Best No-Appraisal Home Equity Loans

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Money’s no-appraisal home equity loan main takeaways

• Homeowners who want to quickly access the equity they’ve built up over time should consider a no-appraisal home equity loan (HELOAN).

• The process to take out a HELOANs is usually faster than a traditional loan since they don't require an in-person appraisal, but they may have higher rates and lower loan maximums.

• HELOANs are called “second mortgages” since borrowers use their homes as collateral. If borrowers experience financial hardship and can’t make their monthly HELOAN payments, they risk foreclosure.

• Compare rates and terms before settling on a lender to ensure you find one that meets your needs.

Our Top Picks for Best No-Appraisal Home Equity Loans

The companies listed below are in alphabetical order.

• Connexus Credit Union: Best Credit Union No-Appraisal Home Equity Loan
• Discover: Best for Getting an Automatic Valuation
• Navy Federal Credit Union: Best No-Appraisal Home Equity Loan for Veterans
• Spring EQ: Best Home Equity Loan for Bad Credit and No Appraisal

Best No-Appraisal Home Equity Loans Reviews

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Why we chose it: Connexus’ (NMLS ID 649316) competitive interest rates and flexible repayment terms make it a good choice for homeowners who prefer to work with a credit union rather than a traditional bank.

Connexus Credit Union offers loans as low as $5,000, making the lender a great choice if you only need to borrow a small amount of money. Qualified homeowners can borrow up to 90% of their home’s value, more than many of the credit union’s competitors, and you can opt for a repayment term of five, 10 or 15 years. Connexus has excellent customer reviews, highlighting the credit union’s customer service and flexibility for borrowers going through hard times. You will have to pay closing costs on the loan, which can range between $175 and $2,000.

You can apply for a HELOAN online or at a Connexus branch if you prefer in-person service. Although membership in the credit union is required to take out a home equity loan, you need only open a savings account with a $5 deposit and donate $5 to the Connexus Association, which provides scholarships and supports financial literacy.

However, not everyone can get a Connexus home equity loan; Alaska, Hawaii, Maryland and Texas residents aren't eligible and will have to work with another lender.

Read more about Connexus’ home equity loan products

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Why we chose it: Discover (NMLS ID 684042) employs an automated valuation model (AVM) to determine the value of your home. The valuation process can be done in a matter of seconds, speeding up the application process.

Discover doesn't charge appraisal, application, origination or processing fees, making it a great choice for borrowers who want to minimize their upfront costs. Loans range from $35,000 to $300,000 and can be used to access up to 90% of your home equity. Discover also offers competitive, fixed-rate APRs and flexible repayment terms ranging from 10 to 30 years.

You’ll need a credit score of 680 or higher to meet Discover’s requirements. You can expect the application, approval and funding process to take six to eight weeks.

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Why we chose it: NFCU (NMLS ID 399807) is a great option for active duty military members and veterans, their families and some Department of Defense personnel because of the competitive interest rates and low fees it offers these individuals.

Navy Federal doesn’t charge any application or origination fees and will pay up to $2,000 in closing costs for fixed-interest rate home equity loans. Repayment terms are generous, ranging from five to 20 years, and there is no prepayment penalty if you pay off the loan early. Qualified borrowers can access up to 100% of their home’s value.

Membership in NFCU is limited to military personnel and their families and can be established by opening a savings account with an initial $5 deposit.

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Why we chose it: With lower-than-average credit score requirements, fixed interest rate options and a maximum debt-to-income ratio (DTI) requirement of 50%, Spring EQ (NMLS ID 1464945) is a good option for borrowers with a less-than-perfect credit history.

You can qualify for a Spring EQ home equity loan with a credit score as low as 640 and access up to 90% of your home's market value. Accessing your money is fast, with funding available in 21 days on average. Repayment terms range from five to 30 years.

There are a few downsides, however. Loans aren't available in every state, and Spring EQ sometimes charges fees for credit reports and other services provided by third-party companies.

Read more about Spring EQ’s home equity loan products

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Other no-appraisal home equity loans we considered

We evaluated HELOAN products and lenders based on available interest rates, repayment terms, application process and time required, and consumer reviews, among other criteria.

Though the following lenders offer competitive terms, they failed to meet all the requirements for inclusion in our "best of" rankings.

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LendingTree

LendingTree is an online marketplace offering an array of financial products, including home equity loans. You can easily compare interest rates and get estimates from multiple lenders within a matter of minutes. SpringEQ, Navy Federal Credit Union and Rocket Mortgage are just a few lender options you can find on the site.

Why LendingTree didn’t make the top four: While comparing multiple lenders at once is convenient, you’ll still have to go through the full application process with the lender you choose. Once that lender has all your financial documentation, the rates and terms offered may significantly differ from those originally offered.

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KeyBank

KeyBank offers home equity loan products that allow qualified applicants to borrow up to 80% of their home’s total value. It offers both home equity loans and HELOCs. Loan amounts range from $25,000 to $500,000 with an available 0.25% discount on interest rates to banking customers who sign up for autopay from a KeyBank checking account.

Why KeyBank didn’t make the top four: Though KeyBank offers competitive offerings and flexible terms, its equity loans are only available to homeowners in 15 states.

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U.S. Bank

U.S. Bank offers competitive rates, especially for customers with excellent credit who enroll in autopay from a U.S. Bank personal checking or savings account. You can borrow up to 80% of your home equity, and loan amounts range from a minimum of $25,000 to a maximum of $750,000 ($1 million in California). The lender offers flexible repayment terms of up to 30 years.

Why U.S. Bank didn’t make the top four: U.S. Bank didn’t make our main list because it requires a minimum credit score of 660, slightly higher than the minimum set by our top picks. It also caps the maximum amount of equity you can borrow at 80%, which is lower than the percentage offered by the companies on our best-of list.

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Rocket Mortgage

Rocket Mortgage offers home equity loans ranging between 80% and 90% of a home’s appraised value, depending on the applicant’s credit history: the higher the score, the higher the CLTV. The minimum loan amount is $45,000 in most states ($10,000 in Michigan), and the maximum is $500,000. The online lender also has a maximum DTI requirement of 50%, higher than many competitors. Rocket has an easy online application process and competitive interest rates.

Why Rocket Mortgage didn’t make the top four: Rocket didn’t make our list of the top no-appraisal home equity lenders because its minimum credit score requirements are higher than its competitors and it charges closing costs, as opposed to some other lenders.

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No-Appraisal Home Equity Loan Guide

If you're a homeowner looking into home equity loans for the first time, you may have questions about how much equity you have in your home or even how equity in a home is built up. Keep reading to learn about the available loan options and answers to some of the most commonly asked questions about no-appraisal home equity loans.

Types of home equity loan appraisals

If you plan on taking out a home equity loan, the lender may offer one of the following options:

• Full appraisal: If the lender requires a full appraisal, a licensed appraiser will visit the home to examine its condition and value. Full appraisals are usually required for new home purchases or larger home equity loan amounts.

• Drive-by appraisal: A drive-by appraisal is less intensive than a full appraisal. The appraiser will visually assess the outside of the home only, relying on public records and online photos of the interior. Drive-by appraisals are convenient but may not be as accurate as a full appraisal.

• Automated valuation model (AVM): AVM appraisals rely on software to analyze data to assess your home's market value. AVM appraisals tend to be quick; however, if you've made significant changes to your home, the software may have outdated information, causing an inaccurate appraisal value.

• Desktop appraisal: With a desktop appraisal, the appraiser never sees your home in person. Instead, they use photos, public records and Multiple Listing Service (MLS) data to determine its value. Because it's quicker and easier for the appraiser, desktop appraisals are often less expensive than full appraisals, but they may not be accurate.

• Hybrid appraisal: If your home undergoes a hybrid appraisal, a third party inspects the property and gives the information to a licensed appraiser. This approach can be cheaper than a full appraisal, but the inspection quality can affect the results.

• No-appraisal: If you bought your home recently, have an existing relationship with the lender or are applying for a relatively small loan amount, the lender may waive the appraisal requirement entirely. No-appraisal loans are convenient, but you may pay a higher interest rate or be subject to stricter loan maximums than if you underwent a full appraisal.

What is a no-appraisal home equity loan?

No-appraisal HELOANS can be used by borrowers to access the money they have built up in their homes without needing an appraisal. Lenders typically offer these loans for primary residences, although some will also provide loans on second homes and investment properties.

Unlike traditional home equity products, these do not require a third-party professional real estate appraiser to assess the home’s value. Homeowners use these loans to consolidate debt, carry out home renovations and cover unforeseen medical expenses, among other things.

Instead, the loan is typically approved based on the applicant’s credit history and overall financial health. The benefit of this type of loan is the speed with which it can be processed, as lengthy appraisals can slow down approval timelines. There are also no hefty appraisal fees. However, speed can come at a cost, as the interest rate is typically higher than with traditional loans, although some lenders may offer interest rate discounts if you're a regular customer.

The funds from the loan are paid out in a lump sum and repaid over a term that can range from five to 30 years, depending on the lender. If you use a home equity loan to make home improvements, some of the interest paid on the loan could be tax deductible.

Home equity loans, also known as second mortgages, take a second lien position on your home on top of your first mortgage and will increase your combined loan-to-value (CLTV). Because you have to carry two mortgages, there's an increased risk of foreclosure on your home if you run into financial difficulties and fall behind on your payments on either loan.

These loans may not be a reasonable option for those who recently financed a new home purchase since they may not have built enough equity.

Tips on how to get a home equity loan without an appraisal

Getting approved for a no-appraisal home equity loan depends on the lender and their eligibility requirements. Borrowers with higher credit scores will qualify for the best rates and pay less interest over the life of the loan. Generally, the lower the mortgage balance (and the higher the amount of equity), the more likely you are to get through the process without an appraisal.

1. Look for lenders that consider automated valuation models (AVMs) or desktop appraisals

Research home equity lenders who may consider automated valuation models (AVMs) or desktop appraisals rather than a full appraisal, as this reduces the cost of borrowing and the time to close the loan. AVMs calculate an estimated value of a property based on public data such as property tax and deed records. Desktop appraisals incorporate the AVM with additional data supplied by an appraiser to generate a detailed report of the property’s value.

2. Ensure that you meet the lender's qualification requirements for loan approval

Check the lender's qualification requirements before applying for a better chance of getting your loan approved. These criteria commonly include things such as:

• Your credit score and payment history
• Your debt-to-income ratio
• The loan-to-value ratio of the property
• The amount of the loan
• The total value of the property

If you don't meet the lender’s criteria, it's unlikely that your application will be approved. Still, you may identify some things you can correct, such as a low credit score that can be improved by lowering your credit card utilization or improving your debt-to-income ratio.

3. Provide full documentation of income, credit history and property details

Without a full accounting of your income, credit history and property details, it's unlikely your loan will be approved. Lenders need comprehensive and accurate documentation to verify your creditworthiness and your home's market value. It's essential to provide all the required information as accurately as possible to ensure your application has the best chance of approval.

4. Apply with credit unions or online lenders instead of traditional banks

You may want to consider applying with credit unions or online lenders instead of traditional banks. Credit unions can be a desirable choice because they tend to have more flexible requirements, lower fees, lower interest rates and may offer more attractive loan terms. Online lenders usually have faster prep and approval times, may waive application fees and sometimes don't require appraisals.

Alternatives to no-appraisal home equity loans

No-appraisal equity loans offer a convenient way to access the capital in your home without undertaking an appraisal, but not everyone will end up qualifying or finding the terms of available loans attractive. Fortunately, there are some good alternative financing options.

Home equity lines of credit (HELOCs)

One potential alternative is a home equity line of credit (HELOC). A home equity line of credit is a revolving line of credit that uses the equity in your home as collateral. With a HELOC, you can borrow money up to the predetermined line of the credit limit as needed, making it a sound way to access funds for home improvement projects, vacations or other large purchases. The time you can access funds is called the draw period, typically the first 10 years of the loan. You can no longer access funds during the repayment period, and it usually lasts 20 years. HELOC rates are typically lower than home equity loan rates.

Cash-out refinances

Another alternative is a cash-out refinance. A cash-out refinance involves replacing the existing mortgage and mortgage lender for a loan with a higher amount and then pocketing the difference between the two loans. This option could be the best if mortgage rates are lower than your current mortgage, allowing you to benefit from lower interest payments while taking advantage of the increased equity in your home. Cash-out refinance loans tend to have lower rates than home equity loans.

A cash-out refinance is also the only option for borrowers who want to get a loan through the Federal Housing Administration (FHA) since the government doesn’t offer equity loans or lines of credit.

Personal loans

Personal loans are another option. While personal loans and debt consolidation loans typically have higher interest rates than home equity loans, they may be the best option if you need funds quickly and don’t want to wait for the process of cash-out refinancing. Personal loans don’t require collateral, simplifying the process even further. Note that most personal loans will require a minimum credit score of 580 or higher. Personal loans can also be used to consolidate high-interest debt.

Credit cards with promotional rates

Some credit cards have promotional annual percentage rates (APRs) for a limited time on purchases and balance transfers. By taking advantage of these offers, you could qualify for 0% APR for a year or more, giving you time to pay off a major purchase or reduce your debt without interest.

Credit card promotional offers can be a good idea if you need a relatively small amount of money and can pay off the balance by the end of the promotional period.

How We Chose the Best No-Appraisal Home Equity Loans

Our methodology for determining the best no-appraisal home equity loans involved carefully comparing the features and benefits of currently available offerings, including:

• Appraisal requirements
• Interest rates
• Application process and processing times
• Availability of fixed or variable interest rates
• Available terms
• Customer and private organization reviews on a variety of platforms
• Customer satisfaction ratings

We also spoke with customer service representatives when possible. It’s important to note that though this information is current at the time of publication, financial institutions may change or update their policies and offerings. Interest rates, terms and the availability of no-appraisal home equity loans may change, and we recommend you verify all information presented here before applying for loans with any of these lenders.

Summary of Money’s Best No-Appraisal Home Equity Loans

The companies listed below are in alphabetical order.

• Connexus Credit Union: Best Credit Union No-Appraisal Home Equity Loan
• Discover: Best for Getting an Automatic Valuation
• Navy Federal Credit Union: Best No-Appraisal Home Equity Loan for Veterans
• Spring EQ: Best Home Equity Loan for Bad Credit and No Appraisal