How to Get Money Out of Your House Without Selling

Homeowners often find themselves with substantial wealth accumulated in their homes, known as home equity. This equity represents the portion of the home’s value that is owned outright, calculated by subtracting the outstanding mortgage balance from the home’s current market value. Accessing this equity can provide financial flexibility without requiring the sale of the property. Homeowners might leverage their equity for various purposes, such as funding significant expenses like home improvements, consolidating existing debts, or covering unexpected costs.

Home Equity Loans

A home equity loan functions as a second mortgage, allowing homeowners to borrow a lump sum of money against their accumulated home equity. This loan typically features a fixed interest rate and a fixed repayment term, providing predictable monthly payments. It operates independently of the primary mortgage, utilizing the home as collateral.

This financial product suits those who need a specific amount for a one-time, large expense, like a major renovation or debt payoff. Funds are disbursed in a single payment at closing, and repayment begins immediately with principal and interest payments. The fixed interest rate ensures consistent monthly payments, which aids budgeting.

To qualify, lenders assess credit score, debt-to-income (DTI) ratio, and available equity. A credit score of at least 620 is often required, with higher scores securing more favorable terms. DTI ratios are generally preferred below 43% to 50%.

Available equity determines the loan amount. Lenders commonly require homeowners to maintain at least 15% to 20% equity, meaning the combined loan-to-value (CLTV) ratio should not exceed 80% to 85%. Required documentation typically includes:
Recent pay stubs
W-2 forms for the past two years
Federal tax returns for the last two years (especially for self-employed)
Current bank statements
Asset statements
Social Security number
Proof of homeowners insurance
A recent property appraisal

Home Equity Lines of Credit

A Home Equity Line of Credit (HELOC) provides a revolving line of credit, allowing homeowners to borrow against their home equity as needed, up to an approved limit. Unlike a home equity loan, a HELOC typically features a variable interest rate, meaning payments can fluctuate. This product has two phases: a draw period and a repayment period.

During the draw period, often 10 years, borrowers can withdraw funds multiple times, similar to a credit card, and usually only make interest payments on the amount borrowed. Once the draw period concludes, the loan transitions into a repayment period, typically 10 to 20 years, requiring both principal and interest payments. This flexibility makes a HELOC suitable for ongoing or unpredictable costs, such as a series of home improvement projects or fluctuating educational expenses.

Eligibility criteria for a HELOC are similar to home equity loans. A credit score of at least 620 is often required, with higher scores improving approval chances and securing better rates. Lenders generally prefer a DTI ratio below 43% to 50%.

Available equity is a primary factor, with most lenders requiring homeowners to maintain at least 15% to 20% equity. This means the combined loan-to-value (CLTV) ratio should not exceed 80% to 85%. Application documents commonly requested include:
Personal identification
Current employment information
Recent pay stubs
W-2 forms from the past two years
Tax returns
Bank statements
Asset statements
Current mortgage statements
Property tax records
Proof of homeowners insurance

Cash-Out Refinancing

Cash-out refinancing replaces an existing mortgage with a new, larger mortgage, allowing the homeowner to receive the difference in cash. This process pays off the original mortgage, establishing a new loan with new terms. The remaining funds are then disbursed directly to the homeowner.

This option can be advantageous for consolidating debts into a single, potentially lower-interest mortgage payment, or financing substantial expenses. A cash-out refinance typically resets the loan term, often to 30 years, which can result in lower monthly payments but may increase total interest paid. The interest rate applies to the entire new loan amount, not just the cash received.

Qualifying often involves stricter criteria. A credit score of at least 620 is typically required for conventional loans, though some FHA and VA programs may allow scores as low as 550 to 580. Higher credit scores, generally 740 or above, can result in more favorable interest rates. DTI ratios are also a consideration, with most lenders preferring them at or below 43% to 50%.

Loan-to-value (LTV) ratio limits are typically more conservative, often capped at 80% of the home’s value, meaning homeowners must retain at least 20% equity. Necessary documentation includes:
Current mortgage statements
Detailed income verification (recent pay stubs, W-2s, tax returns)
Comprehensive employment history
Credit history
Bank statements
A property appraisal
Proof of homeowners insurance

Reverse Mortgages

A reverse mortgage is a specialized loan for homeowners, typically aged 62 or older, enabling them to convert a portion of their home equity into cash. Unlike traditional mortgages, borrowers are not required to make monthly payments. The loan balance, including accrued interest and fees, becomes due when the last borrower permanently leaves the home (e.g., by selling, passing away, or moving out for 12 months or more).

This tool allows older homeowners to supplement income, cover living expenses, or pay for healthcare, while retaining home ownership. The loan amount grows as interest accrues, reducing remaining equity. Mandatory counseling with a U.S. Department of Housing and Urban Development (HUD)-approved agency is required before obtaining a reverse mortgage, ensuring borrowers understand the terms.

The primary eligibility requirement is age, with at least one borrower typically needing to be 62 years or older for a Home Equity Conversion Mortgage (HECM), the most common type. Some proprietary programs may offer options for individuals as young as 55. The property must be the borrower’s primary residence and meet FHA minimum property standards.

Borrowers have several options for receiving funds:
A lump sum
A line of credit
Fixed monthly payments
A combination of these methods

Documentation includes:
Age verification (government-issued identification)
Recent property tax records
Proof of homeowners insurance
A property appraisal to determine home value