Home Equity Loan With Bad Credit: Best Lenders and How to Qualify
You can get a home equity loan with bad credit — lenders like New American Funding offer home equity loans to borrowers with credit scores as low as 620.
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- Even for a bad credit home equity loan, most lenders require at least a 620 to 680 credit score.
- You’ll likely need more home equity and less total debt than if you had good credit to get approved for a home equity loan with bad credit.
- If approved with a low credit score, you should expect higher interest rates and stricter terms on your home equity loan.
- A bad credit home equity loan be a smart move if it helps you consolidate debt, make essential home improvements or achieve other financial goals.
The best home equity lenders for bad or fair credit in 2026
| Lender | Credit score minimum | Available equity loans |
|---|---|---|
 | 600 | HELOCs (fixed- and variable-rate) No home equity loans |
 | 620 to 640 | HELOCs Home equity loans |
 | 620 | HELOCs Home equity loans |
 | 640 | HELOCs (fixed- and variable-rate) Home equity loans |
 | 660 | HELOCs (fixed- and variable-rate) No home equity loans |
Best HELOC lender for bad credit: Achieve
Achieve sets the lowest credit score minimum of all the lenders we reviewed, requiring only a 600 score to access up to $700,000 using a fixed- or variable-rate HELOC. It doesn’t offer a traditional home equity loan, but its fixed-rate HELOC functions similarly to a home equity loan while retaining the ability to repay and reuse the funds you’ve borrowed during the draw period.
Achieve is also a good choice for those who want to close quickly, as they advertise the ability to get your funds to you within five to seven days of approval. However, its home equity products aren’t available in Alaska, Connecticut, Delaware, Hawaii, Maine, Massachusetts, Minnesota, Mississippi, Missouri, Nevada, New Hampshire, New York, North Dakota, Rhode Island, South Carolina, South Dakota, Virginia, Vermont, West Virginia and Wyoming.
Read more in LendingTree’s full Achieve Mortgage review to see if this lender is a good fit for you.
Best home equity loan lender for bad credit: New American Funding
New American allows you to apply online, but it also operates more than 300 brick-and-mortar locations and can issue loans in all 50 states, the District of Columbia and Puerto Rico. That means convenient access to funds in whatever way suits you best.
New American offers both home equity loans and HELOCs, but doesn’t have a fixed-rate HELOC product like some of the other lenders in this list.
Read more in LendingTree’s full New American Funding review to see if this lender is a good fit for you.
Best VA home equity lender for bad credit: Navy Federal Credit Union
Best home equity lender for fair credit: Spring EQ
Spring EQ has something for everyone, even those with credit scores as low as 640. The lender offers fixed- and variable-rate HELOCs as well as home equity loans, and gives you the option to make interest-only payments during the draw period of its HELOCs.
For those who may want to pay off a loan early, Spring EQ is a safe choice: they don’t charge prepayment penalties.
Read more in LendingTree’s full Spring EQ review to see if this lender is a good fit for you.
Runner-up HELOC lender for fair credit: Bank of America
Bank of America offers variable-rate HELOCs with the option to convert up to 90% of that credit line into a fixed-rate loan. It doesn’t offer traditional, fixed-rate home equity loans.
For the price-conscious, Bank of America offers several discounts including a special introductory interest rate that lasts six months, which as of this writing is more than 2.5 percentage points lower than the variable APR that kicks in after the intro period. Plus, you can get discounts for things like setting up autopay from a Bank of America account, owning the home that secures the HELOC outright or drawing at least $10,000 when you open the account.
Read more in LendingTree’s full Bank of America Mortgage review to see if this lender is a good fit for you.
Read more about how LendingTree experts chose the best lenders for bad credit below.
How to qualify for a home equity loan with bad credit
Make no mistake about it: Home equity loan requirements are stricter than traditional mortgage requirements. Add a credit score below 680 into the mix, and you should expect to offset the weaker score with both a lower debt-to-income (DTI) ratio and loan-to-value (LTV) ratio.
| Typical home equity loan requirement | What may be required for those with bad credit | |
|---|---|---|
| Credit score minimum | 620 | Raise your credit score to at least 680 to boost your approval chances |
| DTI maximum | 43% | 56% to 58% CLTV ratio |
| Home equity minimum / LTV maximum | 85% | Lower your DTI ratio to under 43% to offset other weak factors in your financial profile |
How to improve your approval odds
Lenders don’t look at your credit score in isolation, which means that it can be possible to compensate for a lower score with other factors.
For example, if you have a low LTV ratio or strong income relative to your debt, a lower credit score may be acceptable.
Shopping around can also help increase your chances. Applying directly to one lender means you either qualify or you don’t.
LendingTree is a free, safe, and secure way to quickly compare rate quotes from a network of vetted home equity lenders.
According to 2026 LendingTree data, borrowers that use LendingTree to compare offers can save $60,000+ over the life of a 30-year loan.
When banks compete, you win.
Get started by filling out our form to see competitive home equity rate offers today.
Should you get a home equity loan with bad credit?
When it makes sense
- You have significant equity. Lenders may be more flexible with lower credit scores when you have a strong equity position.
- You’re consolidating high-interest debt. If you’re replacing credit card debt with a lower-rate loan, consolidating can reduce your monthly payments and total interest.
- Your income is stable and predictable. A steady income makes it easier to qualify and reduces the risk of falling behind on payments.
- You’ve fixed the root cause of your credit issues. If your credit score dropped due to a one-time event (like extensive medical bills or a temporary job loss), a home equity loan may help you move forward financially.
When it’s risky
- You’re struggling to keep up with your bills. Missing payments on a home equity loan could put your home at risk of foreclosure, so it’s important to know that you can stay current on your payments.
- You’re using it for nonessential spending. Borrowing against your home for discretionary expenses (like travel, hobbies or shopping) increases the risk of financial trouble down the road.
- You don’t qualify for a meaningfully better rate. If you want to consolidate debt, but your home equity loan rate isn’t much lower than your existing debt, the benefit may be limited.
- Your debt-to-income ratio is already high. Taking on a home equity loan doesn’t eliminate your debt; it just restructures it. If you don’t address the underlying financial pressure, taking on yet another loan can just make your situation harder to manage.
How to get a home equity loan with bad credit: 6 steps
1. Gather information about your current mortgage
Home equity lenders will need a copy of your most recent monthly mortgage statement before they’ll make a final home equity loan offer.
2. Check your home’s value
If you’re not sure how much your home is worth, you can use a home value estimator or get a broker price opinion. However, the lender will usually order a home appraisal to confirm the value, so any valuation you get before that should be considered an estimate.
3. Calculate how much you might be able to borrow
Once you know your home’s value and your current mortgage balance, use LendingTree’s home equity loan calculator to estimate how much you may qualify to borrow. It can help you decide whether the full application is worth the effort.
Lenders calculate your maximum home equity loan amount by multiplying your home’s value by the max LTV ratio they allow, and then subtracting your outstanding mortgage balance.
4. Write letters of explanation for your bad credit in advance
If you’ve had some tough financial times, write a letter to explain to lenders what happened and how you’ll be able to repay a home equity loan.
Be prepared to provide documentation — such as bankruptcy papers or divorce decrees — that helps explain your financial situation.
5. Apply with three to five home equity lenders
You may need to show extra patience and shop around to get a home equity loan with bad credit, since not all lenders offer them.
Applying through LendingTree can save you time by letting you enter your information once and receive offers from multiple lenders who want your business.
6. Provide your documents and close your home equity loan
Once your home equity loan is approved, the process is similar to getting a traditional mortgage.
- The lender verifies all the information from your application and, once it’s finalized, you’re ready for closing.
- After you sign your paperwork, you’ll receive the funds from your home equity loan at the end of your right-to-cancel period, which lasts for three business days.
Pros and cons of a home equity loan with bad credit
Pros
- Low rates: Interest rates are typically lower than personal loan or credit card interest rates
- Quick funding: Funds are disbursed quickly (typically two to six weeks) and can be used for any purpose
- Predictable payments: Fixed-rate payments stay the same for the life of the loan
- Tax benefits: Interest may be tax-deductible if used for home improvements
Cons
- Fees and costs: Interest rates and monthly payments will be higher than if you had a good credit score
- Loan limits: You may be limited to a smaller loan amount because your credit score is lower
- Foreclosure risk: Lenders could foreclose and you could lose your home if you default
- Tax implications: Interest isn’t tax-deductible if it’s used for anything besides home improvements
A home equity loan is riskier for a lender because it’s a “second mortgage,” which means it’s repaid after your first mortgage if you default on your loan. If there’s no money left after the first mortgage is repaid, the second mortgage lender stands to lose a lot of money. Lenders guard against this increased risk by charging more in interest, but you should still shop around to ensure you get the best rate.
What happens if I’m denied?
If you’re denied a home equity loan, it just means you don’t meet that lender’s requirements right now, not that you’ll never qualify.
Most denials are due to credit score, home equity or debt-to-income (DTI) ratio issues. Recent negative credit events (like late payments, having debts sent to collections or bankruptcy) can also hurt your chances.
What should you do after being denied?
1. Review your denial notice
Lenders are required to tell you why you were denied. Look for specific reasons like:
- “Insufficient equity”
- “High DTI”
- “Credit history concerns”
This will help you know exactly what you need to fix before applying again. If you need help understanding the reasons you were given or strategizing on how to improve your finances, reach out to a housing counselor.
2. Strengthen your application
Depending on the reason, you can improve your chances by:
- Paying down existing debt to lower your DTI ratio.
- Making on-time payments for several months to improve your credit score.
- Correcting errors on your credit report.
- Waiting after major negative events like late payments or bankruptcy. You may have to wait two to five years, depending on your situation.
3. Consider applying with a different lender
Some lenders specialize in working with borrowers who have lower credit scores, higher LTV or DTI ratios or non-traditional credit profiles. That said, it’s important to compare offers carefully because these loans often come with higher rates and fees.
Are there alternatives if you can’t qualify?
If you’re denied, you may want to consider these home equity loan alternatives:
Read more about the alternatives to a home equity loan.
How LendingTree chose the best “bad credit” home equity lenders
We reviewed more than 40 mortgage lenders to identify which of them offer home equity lines of credit (HELOCs) and home equity loans. We then evaluated each lender based on the exact home equity (second mortgage) products they offer and the minimum credit scores they require. When multiple lenders shared similar credit score requirements, we prioritized those offering both HELOCs and home equity loans, broader geographic availability and more flexible repayment options. Minimum score requirements are based on lenders’ guidelines, but may vary due to individual borrowers’ circumstances.
LendingTree gathers data directly from lenders through their websites, disclosures and, in some cases, direct communication with company representatives. The LendingTree editorial team verifies and updates information periodically.
Our editorial team applies consistent criteria to every lender. Lenders cannot pay to influence our ratings. Read LendingTree’s editorial guidelines for more information.
Why trust LendingTree’s methodology?
As the lead editor for all purchase, refinance and home equity content, I rely on my 14+ years of personal finance experience to manage a team of staff writers and contributors who create consumer-friendly guides.
Together, our team aims to make LendingTree a reliable and helpful resource for readers as they navigate the complex mortgage lending process.
