HEI or HELOC? Two very different ways to tap your home equity.
One is a loan with a monthly payment. The other isn't a loan at all. Since we offer both, we don't need you to pick one; here's how they really compare, and how we choose between them for real clients.
- HELOC: a credit line from 620 credit, and every bit of future appreciation stays with you.
- HEI: cash with no monthly payment and credit from 500, in exchange for a share of your home's future value.
- Both are refinance-only, on a home you already own.
- Not sure which? The quiz sorts it out from your answers.
- Seeing your options on either one takes no hard credit pull.
Rather just talk? Call or text us at (949) 401-7593
By Arran Amorozo, NMLS #1491497 · West Capital Lending, Inc. · Content last reviewed:
The short answer
If your credit is 620 or better and a monthly payment fits your budget, the HELOC is usually the better deal: you borrow against the equity and keep all the appreciation. If your score is under 620, or a new payment is out of the question, the HEI usually wins, because it can say yes where a loan can't.
What each one is
HELOC: a loan
A home equity line of credit is a revolving line that sits behind your current mortgage. Borrow from it when you need to, pay on the balance you've used, and your first mortgage stays exactly where it is. Ours can fund in as little as 5 business days, and on lines up to $1,000,000 there's no appraisal appointment: an automated valuation is used, and above that the value is confirmed on a call.
HEI: not a loan
A Home Equity Investment, sometimes sold as a Home Equity Agreement, pays you a lump sum now for a share of your home's future value. There's no monthly payment and no interest; the agreement settles when you sell, refinance or buy the investor out. The investor's share is the price you pay, and since no monthly payment has to be approved, a low score doesn't sink it.
Side by side
| HELOC | Home Equity Investment | |
|---|---|---|
| What it is | A loan: a revolving line in second position | Not a loan: cash today for a share of the home's future value |
| Monthly payment | Yes, on the amount you use | None; it settles when you sell, refinance or buy it back |
| Credit | 620 minimum; no income documents at 680+ on lines of $150,000+ | From 500 |
| Future appreciation | Yours, all of it | The investor's agreed share comes out at settlement |
| Amounts | $50,000 to $5,000,000 | $50,000 to $600,000, and never more than 25% of the home's value |
| Max leverage (your loans plus the new money) | 90% of value (80% in Texas) | By credit band: 60% at 500–539, 65% at 540–579, 75% at 580+ (10 points less on a rental) |
| Upfront costs | Quoted with your scenario | Set by the offer and disclosed before you sign |
| Income documents | Household income counts; none needed at 680+ on lines of $150,000+ | Mostly about your equity |
| Speed | As little as 5 business days (Texas requires a 12-day wait before closing on a home you live in) | Longer than a HELOC; we give you the timeline up front |
| Property | 1–4 units, primary or investment | Primary homes and investment properties |
| Lien position | Second, behind your first mortgage | 1st, 2nd or 3rd (credit 500–539: 1st or 2nd only) |
| Where | In all 35 states + D.C. where Arran is licensed | AZ, CA, CO, FL, OH, OR, PA, TN, UT & WA |
| Purchase or refinance | Refinance only, on a home you already own | Refinance only, on a home you already own |
Leverage counts every loan on the home plus the new money.
Same home, both tools
A home you live in, worth $600,000, with $300,000 owed:
| Option | Combined limit | Most you could get |
|---|---|---|
| HELOC (620+ credit) | 90% = $540,000 | A line up to $240,000 |
| HEI, credit 580+ | 75% = $450,000 | $150,000 (the 25%-of-value cap) |
| HEI, credit 540–579 | 65% = $390,000 | $90,000 |
| HEI, credit 500–539 | 60% = $360,000 | $60,000 |
Before closing costs, and before the income check (HELOC) or the investor's own review (HEI).
The real trade-off
A HELOC charges as you go: interest on what you've drawn, month by month, while the appreciation stays yours. An HEI charges at the end: the investor's share of what the home is worth at settlement. The more the home climbs, the bigger that share gets, and in a hot market it can outrun years of interest. That's the whole trade, and it's why we price both against your numbers before recommending one.
How we actually decide
- 620+ credit and a payment the budget can handle: the HELOC nearly every time. Holding on to all of your appreciation beats skipping a payment you could afford anyway.
- Credit under 620, home in AZ, CA, CO, FL, OH, OR, PA, TN, UT & WA: the HEI. This is the situation it exists for.
- Strong credit, but your income is hard to document: our no-income HELOC (680+, lines of $150,000+) comes before either one.
- No new monthly payment, period, whether that's a fixed income or a tight retirement budget: the HEI, with the trade-off put in writing.
- 62 or older: add a reverse mortgage to the comparison.
Low credit, real equity: where the HEI earns its keep
Most advice for owners with damaged credit boils down to "fix your score, then come back." The HEI is a way around the wait: since there's no payment for a lender to underwrite, scores from 500 can work. Your band sets the ceiling, counting your current loans: 60% at 500–539, 65% at 540–579 and 75% at 580+.
Below 620, a HELOC is off the table. When that happens in our quiz and the home is in an HEI state with enough room under the cap, it offers the HEI instead of a dead end.
Common questions
How does an HEI differ from a HELOC?
The HELOC is borrowing: a credit line you repay, with payments on what you use, and every dollar of appreciation is yours. The HEI isn't borrowing: you get cash now for a share of the home's future value, make no monthly payments, and settle up when you sell, refinance or buy it back. The HELOC starts at 620 credit; the HEI at 500.
Which one costs less?
It hinges on how much the home gains in value. The HELOC costs the interest on what you draw. The HEI costs the investor's share of the home's value at settlement, plus the upfront costs disclosed in your offer. The faster the home appreciates, the more the HEI costs, so the honest comparison uses your numbers.
Can I get an HEI with poor credit?
Yes, it's built for that. Since no lender has to approve a payment, scores from 500 can work. Your band caps the total against the home, counting your current loans: 60% at 500–539, 65% at 540–579 and 75% at 580+, and 10 points less on a rental. Available in AZ, CA, CO, FL, OH, OR, PA, TN, UT & WA.
Are an HEI and a Home Equity Agreement the same thing?
Yes. Providers use different labels (Home Equity Investment, Home Equity Agreement, equity-sharing agreement) for one idea: a lump sum now, in return for a cut of the home's eventual value and no monthly bill.
Does an HEI really have no payments or interest?
Correct, neither. It still isn't free: the investor gets paid through its share of your home's value at settlement. Judge it by that settlement cost, not by the missing payment.
Could I start with an HEI and move to a HELOC later?
Yes. Paying off an HEI with a new loan once your credit improves is a common exit. Some clients treat the HEI as a bridge: cash now with no payment, then a HELOC or a refinance when their score allows.
When is the HELOC the better choice?
When your credit is 620+ and a payment fits comfortably. You keep the appreciation, lines run $50,000 to $5,000,000 up to 90% combined (80% in Texas), and funding can take as little as 5 business days.
Can I use either one to buy a home?
No. Both only work on a home you already own; they turn existing equity into cash.
Does checking my options affect my credit score?
No. We look at your options with a soft credit check, which has no effect on your score. A hard check only happens later, with your OK, if you decide to apply.
See your real numbers in 60 seconds.
The quiz on our HEI page checks your scenario against our lending rules in about a minute. No hard credit pull, and your information is never sold.
Check my HEI options →Rather just talk? Call or text us at (949) 401-7593
Keep reading
Reverse mortgages
How Reverse Mortgages Work: A Plain-English Guide
Reverse mortgages (HECMs) in plain English: no mortgage payment, who qualifies, counseling, what you still pay, non-recourse, myths, scams and what to ask.
Read the guide →
Conventional under 620
Conventional Loans With Credit Under 620: The Real Paths
Conventional loans below 620 credit: the down payment and equity paths that still work, what changes at 620, how PMI comes off, and when FHA or an HEI fits.
Read the guide →
Rental equity
DSCR HELOCs and Second Mortgages for Rental Properties
A DSCR HELOC or closed-end DSCR second on a rental: qualified on the rent, up to 75% combined loan-to-value, first mortgage untouched, and when a HELOC fits.
Read the guide →