HEI vs HELOC: Which Home Equity Solution Is Right for You?

If you own a home with substantial equity, you have more options than ever to unlock that value. Two increasingly popular methods—Home Equity Investments (HEIs) and Home Equity Lines of Credit (HELOCs)—offer compelling ways to access cash without selling your property. But they work very differently, come with different costs, and suit different financial situations.

In this comprehensive guide, I’ll break down how HEIs and HELOCs compare, highlight when you should choose one over the other, introduce the top providers in each category, and walk you through a practical decision framework to help you choose the right tool for your situation.

HEI vs HELOC at a Glance

Before diving deeper, here’s a side-by-side snapshot of how these two strategies compare across the most important dimensions.

What Is a Home Equity Investment (HEI)?

A Home Equity Investment is a relatively new financial product that lets you sell a percentage of your home’s future appreciation in exchange for cash today. Think of it as part loan, part investment—but it’s technically neither.

How HEIs Work

Here’s the mechanics in plain English: You have a home worth $500,000 with $300,000 in equity. An HEI company appraises your property, offers you, say, $50,000 in exchange for 15% of your home’s appreciation over the next 10 years. You receive $50,000 upfront (after closing costs). When you sell your home five years later for $575,000, the HEI company gets 15% of the $75,000 gain ($11,250), and you keep the rest.

The key differentiator: You have zero monthly payments. The company only makes money if your home appreciates. If your home depreciates or stays flat, they lose money—you lose nothing.

HEI Terms & Structure

Most HEI agreements specify an “appreciation share” (the percentage the company takes), an “investment amount” (cash you receive), and a “term length” (typically 7–10 years). Some HEI companies offer options to buy back their stake before the end of the term, giving you flexibility.

Closing costs typically run 0.5–2.5% of the investment amount, so on a $50,000 HEI, you might pay $250–$1,250 to close.

Who Should Consider an HEI?

HEIs appeal to homeowners who:

• Want cash without monthly debt payments
• Have uncertain income (freelancers, commission-based workers)
• Are concerned about their ability to repay a traditional loan
• Expect their home to appreciate significantly
• Don’t want to affect their credit score

Last verified: March 2026

What Is a HELOC?

A Home Equity Line of Credit (HELOC) is a revolving credit product, much like a credit card, secured by your home equity. Instead of receiving a lump sum, you get access to a credit line and borrow only what you need, when you need it.

How HELOCs Work

Let’s say you’re approved for a $100,000 HELOC at Prime + 1% (currently ~8.5% as of March 2026). You don’t have to use it immediately. You draw what you need—$20,000 for kitchen renovations, $15,000 six months later for a vehicle repair. Each draw costs you interest on the outstanding balance, typically on a variable rate that adjusts with the market.

HELOCs have two phases: the draw period (usually 10 years) when you can borrow and repay flexibly, and the repayment period (usually 15–20 years) when you can no longer draw but must repay the balance in fixed installments.

HELOC Costs & Terms

HELOC interest rates are variable, tied to the Prime Rate. Lenders typically offer Prime + 0.5% to Prime + 2%, so your rate fluctuates with economic conditions. As of March 2026, Prime sits around 7.5%, making HELOCs cost 8–9.5% for well-qualified borrowers.

Closing costs typically range from 2–4% of the credit line (so $2,000–$4,000 on a $100,000 HELOC). Many lenders waive these for strong borrowers.

Who Should Consider a HELOC?

HELOCs make sense for homeowners who:

• Need flexible access to funds over time
• Plan to repay within a reasonable timeframe
• Want lower interest rates than credit cards or personal loans
• Have stable income and good credit
• Don’t mind taking on secured debt

Last verified: March 2026

Head-to-Head Comparison

Cost Analysis: Which Actually Costs Less?

This is where the choice gets tricky. Let me walk through a real example.

Scenario: You need $50,000. Your home is worth $600,000 with $250,000 equity. You expect 3% annual appreciation.

HEI Option: Borrow $50,000, give 15% appreciation share, 10-year term. Closing cost: $500.

• Cash received: $49,500 (after closing)
• Home value at end: ~$672,750 (3% annual growth)
• Investor gets 15% of $72,750 appreciation: $10,912
• Your total cost: $10,912 + $500 = $11,412

HELOC Option: Borrow $50,000 at 8.5%, repay over 10 years. Closing cost: $2,000.

• Cash received: $48,000 (after closing)
• Monthly payment: ~$580 (approximate)
• Total interest over 10 years: ~$19,600
• Your total cost: $19,600 + $2,000 = $21,600

In this scenario, the HEI costs roughly half as much. However, if your home appreciates faster (5%+ annually), the HEI becomes more expensive. If it appreciates slower (1% or less), HEI becomes even cheaper. If it declines, you pay nothing with an HEI but still owe the full HELOC balance.

Flexibility & Access

HELOCs win on flexibility. You can draw funds as needed, repay, and redraw during the draw period. This makes HELOCs ideal for ongoing projects or uncertain timelines. HEIs give you a one-time lump sum, so if you need more cash later, you’d have to apply for another HEI or find alternative financing.

Repayment Obligations

HEI is the clear winner for those seeking to minimize monthly obligations. You have zero payments until you sell, refinance, or the term ends. HELOCs require you to make at least interest-only payments during the draw period, which many borrowers find burdensome.

Impact on Home Sale or Refinance

With an HEI, the provider takes their appreciation share at close of sale or refinance. This reduces your net proceeds. With a HELOC, you simply pay off the remaining balance, which is straightforward. If you’re likely to refinance soon, the HELOC’s simplicity is appealing.

Credit Score Impact

HEIs don’t appear on your credit report as debt, so they have minimal impact on your credit score. HELOCs trigger a hard inquiry (minor dip) and increase your debt-to-income ratio, which can lower your score by 10–50 points initially, though scores typically rebound within a few months.

When to Choose an HEI Over a HELOC

HEI makes more sense in these specific situations:

You Want Zero Monthly Debt Payments

If you’re concerned about monthly cash flow or your income is unpredictable (freelancer, commission-based, or business owner with variable earnings), HEI removes the obligation entirely. You receive $50,000 and have no monthly payments—period.

You Have Fair to Good Credit, Not Excellent

If your credit score is 680–740, you’ll face higher HELOC rates (Prime + 2–3%, so 9.5–10.5%) or outright rejection. HEI providers are generally more flexible on credit, though they’ll still verify income and run underwriting.

Your Home Is Appreciating Steadily

If you’re in a strong real estate market and expect 3–4% annual appreciation, the math favors HEI. You pay out of future gains rather than today’s money.

You Want to Avoid Debt on Your Balance Sheet

If you’re managing a portfolio, applying for business financing, or just prefer not to show debt, HEI keeps your balance sheet clean. It won’t count against you for debt-to-income calculations.

You Plan to Stay in Your Home Long-Term

If you’re planning to stay 10+ years and expect significant appreciation, HEI becomes more favorable because the appreciation period is longer.

When to Choose a HELOC Over an HEI

HELOC is the smarter choice in these situations:

You Need Flexible, Ongoing Access to Funds

If you’re funding a multi-year renovation, launching a business, or handling ongoing cash needs, HELOC’s draw flexibility shines. Draw what you need, repay when you can, redraw later.

You Have Excellent Credit and Stable Income

If you’re a W-2 employee with a 750+ credit score and stable income, you’ll qualify for Prime + 0.5–1% rates (~8–8.5%), making HELOC one of the cheapest ways to borrow.

You Plan to Repay Within 5–10 Years

If you have a clear plan to repay (bonus, inheritance, business sale expected), HELOC’s cost profile is more predictable and typically lower than HEI.

You Expect Modest Home Appreciation (<3%)

In slower real estate markets or if you’re conservative about future appreciation, HELOC’s fixed interest cost beats HEI’s variable appreciation share.

You Might Refinance Your Home Soon

If you’re considering a cash-out refinance or rate-and-term refinance in the next 5 years, HELOC simplifies the process. You just pay off the balance; with HEI, you have to settle the appreciation share, which complicates refinancing.

Best HEI Companies (Detailed Comparison)

The HEI market is growing but still limited. Here are the four largest and most established providers.

1. Point

Point is the largest and most established HEI provider, founded in 2016 and having issued hundreds of millions in home equity investments. They offer investment amounts from $25,000 to $500,000+, typically with appreciation shares between 12–25% depending on risk assessment.

Point serves homeowners in most states and offers fast underwriting (2–4 weeks). They provide a “buyout option” allowing you to repurchase their stake before the term ends. Transparent fee structures and strong customer reviews make them a solid default choice.

2. Hometap

Hometap focuses on higher home values and stronger homeowner profiles. They offer investments from $25,000 to $750,000 with appreciation shares typically 10–20%. Hometap’s underwriting includes detailed analysis of neighborhood trends and local market outlook, which some appreciate for personalized terms.

Hometap also provides flexibility with term lengths (7, 10, or 15 years) and allows buyouts at fair market value. Customer service is frequently praised, and they serve most major U.S. markets.

3. Unlock

Unlock takes a tech-forward approach with streamlined online underwriting and fast closing (some customers close in 10–14 days). They offer investments from $10,000 to $300,000 with appreciation shares ranging from 12–24%.

Unlock emphasizes transparency with their “Unlock Dashboard” showing real-time appreciation tracking. They serve customers in most states and are known for competitive terms and responsive support.

4. Unison

Unison pioneered the HEI model and remains a major player. They offer investments from $15,000 to $500,000+ with appreciation shares of 12–24%. Unison’s differentiator is their “shared appreciation mortgage” option, which combines HEI principles with traditional mortgage features for unique scenarios.

Unison serves most states, offers flexible terms (up to 20 years), and provides detailed market analysis to support their appreciation projections. Closing typically takes 3–4 weeks.

Best HELOC Lenders (Detailed Comparison)

The HELOC market is more fragmented, with offerings from traditional banks, credit unions, and fintech lenders. Here are the standout providers as of March 2026.

1. Figure (Fintech Leader)

Figure is a blockchain-based lending platform offering HELOCs with competitive rates and fast underwriting. They offer credit lines from $25,000 to $500,000+, with rates typically Prime + 0.75–1.5% (currently 8.25–9% range).

Figure’s main advantage is speed—many closings happen in under two weeks. Closing costs are transparent and often waived for qualified applicants. Require a minimum 680 credit score and 15% equity.

2. Spring EQ (Credit Union Alternative)

Spring EQ aggregates HELOC offerings from credit unions nationwide, allowing you to shop rates from multiple institutions. Credit union rates are often 0.25–0.5% better than banks, making Spring EQ a smart starting point.

Typical rates through Spring EQ: Prime + 1–2%, with credit lines from $10,000 to $250,000. The platform handles the application, but you’ll work with the selected credit union for closing. Turn-around: 2–3 weeks.

3. Third Federal Savings Bank (Regional Bank)

Third Federal is a brick-and-mortar bank (headquartered in Ohio) with branches across the Midwest and Southeast. They offer competitive HELOC rates (~Prime + 1.25%) and flexible terms. Credit lines range from $10,000 to $500,000.

Third Federal’s strength is relationship banking—you work with a loan officer and can negotiate terms. They require 20% equity and a minimum 620 credit score. Closing typically takes 2–3 weeks.

4. Bethpage Federal Credit Union (Member-Owned)

Bethpage FCU is one of the largest credit unions in the U.S. with membership open to most New York residents and select occupational groups. HELOC rates are Prime + 0.75–1.5%, among the industry’s best for qualified borrowers.

Credit lines up to $500,000, waived closing costs for members with strong credit, and personalized service from loan officers. Closing: 2–4 weeks. You’ll need to establish membership (easy if you qualify), but it’s worth it for the rate savings.

How to Decide: Step-by-Step Decision Framework

Ready to choose? Work through this framework in order:

Step 1: Assess Your Cash Flow Needs

Question: Do you need ongoing access to funds, or a one-time lump sum?

• Ongoing access: → HELOC (flexibility is critical)
• One-time lump sum: → Proceed to Step 2

Step 2: Evaluate Your Monthly Cash Flow

Question: Can you comfortably handle monthly interest payments?

• Yes, solid income: → HELOC works well
• No, uncertain income: → HEI preferred (zero monthly payments)

Step 3: Check Your Credit Score

Question: What’s your credit score?

• 750+: HELOC rates will be excellent (Prime + 0.75%); HELOC wins on cost.
• 700–749: Competitive HELOC rates available; both options viable.
• 650–699: HELOC rates higher (Prime + 1.75–2%); HEI may be cheaper.
• <650: HELOC may be difficult to qualify for; HEI is more accessible.

Step 4: Project Home Appreciation

Question: What’s your realistic home appreciation outlook?

• <2% annually: HELOC cheaper (you pay less than HEI’s appreciation share)
• 2–4% annually: HEI and HELOC roughly equal; consider other factors
• >4% annually: HEI attractive (pay less, let investor bear risk)

Research your local market’s 10-year appreciation trend. If your area has averaged 3.5% and you expect it to continue, factor that in.

Step 5: Consider Your Home Sale Timeline

Question: When do you expect to move or refinance?

• <5 years: HELOC preferred (simpler payout at sale)
• 5–10 years: Both viable; HEI works if appreciation is strong
• 10+ years: HEI attractive (you benefit from long appreciation period)

Step 6: Verify Availability & Costs

Action: Get quotes from at least two providers in your chosen category.

• HEI quotes: Point, Hometap, Unlock, Unison (compare appreciation shares)
• HELOC quotes: Figure, Spring EQ, local banks/credit unions (compare rates + closing costs)

Run a 10-year cost projection with your specific numbers. HEI vs. HELOC winner often depends on local details.

Step 7: Make Your Decision

At this point, you should have enough data to decide. Consider:

• Which product aligns with your cash flow comfort zone?
• Which has lower projected total cost based on your specific situation?
• Which feels less risky given your timeline and confidence in home appreciation?

When in doubt, HEI wins for risk-averse homeowners with uncertain cash flow. HELOC wins for those with stable income and excellent credit.

Frequently Asked Questions

Bottom Line: Which Should You Choose?

Here’s my recommendation based on common scenarios:

• Uncertain cash flow, want simplicity: Choose HEI. Zero monthly payments and non-recourse protection let you sleep at night.
• Excellent credit, stable income, need flexibility: Choose HELOC. Your low rates and flexible access will save money.
• Fair credit, one-time cash need: Choose HEI. You’ll qualify more easily and avoid monthly payment stress.
• Planning to repay within 5 years: Choose HELOC. Simpler payout and lower cost if you can repay quickly.
• Home in strong appreciation market: Consider HEI. You shift upside risk to the investor while keeping downside protection.

The right choice depends on your unique financial situation, risk tolerance, and timeline. Both products are legitimate ways to unlock home equity—use the framework above and get real quotes to make an informed decision.

For more information on home ownership strategies, visit our Home Hub, where we cover mortgages, refinancing, and other ways to optimize your real estate investments.