does not have any physical branches, which can be a dealbreaker for people who want to do their banking in person. Furthermore, you cannot access more than $500,000 of home equity through a SoFi HELOC. Homeowners who want to access large credit lines on multi-million dollar properties may want to look elsewhere.
Best HELOC for No Closing Costs: FourLeaf Federal Credit Union
Pros:
- No closing costs
- Competitive APRs
- Choose between fixed or variable rate HELOCs
Cons:
- You can only borrow up to $500,000
- The minimum credit score is 670
FourLeaf Federal Credit Union is one of the few lenders that doesn’t charge any closing costs for its loans. You can also get a competitive rate on a fixed or variable-rate HELOC. Fixed-rate HELOCs start at 6.99% APR, while variable-rate HELOCs are as low as 7.50% APR.
However, the lender limits you to a $500,000 line of credit. Furthermore, you need a 670 FICO score to get approved. Some mortgage lenders are more flexible and only require that you have a 620 credit score to receive financing.
What is a HELOC?
A home equity line of credit (HELOC) is a financial product that lets homeowners borrow against their home equity. Due to its revolving nature, it’s a little different from a home equity loan. Michael Elefante, a short-term rental expert with a seven-figure portfolio and the founder of the BNB Investor Academy, explains how HELOCs work and what distinguishes them from home equity loans.
“A Home Equity Line of Credit (HELOC) is a revolving credit facility that provides you with a line of credit up to a borrowing limit, typically with a variable interest rate. Home equity loans give you a lump sum right away with a fixed interest rate and a repayment time frame. This is an important differentiator because a home equity loan offers predictable monthly payments, while a HELOC gives you the option to borrow funds over time. A HELOC can work well if you need to cover intermittent expenses.”
HELOC lenders tend to have five- to 10-year draw periods for their credit lines. During the draw period, you only have to pay interest. Of course, you can make larger payments to get out of debt sooner. However, it offers plenty of flexibility. If you pay off your HELOC before the draw period concludes, you can always borrow against it in the future if you need to cover a new expense.
Why Use a HELOC for Debt Consolidation
A HELOC for debt consolidation can strengthen your finances and free up more capital. Elefante outlines some of the ways HELOCs can help.
“There are substantial advantages to using a HELOC to consolidate debt, including greater liquidity, lower interest rates (compared to unsecured loans or credit cards), and only paying interest on the unused portion. Borrowing against existing debt to manage and amortize it provides not just a hat trick for debt management but also an opportunity for refocusing freed-up capital on strategic investments.”
Alternatives to HELOCs
Although using a HELOC to pay off credit card debt and other obligations has benefits, you can use other financial products to consolidate your debt. These are some of the other options to consider.
Home Equity Loans
These financial products let you borrow against home equity at competitive rates and terms. You can get a home equity loan for up to 30 years and have fixed monthly payments. Home equity loans are more predictable since monthly payments stay the same. However, HELOCs let you start with interest-only payments, and you can draw against the credit line again if you have already repaid it.
Home Equity Agreements
Home equity agreements (HEAs) allow you to give a stake in your home equity in exchange for capital. You don’t have to contend with monthly loan payments, but the HEA provider’s stake will gain value as your property’s value increases. Home equity agreements have terms that typically range from five to 30 years. When the term concludes, they turn into balloon payments, but you can buy out an HEA provider early.
Personal Loans
Personal loans have higher APRs than home equity loans and HELOCs. The higher rates come with speed since you can get personal loans much faster. Some lenders offer financing within 24-48 hours, while you will likely have to wait two to six weeks to get approved for a HELOC or a home equity loan. Personal loans are also accessible to people who do not own homes, and some of them have flexible credit score requirements.
Why You Should Trust Us
Benzinga has provided financial insights for over 15 years, and I have been on the team for almost five years. Along the way, I have written for other publications like U.S. News & World Report, Business Insider and Newsweek. Benzinga regularly reaches out to expert sources for articles, including the real estate expert with a seven-figure portfolio who shared his insights for this article.
Methodology
We assessed HELOC lenders based on their APRs, terms, fees and other details. We also checked online reviews to gauge past customers' feelings about each lender. You can see our full methodology here.
FAQ
Is a HELOC good for debt consolidation?
A HELOC can be a good financial product for debt consolidation. HELOC rates are typically lower than credit card APRs and rates on other unsecured loans. Furthermore, you can continue to borrow against a HELOC even after you have paid it back.
What is the downside to a HELOC?
HELOCs have variable interest rates, which make it more difficult to predict monthly payments. Furthermore, a HELOC uses your home as collateral. You risk losing your home if you cannot make HELOC payments. Another risk is if a homeowner uses their HELOC for unnecessary purchases and gets deeper into debt.
Do you need an appraisal for a HELOC?
Yes. In most cases, you need an appraisal for a HELOC. That’s why most HELOCs take more than a month to get approved.
Sources
Elefante, Michael. Personal interview with the author. 13 Mar. 2025.
About Marc Guberti
Marc Guberti is an investing writer passionate about helping people learn more about money management, investing and finance. He has more than 10 years of writing experience focused on finance and digital marketing. His work has been published in U.S. News & World Report, USA Today, InvestorPlace and other publications.