Can You Get A Home Equity Loan with Bad Credit?

Last updated October 17, 2025

Can you get a home equity loan with bad credit? Before we answer that question, it’s important to define what “bad credit” is — so we’re on the same page as we explore how you can access your equity with your credit score. And before we do that, we also need to step back and define “credit” in general so that we can understand why and how it factors into your ability to access different financial products.

What Is Credit and Why Does It Matter?

You can think of credit as your financial reputation in the eyes of lenders. It’s represented by a three-digit credit score, which reflects your borrowing history and how responsibly you’ve managed debt in the past. Your score is based on things like:

• How much debt you currently carry
• Your payment history on credit cards, loans, and bills
• The length of your credit history
• Major financial issues, like bankruptcies or foreclosures

Credit score ranges:

• Poor credit (or bad credit): 500-600
• Fair credit: 601-660
• Good credit: 661-780
• Excellent credit: 781-850

It’s worth mentioning that even these ranges — and how they’re defined — can vary slightly from one source to another.

Lenders use this score to decide whether to approve you for a loan, how much you can borrow, and what interest rate you’ll pay.

Now that we’ve defined bad credit, let’s get back to the question at hand…

Can You Get a Home Equity Loan With Bad Credit?

The short answer is no, probably not. Most lenders require a minimum credit score of 620 for a home equity loan or home equity line of credit (HELOC). By definition, if “bad credit” means a score below 600, you likely won’t qualify for a traditional home equity loan with bad credit.

That said, having bad or fair credit doesn’t mean your equity is completely off-limits. There are other ways to tap into your home’s value — even if you don’t meet the credit requirements for a loan. Let’s walk through your options.

(Home equity investment requirements will vary by provider; the above data is based on Hometap’s requirements.)

Common Ways to Access Home Equity

1. Cash-Out Refinance

A cash-out refinance replaces your current mortgage with a larger one and gives you the difference in cash. To qualify, lenders generally require:

• At least 20% equity in your home
• A credit score of 620 or higher

This option may make sense if you can secure a lower interest rate than your existing mortgage’s, but it can extend your repayment timeline, often by 15–30 years.

2. Home Equity Loan or Home Equity Line of Credit (HELOC)

Both a home equity loan and a HELOC use your home as collateral:

• Home equity loan: Lump-sum payout with a fixed interest rate
• HELOC: Flexible borrowing over time with a variable interest rate

Typical credit requirements:

• Most lenders require at least a 620 credit score
• Stronger credit (good or excellent) may qualify you for larger amounts and lower rates

If you’re in the fair credit range (601-660), approval may be possible, but more difficult. Expect higher interest rates or stricter borrowing limits.

3. Home Equity Investment

A home equity investment, or home equity agreement, allows you to access cash from your home’s value without taking on monthly payments. At or before the end of the term, you share a portion of your home’s future value by settling the investment with a loan, refinance, buyout with savings, or sale of your home.

At Hometap, for example:

• Credit requirements are more flexible than for some loans or HELOCs.
• Applicants are evaluated on multiple factors beyond their credit score.
• Homeowners with fair or even poor (550+) credit may still qualify.
• However, many companies — including Hometap — require that you have a minimum of 25% equity in your home.

This makes an HEI an attractive option if you don’t meet the minimum credit score for a loan.

4. Selling Your Home

Selling may feel like a last resort, but it does give you full access to your equity — regardless of your credit score. However, you’ll need to factor in real estate commissions, moving costs, and the affordability of your next home.

Can You Improve Your Chances?

If your credit is holding you back, you may want to work on boosting your score before applying for a home equity loan or refinance. Even small improvements can make a big difference in your approval odds and interest rate.

Check out our guide on ways to build your credit.

Frequently-Asked Questions About Getting a Home Equity Loan With Bad Credit

Can I get a home equity loan with a 580 credit score?It’s unlikely, since most lenders set 620 as the minimum. With a 580 score, you may need to explore alternatives.

Is fair credit good enough for a HELOC?Sometimes. If your score is in the 580–669 range, some lenders may approve you, but expect higher interest rates and stricter requirements.

What’s the difference between an HEI and a loan?A loan requires monthly payments. A home equity investment gives you cash today in exchange for a share of your home’s future value without monthly payments. Instead, you pay an agreed-upon percentage when you decide to settle the investment.

How much equity do I need to have in my home to qualify for most options?

• Home equity loan or HELOC: usually at least 15–20% equity
• Cash-out refinance: typically at least 20% equity
• HEI: requirements vary, but can be more flexible than loans

Should I wait to improve my credit before accessing equity?It depends on your situation. If you don’t urgently need funds, improving your credit may open the door to better loan options. If you need access now, an HEI may be a better fit.

Bottom line: Getting a home equity loan with bad credit is very difficult, but you still have options. Explore cash-out refinances, HEIs, or even selling your home if necessary — and don’t forget that improving your credit can not only expand your choices in the future, but help them come at a lower cost.

As with any major financing decision, consult with a trusted financial professional to determine your best course of action, and get moving toward your goals.

Ready to learn more about home equity investments? See if you prequalify for a Hometap investment in less than two minutes.