Can I get a HELOC on a paid-off house?
A paid-off home has no mortgage, so all of its value is equity, which is what a home equity line borrows against. Lenders still limit how much of that equity you can use, and they review your income, credit, and title. Your pre-approval decision, by text and email, tells you whether a line fits your home.
Key facts
| Your equity | Your home's value minus what you owe; with no mortgage, the whole value source |
|---|---|
| How much you can borrow | Typically up to a set share of your equity, set by the lender source |
| Your home | Is the collateral; falling behind can mean losing it source |
| Two stages | A draw period to borrow, then a repayment period to pay back source |
Paying off a home is a big step. Some owners later want to use part of that value without selling. A home equity line is one way people look at doing that.
What does a paid-off home change?
Equity is your home's value minus what you owe on it. With no mortgage, all of the home's value is equity.
How much could I borrow?
Lenders typically let you borrow up to a set share of your equity. They also look at your income and monthly debts. The exact limit is the lender's, worked out from your own numbers.
In Texas, all loans on the home together cannot go above 80 percent of its fair market value. On a home worth $400,000 with no mortgage, that cap is $320,000. The lender's own rules and your numbers decide the line. See Texas HELOC rules.
What do lenders still look at?
- How the home is used. A main home is the simplest case.
- Who is on the title. The owners on title should match the people applying.
- Your income and your monthly debts.
- Your credit history, at the application stage.
What can slow things down?
- The home is listed for sale. Lenders usually will not open a line on a home that is on the market.
- A recent transfer. A home bought or transferred in the last 90 days is not eligible.
- A trust or an LLC on the title. The lender reviews how the home is held.
What should I weigh?
Your home is the collateral for the line. If you fall behind or cannot repay on schedule, you could lose your home. Borrow an amount you have a plan to repay.
Who does what?
Click Mortgage arranges the line and is not the lender. A licensed lender funds it. On the line we arrange, the rate on each draw is fixed for the full term of that draw. To learn the basics, see what a HELOC is and how it works.
Questions people ask
What if I sell the home later?
The line often must be repaid when you sell. Plan for that, and check how it works in the terms you get in writing.
My home is in a trust. Can I still apply?
You can ask. The lender reviews homes held in a trust, and the rules depend on the kind of trust. Tell us on the form at the start.
Does checking my options affect my credit score?
No. The first check is a soft inquiry. A hard inquiry may follow at the application stage with the lender.
- Sources
- https://files.consumerfinance.gov/f/documents/cfpb_heloc-brochure.pdf
- https://www.consumerfinance.gov/ask-cfpb/what-is-a-home-equity-line-of-credit-heloc-en-107/
- https://www.consumerfinance.gov/rules-policy/regulations/1026/16/
See what a line on your home could be.
A few questions, a soft credit check only, and your pre-approval decision by text and email.
Check what you can borrow