Home Equity Loan Requirements
Different lenders have different requirement for offering home equity loans. Generally, the borrowers should fulfill the following conditions:
- Equity in their home should be at least 15% to 20% of the home’s value.
- Verifiable income history of more than two years.
- A credit score of more than 620.
- Debt-to-income ratio should be less than 43%.
If these requirements are not met, still the borrower can avail the home equity loan but with a higher interest rate from a lender who specializes in high-risk borrowers. Further, to determine the fair price of the house (collateral), the lender would estimate the borrowing capacity of the borrower.