Can I Get a Home Equity Loan If My Name Is Not on the Deed?

A home equity loan (HEL) provides a lump sum of money, typically with a fixed interest rate and set repayment schedule. A home equity line of credit (HELOC) functions as a revolving line of credit, similar to a credit card, allowing borrowers to draw funds as needed up to a predetermined limit, often with a variable interest rate. Direct ownership of the property, evidenced by being named on the deed, is a fundamental requirement for both types of financing. Without your name on the deed, securing a home equity loan or HELOC independently is not possible.

The Role of Property Ownership in Home Equity Loans

Being listed on the property deed is a foundational requirement for obtaining a home equity loan or HELOC because the home serves as collateral for the loan. Lenders need legal assurance that they can claim the property in the event of default. The deed acts as the official legal document proving ownership, establishing who has the right to encumber the property with debt.

When a home equity loan or HELOC is issued, the lender places a lien on the property. This lien is a legal claim against the asset, allowing the lender to repossess or foreclose on the home if the borrower fails to meet the repayment terms. This secured lending structure minimizes risk for the lender, which is why they offer more favorable interest rates compared to unsecured loans. If multiple individuals are on the deed, most lenders will require all owners to sign the loan documents. This collective consent protects all parties involved and ensures the loan is enforceable against the entire property, maintaining a clear title.

Situations Where You Are Not on the Deed and Seeking Funds

Many individuals contribute financially to a household but are not listed as legal owners on the property deed. Common examples include a spouse whose name was never added to the deed, an adult child living with and financially supporting parents, or individuals in shared living arrangements where only one person holds the title. In these scenarios, the person not on the deed cannot independently obtain a home equity loan or HELOC. Lenders require the applicant to be a legal owner to establish a valid lien, preventing those not on the deed from offering the property as security. This limitation applies even with a strong credit history or significant income.

Strategies for Accessing Home Equity When Not the Sole Owner

While direct application for a home equity loan or HELOC is not possible without being on the deed, alternative strategies exist to access the home’s equity, primarily through the cooperation of the legal owner. The most straightforward approach involves the legal homeowner applying for the home equity loan or HELOC themselves. This allows them to leverage the property’s equity, and the funds can then be used as agreed upon by all parties.

Another option the legal owner can pursue is a cash-out refinance. This involves replacing the existing mortgage with a new, larger one, with the difference provided as a lump sum of cash. This strategy can be beneficial if current interest rates are lower than the existing mortgage rate, potentially offering more favorable terms for the new, larger loan. Lenders typically require at least 20% equity remaining in the home after the refinance.

For the individual not on the deed, if accessing the home’s equity via the legal owner is not feasible, exploring unsecured personal loans remains an option. These loans do not require collateral, meaning the property deed is irrelevant. However, personal loans typically carry higher interest rates than secured home equity products due to the increased risk for the lender.

Adding Your Name to the Property Deed

Adding your name to a property deed is a significant legal step that can enable future eligibility for home equity financing. This process typically involves preparing and recording a new deed, such as a quitclaim deed or a warranty deed, with the county recorder’s office. A quitclaim deed, common for transfers between family members, conveys whatever interest the grantor has in the property without making guarantees about the title.

Before recording, the new deed must be signed by the current owner(s) and notarized. Many counties also require a Preliminary Change of Ownership Report (PCOR) or a similar declaration of value, along with payment of recording fees, which can range from approximately $75 to $450 depending on the location and specific fees. The new deed officially records the change in ownership, making the added individual a legal co-owner.

Adding a name to a deed has several tax implications. Transferring a portion of property ownership without consideration is generally considered a gift, which may trigger gift tax reporting requirements for the donor if the gifted value exceeds the annual exclusion limit ($19,000 per recipient in 2025). While a gift tax return (Form 709) might be necessary, actual gift tax is rarely owed due to the high lifetime gift and estate tax exemption ($13.99 million in 2025).

Adding a name to a deed can also impact the capital gains tax basis when the property is eventually sold. If a portion of the property is gifted, the recipient typically receives the donor’s original cost basis for that portion, rather than a “stepped-up” basis to fair market value at the time of the gift. This can result in a larger capital gains tax liability for the new owner upon sale.