With trillions in untapped equity sitting in American homes, the opportunity is massive — if you can help borrowers navigate it.

American homeowners are sitting on record levels of home equity. After years of rising home values, the average homeowner with a mortgage has over $300,000 in equity — much of it untapped. For banks and credit unions, this represents one of the largest lending opportunities in a generation.

But there's a gap between the opportunity and the reality. Many homeowners don't understand their equity position, aren't sure how to access it, or can't decide between product options. They visit loan pages, see unfamiliar terms like HELOC and LTV, and leave confused.

This guide covers the full landscape of home equity lending: what's driving the opportunity, how to help borrowers understand their options, and how to build a digital experience that converts interest into funded loans.

Why Home Equity Lending Matters Now

Several factors are converging to make home equity lending particularly attractive — for both borrowers and lenders.

Equity levels are historically high

Home values appreciated significantly over the past several years, even as many homeowners stayed in place rather than selling into a competitive market. The result: a massive accumulation of untapped equity. Homeowners who bought or refinanced during the low-rate environment of 2020-2021 are especially well-positioned, with low first-mortgage rates they don't want to disturb and substantial equity built up since.

First-mortgage refinancing is less attractive

When homeowners have a first mortgage at 3% and current rates are significantly higher, cash-out refinancing doesn't make sense. They'd be replacing a low-rate loan with a higher-rate loan just to access equity. Home equity products — HELOCs and home equity loans — let them tap equity while leaving that favorable first mortgage in place.

Consumer debt is elevated

Credit card balances and interest rates are both at high levels. For homeowners carrying high-rate revolving debt, consolidating into a home equity product with a lower rate can provide meaningful savings. This is a compelling use case that resonates with borrowers feeling squeezed by debt payments.

Home improvement demand remains strong

Whether it's aging-in-place modifications, energy efficiency upgrades, or deferred maintenance catching up, homeowners continue to invest in their properties. Home equity is a natural funding source for these projects, especially for improvements that may increase the home's value.

HELOC vs. Home Equity Loan: The Decision Borrowers Face

For most homeowners, the first hurdle isn't whether to tap their equity — it's figuring out how. The choice between a Home Equity Line of Credit (HELOC) and a home equity loan confuses many borrowers, and institutions that don't help them navigate this decision lose conversions.

Home Equity Line of Credit (HELOC)

A HELOC works like a credit card secured by the home. The borrower is approved for a maximum credit line and can draw against it as needed during a draw period (typically 10 years). They pay interest only on what they've borrowed, and the rate is usually variable. After the draw period ends, the repayment period begins, and the borrower pays back principal plus interest.

Best for: Borrowers who need flexibility, don't know exactly how much they'll need, or want to access funds over time (like for ongoing home improvements or as a financial safety net).

Home Equity Loan

A home equity loan provides a lump sum at closing with a fixed interest rate and fixed monthly payments over a set term (typically 5-30 years). It's a second mortgage in the traditional sense — predictable payments, no surprises.

Best for: Borrowers who know exactly how much they need, want payment predictability, or are consolidating debt and want a clear payoff timeline.

	HELOC	Home Equity Loan
Funds access	Draw as needed up to limit	Lump sum at closing
Interest rate	Variable (typically)	Fixed
Monthly payment	Varies with balance and rate	Fixed for life of loan
Best use case	Ongoing or uncertain expenses	One-time, known expense
Risk profile	Rate risk during draw and repayment	No rate risk after closing

Many borrowers don't know these differences when they arrive at your website. A rate table that shows HELOC rates and home equity loan rates separately, without explaining when each makes sense, leaves borrowers to figure it out on their own. Many won't.

The Borrower's Journey: From Awareness to Funded Loan

Understanding how borrowers move through the home equity decision helps identify where guidance — and where friction — typically occurs.

Stage 1: Awareness

The borrower realizes they might be able to tap their home equity. This might be triggered by a home improvement project, a debt consolidation goal, or simply hearing that home values have risen. At this stage, they're not shopping — they're wondering whether this is even an option for them.

What they need: Basic education about home equity products, a sense of whether they might qualify, and a rough idea of how much they could access.

Stage 2: Exploration

The borrower starts researching options. They visit lender websites, use calculators, and try to understand the differences between products. This is where confusion often sets in — and where many borrowers abandon.

What they need: Clear explanations of HELOC vs. home equity loan, tools that estimate their available equity and potential rates, and help identifying which product fits their situation.

Stage 3: Comparison

The borrower is narrowing options — comparing products, comparing lenders, or both. They want to see specific numbers: what rate they'd get, what their payment would be, how much they could borrow.

What they need: Personalized rate estimates, side-by-side comparisons, and the ability to save and share scenarios (often with a spouse or partner).

Stage 4: Decision

The borrower is ready to choose a lender and product. They may have final questions, want reassurance about the process, or need a conversation with a human before committing.

What they need: Clear next steps, easy access to human help if desired, and transparency about what the application process involves.

Stage 5: Application and closing

The borrower completes the application, provides documentation, and moves through underwriting to closing. This stage is operational — important to execute well, but not where most conversions are won or lost.

Most digital lending tools focus heavily on Stage 5 (the application) while underserving Stages 1-4. But by the time a borrower starts an application, they've already made the key decisions. The opportunity to influence those decisions — and to prevent abandonment — is earlier in the journey.

Common Borrower Questions (and How to Answer Them)

Borrowers exploring home equity have predictable questions. Addressing these questions proactively — through content, tools, and guidance — builds confidence and moves borrowers forward.

"How much equity do I have?"

Many homeowners have only a vague sense of their equity position. A simple calculator that takes estimated home value and current mortgage balance can provide a starting point. Even an approximate number helps borrowers understand whether home equity borrowing is realistic for them.

"How much can I borrow?"

Lenders typically allow borrowing up to 80-85% of home value (combined with the first mortgage). Showing borrowers their potential borrowing capacity — based on their equity estimate and your LTV limits — helps them understand what's possible.

"What rate will I get?"

Generic rate tables don't answer this question. Personalized estimates based on the borrower's situation (equity position, estimated credit, loan amount) build confidence. Even a range is better than "rates as low as" marketing language that feels untrustworthy.

"Should I get a HELOC or a home equity loan?"

This is the question guided tools are built to answer. Ask about the borrower's intended use, whether they need funds all at once or over time, and how much payment predictability matters to them. Then recommend a product with a clear explanation of why it fits.

"Is this a good idea?"

Borrowers often have underlying anxiety about using their home as collateral. Responsible lenders address this directly: explaining the risks, helping borrowers evaluate whether the use of funds justifies the borrowing, and never pushing products that don't serve the borrower's interests. Building trust requires acknowledging that home equity borrowing isn't right for everyone.

Building a Home Equity Experience That Converts

Based on the borrower journey and common questions, here's what an effective digital home equity experience includes.

An equity estimator as the entry point

Before showing products or rates, help borrowers understand their starting position. A simple tool that estimates available equity (home value minus mortgage balance, times your LTV limit) gives borrowers a concrete number to work with and qualifies them for the next step.

A product recommendation tool

Don't make borrowers choose between HELOC and home equity loan without guidance. Ask about their goals and preferences, then recommend a product. Guided selling tools excel here — they turn a confusing choice into a clear recommendation.

Personalized rate and payment estimates

Show borrowers what their specific loan would look like: estimated rate, monthly payment, total interest cost. The more personalized and concrete, the more confidence it builds. Generic rate tables don't create conversions; personalized scenarios do.

Side-by-side comparison

Let borrowers compare a HELOC scenario against a home equity loan scenario, or compare different loan amounts and terms. Visual comparison tools make trade-offs tangible and help borrowers make decisions.

Save and share functionality

Home equity decisions often involve more than one person. The ability to save a scenario, email it, or return to it later supports the multi-session, multi-person reality of how these decisions get made. See Save and Return: The Underrated Conversion Tactic for implementation details.

Easy access to human help

Home equity products are complex enough that many borrowers want to talk to someone before committing. Make it easy to schedule a callback or start a chat at any point in the journey. The option to talk to a human — even if not everyone uses it — provides reassurance.

Educational content in context

Don't make borrowers hunt for explanations. Deliver education at the moment of need: a tooltip explaining LTV when that field appears, a short explanation of draw period vs. repayment period when showing HELOC details. Contextual education builds understanding without overwhelming.

Marketing Home Equity: Reaching Borrowers Who Don't Know They're Borrowers

Many homeowners who could benefit from home equity products aren't actively shopping. They're not searching "HELOC rates" — they're thinking about how to pay for a kitchen renovation, or wondering if they'll ever get out from under their credit card debt. Effective marketing meets them where they are.

Lead with the use case, not the product

"Consolidate your debt at a lower rate" resonates more than "Apply for a home equity loan." "Fund your home renovation without draining savings" is more compelling than "HELOC rates starting at 7.99%." The product is the solution; the use case is the problem the borrower actually feels.

Target existing customers first

Your current customers — especially those with first mortgages at low rates — are prime home equity prospects. You already have a relationship, you likely know something about their home and financial situation, and you have channels to reach them. Cross-selling to existing customers is more efficient than acquiring new ones.

Use equity as a hook

"Your home's value may have increased — see how much equity you have" is an invitation to engage, not a sales pitch. Equity estimator tools can serve as lead generation mechanisms, capturing interest from homeowners who are curious but not yet shopping.

Address rate sensitivity directly

In a higher-rate environment, borrowers are acutely aware of rates. Don't hide from this — address it. "Yes, rates are higher than a few years ago. Here's why a home equity loan might still make sense for debt consolidation." Honest acknowledgment of the rate environment builds trust.

Compliance Considerations

Home equity lending carries regulatory requirements that affect how you market and originate these products. A few areas warrant particular attention.

TILA and Regulation Z

Home equity products are subject to Truth in Lending Act requirements, including disclosure rules for both HELOCs and closed-end home equity loans. Advertising triggers, rate disclosures, and APR calculations all have specific requirements.

RESPA and Regulation X

Home equity loans (though not HELOCs) may trigger Real Estate Settlement Procedures Act requirements, including good faith estimates and settlement cost disclosures.

Fair lending

All lending, including home equity, must comply with fair lending laws. Pricing, marketing, and underwriting practices need to be consistent and non-discriminatory.

UDAP/UDAAP

Marketing claims, rate representations, and the overall borrower experience must avoid unfair, deceptive, or abusive practices. Clear, honest communication protects both borrowers and the institution.

This guide doesn't constitute legal or compliance advice. Work with your compliance team to ensure your home equity products and marketing meet all applicable requirements.

Measuring Success

Home equity lending success can be measured at multiple points in the funnel.

Engagement metrics: How many visitors use your equity estimator, guided product selector, or comparison tools? High engagement indicates that your tools are resonating with borrowers in the exploration phase.

Application start rate: What percentage of visitors who engage with home equity content or tools start an application? This measures your ability to convert interest into intent.

Application completion rate: Of those who start, how many finish? Drop-off within the application points to friction that needs addressing.

Lead capture rate: How many visitors provide contact information through save-a-quote, callback requests, or other mechanisms? These are warm leads for follow-up even if they don't apply immediately.

Funded loan volume and value: Ultimately, success is measured in closed loans. Track both count and dollar volume, and segment by product type and acquisition channel.

Getting Started

If your institution is looking to grow home equity lending, start with the basics.

Audit your current experience. Go through your home equity pages as if you were a confused borrower. Can you easily understand the difference between HELOC and home equity loan? Can you estimate your equity and potential borrowing capacity? Is there guidance, or just a rate table and an "Apply Now" button?

Add an equity estimator. Even a simple calculator that helps borrowers understand their equity position can significantly increase engagement and conversion.

Implement product guidance. Don't make borrowers choose between products without help. A few questions about their situation and goals can power a recommendation that moves them forward.

Enable save and return. Home equity decisions aren't made in one session. Let borrowers save their scenarios and come back.

Review your marketing. Are you leading with products or use cases? Are you reaching existing customers who might benefit? Is your messaging honest about the current rate environment?