How to Get Equity Out of Your Home Without Refinancing | 2025

Can you pull equity out of your home without refinancing?

Absolutely. You can access your home’s equity without refinancing your existing mortgage.

Home equity loans and Home Equity Lines of Credit (HELOCs) are two popular ways to tap into your home’s equity while keeping your original mortgage in place.

• A home equity loan, often called a “second mortgage,” lets you borrow against your home’s equity in a lump sum, giving you cash to use as needed.
• HELOCs, on the other hand, function more like a credit card, allowing you to borrow funds as needed up to a set limit. Both typically offer lower interest rates than other loan types since they are secured by your home’s value.

Home equity options other than refinancing include reverse mortgages, sale-leaseback agreements, and home equity investments. Remember, each choice has its own merits and potential drawbacks, so it’s crucial to thoroughly evaluate and make an informed decision to suit your financial needs and goals.

In this article (Skip to...)

• Options
• Pros and cons
• Should you refinance?
• FAQ

How to get equity out of your home without refinancing

If you already have a low, fixed-rate mortgage or are close to paying off your current mortgage, a cash-out refi might not make sense. Instead, consider a home equity line of credit (HELOC) or a home equity loan. These “second mortgages” let you tap into your home’s value without refinancing your existing loan.

But there are a few other lesser-known ways to tap home equity without refinancing. Here is what you should know.

1. Home equity line of credit (HELOC)

A home equity line of credit, or HELOC, is a smart financing strategy for those who don’t want to refinance their primary mortgage. It operates similarly to a credit card but uses your home’s value as collateral, which enables lower interest rates. For many, a HELOC is considered one of the cheapest ways to get equity out of a house without having to restructure their existing mortgage.

With a HELOC, you can draw funds as needed, repay them, and then draw again during the draw period, which can last up to 10 years. During this time, it’s important to continue making your original monthly mortgage payments while managing the HELOC’s interest-only payments on the drawn amount.

Key HELOC benefits:

• Borrowing flexibility: Withdraw and repay funds as needed within the draw period.
• Lower interest rates: Secured by home equity, they offer more favorable rates.
• Interest-only payments: Pay interest only on the amount borrowed during the draw period (not the full credit limit).
• Interest deductibility: Interest paid on the loan may be tax-deductible if used for home improvements.
• Lower costs: Typically, less expensive than cash-out refinancing, with lower closing costs and quicker processing.
• No usage restrictions: Use the funds for any purpose, from home improvements to education.
• Efficiency: Faster to set up compared to alternatives, providing quick access to funds.

A HELOC is especially useful for those not needing a large sum upfront, offering a blend of cost efficiency, flexibility, and lower interest rates.

2. Home equity loan

For homeowners who want to borrow against the equity in their homes without refinancing their current mortgages, a home equity loan is an enticing choice. This type of loan grants you a lump sum upfront, based on the equity you’ve built in your home, which you then pay back over time with fixed monthly payments.

Unlike a HELOC, a home equity loan provides the security of a fixed interest rate, making it an ideal choice for those who prefer consistent monthly repayments throughout the life of the loan. If you’re looking for the cheapest way to get equity out of your home, it can be a straightforward solution, especially for large, one-time expenses such as home renovations, debt consolidation, or major life events.

Key home equity loan benefits:

• Fixed interest rates: Offers stability and predictability in repayments, unlike variable-rate lines of credit.
• Lump sum funding: Receive the full loan amount upfront, which is suitable for expensive projects or purchases.
• Interest deductibility: Interest paid on the loan may be tax-deductible if used for home improvements.
• Lower costs: Typically, less expensive than cash-out refinancing, with lower closing costs and quicker processing.
• No usage restrictions: Use the funds for any purpose, from home repairs to putting a down payment on a vacation home.

For homeowners who need a larger loan amount quickly, a home equity loan is a popular option.

3. Home equity investments

Home equity investments, also known as home equity agreements (HEAs), offer a unique method for homeowners to tap into their home’s value without taking on additional debt. Through this arrangement, an investor buys a share of the home’s equity, determining the percentage based on the property’s current market price. These agreements typically last from 10 to 30 years, providing a long-term strategy for accessing equity.

Key aspects of home equity investments:

• Debt-free financing: Access your home’s equity without the burden of monthly debt payments.
• Flexible terms: Agreements last between 10 and 30 years, with various exit options like selling or refinancing.
• No monthly or interest payments: This eliminates the stress of monthly payments, though a service fee may be involved.
• Eligibility based on equity: Requires a significant amount of equity, typically allowing for a loan-to-value ratio of 75% to 85%.

Home equity investments are well suited for borrowers who are unable to handle extra monthly payments or those with low credit scores. Unfortunately, it’s often not the cheapest way to get equity out of a house.

4. Sale-lease agreements

A sale-leaseback agreement provides an alternative route to access home equity without refinancing. This arrangement involves selling your home to another entity, allowing you to cash out the full value of your accrued equity, and then leasing your home back from the new owner.

Sale-leaseback agreements let you continue living in your home, paying rent at market value, unlike traditional home sales, which would require you to move out. What’s more, these types of agreements often bypass the credit requirements associated with second mortgages or home equity lines of credit.

Sale-lease drawbacks:

• Ongoing financial obligations: Some agreements might require you to cover costs typically associated with homeownership, such as property taxes and maintenance. However, in some cases, the buyer assumes these responsibilities, including insurance and repair costs.
• Loss of property ownership: Entering a sale-leaseback means you’ll no longer own your home, which means missing out on potential future value increases.
• Monthly rent payments: Although you can unlock a significant amount of equity, the deal converts you into a renter of your own home, which might not be financially advantageous over time for some.

Ultimately, sale-leaseback agreements might not be the most advantageous route unless you find yourself in a situation where immediate liquidity is essential, and your home is your primary or sole asset.

5. Rate-and-term loan with a second mortgage

Looking for a smart way to access your home’s equity without paying for a cash-out refinance loan? Consider this two-step strategy that offers both better mortgage terms and access to equity—without the high costs of cash-out refinancing.

1. Refinance your first mortgage with a lower-cost rate-and-term refinance loan.
2. Then, get a second mortgage (HELOC or home equity loan) to tap into your equity.

If you’re looking for the cheapest way to get equity out of a house, this strategy effectively sidesteps the high cost typically associated with cash-out refinancing. It’s particularly well-suited for individuals who have accumulated a significant amount of equity in their homes and are seeking to lower their monthly payments while simultaneously accessing funds for major expenses.

If you have an FHA, USDA, or VA loan, you may be able to save even more with a Streamline Refinance Loan—a loan that lowers your rate or monthly payment.

If you have a conventional loan and can’t get a Streamline Refinance, you may still save with this strategy since rate-and-term refinancing is generally cheaper than cash-out refinancing.

6. Reverse mortgages

A reverse mortgage is a specialized type of home equity loan designed for seniors aged 62 or older. It allows the conversion of a portion of home equity into cash without the need for refinancing.

Furthermore, a reverse mortgage allows borrowers to tap into their home equity without taking on any monthly payments. Instead, the lender makes monthly payments to the homeowner. The obligation to repay the loan is deferred until the homeowner either sells the home, moves out, or passes away, at which point the loan must be settled.

Reverse mortgage disadvantages:

• Costs: Fees and interest can be high, leading to an increasing loan balance over time.
• Potential for equity depletion: The growing loan balance may significantly reduce the home’s equity, impacting the inheritance for heirs.
• Foreclosure risk: Failure to comply with loan terms, such as home maintenance and paying taxes and insurance, could result in foreclosure.
• Loan limits: The homeowner’s age, home value, and current interest rates all have an impact on the amount that is available for borrowing, which may restrict access to the full equity value.

Due to its high costs and potential to deplete home equity, a reverse mortgage is not typically the cheapest way to access home equity. Therefore, consider a reverse mortgage only as a last resort for cash in retirement. It’s best suited for those without alternative financial resources, as it can substantially affect long-term finances and reduce inheritance for heirs.

7. Personal loans

When considering how to get equity out of your home without refinancing, one option is securing a personal loan with your home’s deed as collateral. With this method, you may get the benefits of secured borrowing without the costs of cash-out refinancing. It’s an alternative that offers fixed rates and the flexibility to use funds for various purposes.

The interest rates may be lower than those on unsecured credit card debt, but they are usually higher than those on traditional home equity loans.

For people with good credit who want quick access to funds without going through the refinancing process, a personal loan may be a reasonable option, though it’s not perfect for everyone.

Pros and cons of refinancing

When considering options to tap into the value of your home, it’s essential to understand the potential benefits and drawbacks of refinancing. Let’s break them down:

Pros of refinancing:

• Lower interest rates: If you secure a refinance loan with a lower interest rate than your original mortgage, you can save money over the life of the loan
• Fixed interest rate: Refinancing can allow you to switch from a variable interest rate to a fixed interest rate, providing more predictable monthly payments
• Longer loan terms: Refinancing can extend your loan terms, reducing your monthly payment burden
• Cash out: If your home has appreciated in value, you can do a cash-out refinance to use home equity and get a lump sum payment

Cons of refinancing:

• Closing costs: Refinancing a mortgage involves costs similar to those you paid for your original mortgage
• Longer repayment: Extending your loan terms means you’ll be in debt for a longer period
• Foreclosure risk: If for any reason you cannot meet the new mortgage payments, you risk foreclosure on your home

What to consider before a cash-out refinance

A cash-out refi is a powerful tool. It may be exactly what you need to build a stronger financial foundation going forward. If so, the closing costs and higher interest rate will be worth the cost.

But before applying for this type of mortgage refinance option, make sure you understand the details. Here are a few key points to be aware of.

1. How much cash can you withdraw?

Fannie Mae and Freddie Mac set the rules for conventional loans, which include limits on the amount of cash you can withdraw from your home equity.

Cash-out refinancing has a loan-to-value limit of 80%. This means you’d need to leave 20% of your home’s current value untouched. If your home was worth $300,000, your new loan amount couldn’t exceed $240,000.

This new $240,000 loan would need to pay off your existing loan. Then, your cash-out would come from what’s left over. If you owed $230,000 on your existing mortgage loan, you could get only $10,000 in cash back.

Many homeowners don’t have enough equity to pay off their current loan, leave 20% of equity in the home, and get cash back.

There is one exception to this convention. The VA cash-out refinance can allow borrowers to access 100% of their home’s equity, bypassing the 80% LTV rule. Only veterans, active duty service members, and some surviving military spouses can get VA loans.

2. Do you meet cash-out underwriting guidelines?

A cash-out refinance is not a source of quick cash; it’s a large loan secured by your home. As a result, underwriting and eligibility guidelines are stricter for these loans and they can take longer to close than shorter-term financing.

Conventional loan lenders generally require higher credit scores for cash-out refinancing: While home buyers can get approved with FICO scores as low as 620, for cash-out refinancing, lenders often expect credit scores of at least 660.

It is worth noting that you can avoid the surcharges and stricter underwriting by choosing government-backed refinance options like FHA and VA.

However, those programs have their own sets of upfront mortgage insurance fees. FHA also charges annual mortgage insurance on all cash-out refinance loans, whereas a conventional cash-out loan has no PMI. So these may not make sense if you have significant home equity.

3. Are you comfortable changing your loan amount and term?

Cash-out refinancing means you’ll have a bigger mortgage and probably a higher payment. You’ll also burn up some home equity, which is an asset just like your 401(k) or bank balance.

This is not something to do lightly.

In addition, taking a cash-out refinance means resetting the clock on your home loan. You pay more over time by adding those extra years and interest to a new mortgage.

4. How will you manage your finances after cashing out?

If the reason for your cash-out refinance is debt consolidation, take a moment to explore other options first. This type of refinance loan may seem like an easy fix, but it can come with significant risks, especially if you’re consolidating consumer debt.

Depleting home equity to pay off short-term purchases—such as things that lose value quickly—can lead to financial instability down the road. It’s important to consider how this decision might affect your long-term financial health.

Additionally, it can be tempting for some borrowers to run up their cards again and accrue new debt after paying off the old liens. Then they might need another cash-out refi to pay off the new debt, creating a a revolving cycle of debt that becomes harder to break.

That doesn’t mean a debt-consolidation refinance is always a bad idea. It just means you need to have a strategic plan in place before proceeding.

Consider consulting a financial advisor to help you assess how you’ll repay your debt and develop a clear roadmap for managing your finances post-consolidation.

FAQ: How to get equity out of your home without refinancing

Final thoughts on getting equity out of your home without refinancing

If you’re considering using your home equity to consolidate debt, upgrade your home, or increase financial flexibility, it can be a smart strategy—provided it’s done with careful planning. For many homeowners, it can be one of the most affordable ways to get equity out of a house when approached thoughtfully.

Start by determining your home’s current value and calculate your loan-to-value ratio to evaluate eligibility for a home equity loan or a HELOC.

The key is to use this equity that improves your financial situation, such as paying off high-interest debts or investing in value-boosting home improvements. It’s important to have a solid repayment plan in place to avoid future financial strain.

Lastly, it’s essential to shop around and compare offers from different lenders to find the best terms and rates for your needs. You can begin that process by clicking on the links below.