Writer: Choncé Maddox
Editor: Lillian Guevara-Castro
Reviewer: Ashley Fricker
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A home equity loan is a popular way to finance home repairs, pay off debt, or cover other important expenses. In the first quarter of 2025, homeowners lost about $9,200 in equity compared to gains in the same quarter the previous year. Like any loan, a low credit score can make qualifying difficult and limit your options.
Even if you have a subprime credit score, there are still options when seeking home equity loans. Some lenders specialize in working with borrowers who have fair or poor credit. They’ll often look at other factors, such as your debt-to-income ratio (DTI), to assess your creditworthiness.
Best Home Equity Loans For a 500 to 600 Credit Score
While some lenders are open to approving home equity loans for those with lower credit scores, the terms might not be the best. If you’re considering a home equity loan as your top choice, check out these lenders that cater to individuals with credit scores between 500 and 600.
- America’s largest mortgage lender
- The entire process is completed online
- Options for new mortgages and refinancing existing mortgages
- Award-winning customer service and cutting-edge digital platforms
- More than 90% of clients would recommend us
- See application, terms, and details
| Interest Rate | In Business Since | Application Length | Reputation Score |
|---|---|---|---|
| Varies | 1985 | 5 minutes | 9.5/10 |
Rocket Mortgage is one of the largest mortgage lenders in the U.S. This lender offers home equity loans at a fixed rate, allowing you to keep the same rate on your current mortgage. Rocket Mortgage has home equity loan experts to help you get the cash you need, and with predictable payments you can budget for.
You can easily apply online using a streamlined application process to get an accurate loan quote. Rocket Mortgage specializes in assisting borrowers with poor credit by presenting the loan terms available to you. During the online questionnaire, you’ll be asked about your credit score range and whether you’ve declared bankruptcy in the past three years.
This information won’t automatically disqualify you from securing a home equity loan. Rocket Mortgage is ready to have one of its home equity loan experts reach out by phone to discuss your options.
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- Buy a home or refinance your existing mortgage
- Cash-out refis and HELOCs available
- Flexible credit requirements
- Up to $8,000 in down payment assistance, see terms.
- Popular with first-time homebuyers See application, terms, and details.
| Interest Rate | In Business Since | Application Length | Reputation Score |
|---|---|---|---|
| Varies | 2003 | 5 minutes | 9.5/10 |
New American Funding offers cash-out refinancing and home equity line of credit (HELOC) options to help borrowers leverage their equity when they need it. The lender has flexible credit requirements and may work with borrowers who have had issues in the past.
The initial application is straightforward and asks for details about your home, market conditions, income, and credit score range. Once you submit it, New American Funding will quickly provide a decision, and the process is confidential, ensuring your credit score remains unaffected.
Many first-time homebuyers also seek out New American Funding for its popular loan programs and down payment assistance program, which can provide the extra boost to get them into a home.
3. Unlock
- Access up to $500,000 in home equity with NO monthly payments
- Ability to use funds for any reason
- Minimum 500 FICO required — no impact on your credit score
- No age or income restrictions
- Not available in every state; terms and conditions apply
- See application, terms, and details.
| Interest Rate | In Business Since | Application Length | Reputation Score |
|---|---|---|---|
| No Interest | 2020 | 10 minutes | 9.0/10 |
Unlock provides homeowners with a different type of financing structure to tap into their home equity — and you can do it without making monthly payments. The type of financing is not a loan, but a home equity agreement (HEA) that provides homeowners with the funds they need in exchange for a percentage share of the future value of their home.
Borrowers need a FICO score of 500 or above to be eligible, but this structure has some significant benefits — especially if you want to access cash to pay off debt. As opposed to HELOCs and home equity loans, HEAs don’t charge interest or have monthly payments, possibly giving homeowners some much-needed breathing room.
You will need to maintain the property, as well as pay your mortgage and taxes, during the agreement. And Unlock allows you to buy back the equity without selling your property.
4. eMortgage
- Get today’s mortgage rates from the top mortgage lenders and banks
- Easily compare and choose mortgage lenders with no obligations or fees
- Review current mortgage rates side by side
- Pick mortgage lenders that meet your specific needs
- Compare rates from pre-qualified and approved mortgage lenders — 100% online, 100% free
- See application, terms, and details.
| Interest Rate | In Business Since | Application Length | Reputation Score |
|---|---|---|---|
| Varies | 1979 | 4 minutes | 8.5/10 |
eMortgage is a mortgage service with a minimum credit score requirement of 500. To obtain a home equity loan, you’ll need to fill out a request form online or call to connect with a loan professional in your area to discuss your options.
eMortgage makes the loan process faster by connecting you with its network of lenders, letting you compare offers side by side. You can then select the loan option that suits you best and either apply online or contact a loan officer if you have any questions.
- Tap into your home’s equity to get the cash you need
- First mortgages & home equity loans (credit score approvals as low as 500)
- Self-employed bank statement loan programs – no tax returns needed
- Reverse mortgage options for seniors 62+
- A+ BBB Rating and 4.9 Stars on Google
- Not available in all states
- See application, terms, and details.
| Interest Rate | In Business Since | Application Length | Reputation Score |
|---|---|---|---|
| Varies | 2002 | 5 minutes | 9.5/10 |
Top Flite Financial is a family-owned direct lender that offers home equity loans to help borrowers consolidate debt, make improvements to their homes, or cover other large expenses. It works with people of all credit stripes, including borrowers with credit scores as low as 500.
Founded in 2022, Top Flite Financial has a wide range of options in addition to home equity loans, including first mortgages, reverse mortgages, and loan refinancing. You can get a quote quickly with no impact on your credit score.
To find out what you’re eligible for, just complete a brief questionnaire. You’ll share details about your home, its value, your income, how you plan to use the funds, and your estimated credit score. The best part is you won’t need to provide your Social Security number for this.
How Do You Qualify For a Home Equity Loan?
To apply for a home equity loan, you need to meet specific qualifications. Typically, this means having a solid credit score and being up-to-date with your mortgage payments.
Lenders each have their own criteria for home equity loans, which can differ significantly. While some lenders prefer borrowers with higher credit scores, others are open to working with individuals who have lower scores.
Lenders take into account various factors like your job history, income, and debt-to-income ratio (DTI). Ideally, your DTI should be 45% or lower, meaning you’re using nearly half of your gross income to pay off debts monthly.
Here is an example of how to calculate your DTI based on your income and debt:
| Monthly Debt | Monthly Income | ||
|---|---|---|---|
| Rent | $1,000 | Salary | $3,300 |
| Car Payment | $175 | Side Hustle | $200 |
| Credit Card | $75 | Misc. Income | $150 |
| Total Monthly Debt | $1,250 | Total Monthly Income | $3,650 |
| DTI: $1,250 / $3,650 = 0.34 (or 34%) | |||
It’s vital to ensure that a home equity loan fits your financial needs. You should feel confident about handling the repayments comfortably.
To qualify, you must have some equity in your home. Lenders generally require that you possess at least 15% to 20% equity before applying.
This means if your home’s appraised value is $300,000 and you owe a mortgage balance of $225,000, you have $75,000 in equity ($300,000 – $225,000). This works out to 25% equity in your home ($75,000 / $300,000).
If you initially don’t meet the home equity requirements, you might need to reduce the principal balance on your home loan before trying again. Meeting these qualifications can help you secure the financing needed for home improvements or essential expenses.
What Minimum Credit Score Do I Need to Get a Home Equity Loan?
You may still qualify for a home equity loan with a credit score below 600, though lenders typically require a minimum credit score of around 680. Services like eMortgage may be able to help.
Most lenders allow you to prequalify online to quickly determine whether you’re preapproved. The lender may also assign you a loan specialist who can discuss your options and provide advice.
If you’re struggling with poor credit, improving your score can boost your chances of approval. Start by downloading your full credit report. You can get a free copy from the three major credit bureaus (Equifax, Experian, and TransUnion) once a week at annualcreditreport.com.
Review your credit report for any inaccuracies that may be negatively affecting your score.
Some immediate ways to improve your credit include lowering your credit utilization by paying down credit card debt and other loans. You can also limit hard inquiries and keep older credit card accounts open to increase your average credit age. Aim to keep your credit card balance at or below 30% of your credit limit.
Consider monitoring your credit score online using free services like Credit Karma. Credit Karma tracks VantageScores, not FICO scores, but it will still give you a good idea of where your credit stands.
If your credit score has dropped because of recent financial difficulties like bankruptcy or foreclosure, lenders might be hesitant to approve your loan. Likewise, if your income is unstable or insufficient to manage loan payments, it could cause concern.
What If You Can’t Afford to Pay Back Your Home Equity Loan?
If you can’t pay back your home equity loan, the lender can foreclose on your property, and you will lose your home. Home equity loans are collateral loans that use your property to secure the loan.
It’s essential to be sure you can repay the loan and adhere to your agreement’s terms. Life can throw unexpected challenges your way, so if you’re having trouble making a payment, reach out to your lender as soon as possible.
If you fail to pay back a home equity loan, the consequence could be losing your home.
The lender may offer deferment options, a partial payment, or another type of relief to any borrower who qualifies for the assistance. But you won’t know unless you ask.
Missing a payment by 30 or more days will also negatively impact your credit history, but the biggest risk is losing your home. If you feel this risk is too great, you may want to consider exploring your options for an unsecured loan, such as a personal loan.
How Does a Home Equity Loan Differ From a HELOC?
A home equity loan is a lump-sum loan that uses the equity in your home as collateral. This means you will need to make regular payments on the entire principal balance within a set period (usually five to 30 years).
A HELOC, or home equity line of credit, operates a bit differently. Think of it like a credit card: you get a credit line secured by your home and can draw from it as needed. You’ll only pay interest on the amount you borrow, offering much more flexibility in repayment, typically over 10 to 20 years.
This chart lists a few of the differences between home equity loans and HELOCs (and one big similarity):
| Home Equity Loan | Home Equity Line of Credit |
|---|---|
| Fixed interest rate | Variable interest rate |
| Lump sum funding | Withdraw funds as needed |
| Secured by your home | Secured by your home |
| Monthly payments stay the same | Monthly payments fluctuate based on the balance you owe |
The major difference between the two is that with a home equity loan, you get one lump sum payment upfront, while with a HELOC, you can draw from the credit line when needed. Both loans have their advantages and disadvantages and should be considered carefully depending on your individual needs.
Home equity loans are typically best for those who need a large amount of money right away, while HELOCs are better suited for those who have ongoing financing needs. It’s also essential to compare rates and repayment terms from different lenders to get the best deal.
Ultimately, finding the right loan for you hinges on your financial needs and goals. Make sure to explore all your options thoroughly before you decide.
Shop Around For the Best Rates
Home equity loans are different from personal loans in that you must use your home as collateral to secure the loan. While a home equity loan can help you cover immediate expenses and home repairs, you will have limited options if you have a credit score of between 500 and 600.
This list of home equity loans for borrowers with a 500 to 600 credit score is a great place to start. Some of these lenders may have a lending partner that works with borrowers with bad credit. Before applying, be sure to shop around and compare rates online, know your FICO credit score, and estimate your home’s value to ensure you have enough equity to qualify.
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