front view of a home

Your Guide to a Home Equity Line of Credit (HELOC)

If you’re a homeowner in need of extra cash, you may be able to obtain a home equity line of credit (HELOC). Many people use this financing alternative to fund home improvement projects or other major expenses. Learn what a HELOC is and how to get one.   

How does a home equity line of credit work?

Similar to a credit card, a home equity line of credit allows you to borrow money in incremental amounts as needed up to a set credit limit, using your home as collateral. How much you can borrow depends on the value of your property and how much equity you’ve earned. The higher the equity, the higher the credit limit. There’s just one potential downside: If you can’t repay the loan, you may risk losing your home. 

You can borrow any monetary amount that does not exceed the maximum credit limit. For example, if your limit is $1,000,000 you can borrow up to a million dollars only. However, once you repay the outstanding balance, you can borrow that money again until the end of the term. At Vibrant, you can continue to borrow against your HELOC for 15 years without needing to reapply.   

Benefits of a home equity line of credit

  • Borrow money up to the maximum credit amount 
  • Pay lower interest rates than credit cards 
  • Enjoy flexible repayment options 
  • Gain possible tax deductions

Where can I get a home equity line of credit?

Mortgage companies, credit unions, and banks offer HELOCs. To get the best rate, you want to research and shop for different lenders. The more information you can obtain, the more bargaining power you’ll have. You can negotiate with lenders to decrease interest rates or convince them to beat their competitors' terms.

What are the eligibility requirements?  

Each financial or lending institution will have different eligibility requirements. Here are the most common HELOC requirements: 

  • Good to excellent credit score: 660 or above will allow you to get a HELOC with lower interest rates.
  • Low debt-to-income (DTI) ratio: This ratio compares your monthly earnings to your outstanding debt. A 40–50% DTI ratio is accepted by most lenders.
  • Home equity: You should have at least 15% equity in your home. 
  • Consistent income: Lenders will request your paystubs, W-2s, 1099s, and other financial records to evaluate your ability to repay your loan. 

How to take out a home equity line of credit 

Applying for a home equity line of credit is easy. Here’s a guide to getting your HELOC.  

1. Estimate your home equity

Your home equity represents the market value of your home minus the amount you currently owe on your mortgage. 

Appraised (market) value - mortgage amount owed = home equity 

Example: $1,000,000 (appraised value) - $100,000 (mortgage amount owed) = $900,000 Home equity  

2. Choose an optimal lender 

Once you have an idea of how much home equity you have earned, you can start researching lender options. Your mortgage lender company is a good place to start. They’ll already have your home and personal information on file to start an application. 

A local credit union like Vibrant Credit Union offers competitive HELOC rates. Plus, our application process is quick and easy and you’ll benefit from an expert Vibrant banker to guide you through the entire HELOC process.    

Apply for a home equity line of credit with Vibrant Credit Union

Vibrant Credit Union simplifies the HELOC process. Whether you’re shopping for the best lender or are ready to move forward with your application, we’re here to help. Contact us to discuss your options with a friendly, knowledgeable banker. 


Q: How long does it take to apply for a home equity line of credit at Vibrant Credit Union?

A: It takes just a few minutes to complete the application. Once approved, you’ll be able to start accessing your line of credit in about a week.

Q, Does a HELOC require a new property appraisal? 

In most cases, you will need an appraisal so Vibrant can accurately determine the current value of your home. In many cases, however, this appraisal can be conducted virtually rather than in-person, so it shouldn’t take as long to complete the process as it did when you applied for your mortgage.

Q: Do I need to submit any personal information when I apply for a home equity line of credit?

A: Yes, you’ll need to provide the following:

  • Full name 
  • Address 
  • Social security number
  • Income and tax documents including pay stubs, W-2s, 1099s, tax returns, and credit reports
  • Homeowner documents such as your insurance policy, appraisal, and deed 

Q: Does Vibrant Credit Union charge any fees to apply for a home equity line of credit? 

As with a mortgage, there are closing costs associated with a HELOC. Expect to pay about $450 (the actual amount may vary based on the amount of your credit limit and the value of your home).