Using home equity to pay off credit card debt can drop what you pay every month. It also swaps debt nobody can take your house over for debt that can. That trade is the whole decision, so it deserves a slow look.
You have two ways to do it. A HELOC from Figure comes with a lower rate than a card and a new monthly payment, and you want a credit score of 600 or better. A home equity investment from Point has no monthly payment and works with lower credit, but it costs you a share of your home’s value instead.
Quick answer
You have a credit score of 600 or better and room in the budget for a monthly payment.
You can’t take on another payment, or your credit is under what a HELOC wants.
Each button checks your state first. If the company you pick doesn’t serve it, you’ll land on another lender that does.
Home equity loan to pay off credit card debt: how it works
Your equity is what your home is worth minus what you still owe on the mortgage. Borrow against it, use the cash to pay the cards down to zero, and the card balances become one new payment at a lower rate.
Figure’s HELOC is the simple version. It does a soft-pull rate check, it can fund in as few as 5 days, and you draw the full amount at closing with a fixed rate on that draw. Credit starts at 600 in most states and 640 in a few. The origination fee is up to 4.99%, so put that number in your math before you sign. Our Figure HELOC review goes deeper, and the best HELOC lenders list shows who else to price.
What a lower rate is worth, in dollars
Say you carry $20,000 across your cards. These are example rates, not quotes. Your card rate and your HELOC rate will be different.
| On $20,000 | Cards at an example 22% | HELOC at an example 9% |
|---|---|---|
| Interest in one year | $4,400 | $1,800 |
| Interest per month | $366.67 | $150.00 |
| Difference in one year | $2,600 less |
Interest only, on a $20,000 balance held flat for one year. Interest = balance times rate. $20,000 x 22% = $4,400. $20,000 x 9% = $1,800.
Now the fee. Up to 4.99% origination on $20,000 is $998, which takes a bite out of that $2,600 in year one. You still come out $1,602 ahead on those numbers, but only if the cards stay at zero and you can make the new payment every month.
A balance transfer card is the third option. It doesn’t put your house on the line, so check it first if your credit still qualifies. Read the transfer fee and what the rate jumps to when the intro period ends.
Use home equity to pay off debt: the risks
Cards are unsecured. Miss payments and your credit score takes a hit and collectors call, but nobody is coming for the house. Move that balance onto your home and a missed payment can put the home at risk. That is the real cost of the lower rate.
The one that gets people
You pay the cards to zero, feel great, then the cards creep back up. Now you have the home equity debt and new card debt. If you don’t trust the plan to hold, build the budget first and borrow second.
Two more to weigh. The lower rate only helps if the new payment fits your month with room to spare. And upfront fees come out before you see the money, so ask what you’d actually receive.
HELOC vs home equity investment, side by side
| Feature | HELOC (Figure) | Home equity investment (Point) |
|---|---|---|
| Minimum credit score | 600 in most states, 640 in a few | From 500 (scores under 600 capped at $500,000) |
| Monthly payment | Yes | None |
| What you pay | Interest on what you borrow | A share of your home’s future appreciation |
| Upfront cost | Origination up to 4.99% | Fee up to 4.9% ($2,000 minimum) |
| How you get the money | Full amount drawn at closing, fixed rate on the draw | $30,000 to $600,000, 30-year term |
| Settled | Through your monthly payments | When you sell, refinance, or at the end of the term |
| Your home | Secures the debt | Point holds a stake in it |
| See your number | Check My Figure Rate | Get My Point Offer |
Point can fund up to about 71% of your home’s value combined with your mortgage for scores of 550 and up (67.5% for 500 to 549). It isn’t available for manufactured homes, co-ops or LLC-owned homes.
The catch with the investment is that no payment doesn’t mean no cost. Point takes a share of future appreciation, so the more your home gains, the more that share is worth when you settle. Our Point review walks through it, and getting equity out without a loan covers the whole category.
Which one fits you
Bottom line: take the HELOC if your credit is 600 or better and a monthly payment fits comfortably. Take the investment if the payment is the problem or your credit is lower. If the cards are small enough to clear in a year by cutting spending, skip both.
A HELOC fits if you can afford the payment and you’re sure the cards won’t fill back up.
What works
Credit from 600 in most states
Soft-pull rate check
Funds in as few as 5 days
Fixed rate on the draw
What to know first
New monthly payment
Origination up to 4.99%
Full amount drawn at closing
Your home secures it
Point fits if the payment is what’s squeezing you, or if your credit isn’t where a HELOC wants it.
What works
No monthly payment
Credit from 500
$30,000 to $600,000
No income requirements
What to know first
Fee up to 4.9%, $2,000 minimum
Cost is a share of future appreciation
Not for manufactured homes, co-ops or LLC-owned homes
A stake in your home
Point serves 30 states plus D.C., and you can see a Point offer before you decide anything.
Other home equity investment options
If Point doesn’t reach your state, check Splitero. It funds $50,000 to $600,000, up to 25% of your home’s value, with credit from 500, no income documents and a term of up to 30 years. You need at least 25% equity and a home worth $200,000 to $5,000,000. Origination is 4.99%, and Splitero serves 17 states.
Hometap is another home equity investment. Among other qualifying criteria, it could fund $15,000 to $600,000 if your home is located in an eligible state, with a 10-year term, credit from 575 and at least 25% equity. You settle the investment when you sell or refinance, or at the end of the term. See the full home equity investment companies list to compare, or HELOC alternatives if neither route feels right.
Self-employed? Your paperwork matters more, so read home equity for the self-employed first. And if you’re eyeing a second property instead of paying cards, see using home equity to buy another house.
If it’s not enough equity
Neither route works well with thin equity, and putting a shaky budget on your home makes it worse. If you’re behind on bills or the cards are already past what you can carry, there is free help paying your bills at MoneyAnswers. Start there before you pledge the house.
Get your numbers
Look at both before you decide. Put the monthly payment from one next to the no-payment cost of the other.
Home equity and credit card debt FAQs
Yes. You borrow against your equity, pay the cards off with the cash and then repay the new debt. Figure’s HELOC is one route, with credit starting at 600 in most states. The catch is that your home secures it, so a missed payment puts the house at risk, which a card never does.
It can be, when the new rate is lower, the payment fits your budget with room to spare, and you stop using the cards. It’s a bad idea if the cards would fill back up. Fees count too, since Figure’s origination is up to 4.99% and Point’s fee is up to 4.9% with a $2,000 minimum.
A home equity investment may work. Point starts at a credit score of 500, with no monthly payment and no income requirements. You give up a share of your home’s future appreciation instead.
No. With Point you settle when you sell, refinance or reach the end of the 30-year term. The cost is a share of future appreciation plus a fee of up to 4.9%, with a $2,000 minimum.
Neither option works well with thin equity. If you’re behind on bills, MoneyAnswers has free help paying your bills.
