HELOC Alternatives: 8 Other Ways to Access Cash

Denied for a HELOC? Or maybe you're not sure you want to put your home on the line?

Either way, you have options. Here are 8 alternatives to a HELOC—when they make sense and what to watch out for.

Why You Might Need an Alternative

People look for HELOC alternatives for different reasons:

Denied for a HELOC because:

• Credit score below 620
• Debt-to-income ratio too high
• Not enough equity (need 15-20%+)
• Recent bankruptcy or foreclosure
• Self-employment documentation issues

Choosing to avoid a HELOC because:

• Don't want home as collateral
• Need money faster than HELOC timeline
• Only need a small amount
• Planning to sell home soon

Whatever your reason, here's what else exists.

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Alternative 1: Home Equity Loan (Fixed Rate)

What it is: A lump-sum second mortgage with fixed rate and payments.

How it differs from HELOC:

• Lump sum, not credit line
• Fixed rate (HELOC is variable)
• Fixed monthly payment from day one

Best for:

• People who want predictable payments
• One-time large expenses (roof, major renovation)
• Borrowers worried about rate increases

Watch out for:

• Can't re-borrow after paying down
• Same home-at-risk issue as HELOC
• May have higher rates than HELOC intro rates

Typical rates: 8-12%

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Alternative 2: Cash-Out Refinance

What it is: Replace your current mortgage with a larger one, pocket the difference.

How it differs from HELOC:

• One loan (replaces mortgage)
• Fixed rate typically
• Bigger closing costs

Best for:

• Large amounts ($50K+)
• When refinance rates are lower than your current rate
• Consolidating a HELOC you already have

Watch out for:

• If your current rate is low, you'll lose it
• Closing costs of 2-5% of loan amount
• Longer timeline (30-45 days typical)

Typical rates: 6-8% (market dependent)

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Alternative 3: Personal Loan (No Collateral)

What it is: Unsecured loan based on creditworthiness, not home equity.

How it differs from HELOC:

• No home as collateral
• Fixed rate and term
• Faster approval (days, not weeks)

Best for:

• People with good credit but limited equity
• Those who don't want to risk their home
• Smaller amounts ($5K-$50K)
• Fast funding needs

Watch out for:

• Higher rates than secured loans
• Lower borrowing limits
• Payments start immediately

Typical rates: 8-20% (credit dependent)

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Alternative 4: 401(k) Loan

What it is: Borrow from your own retirement savings.

How it differs from HELOC:

• Borrowing from yourself
• No credit check
• Repayment through payroll deduction

Best for:

• People with substantial 401(k) balances
• Those with poor credit who need low rates
• Short-term needs (plan to repay quickly)

Watch out for:

• Opportunity cost is huge — money not invested misses market gains
• If you leave your job, loan may be due in 60 days
• Max loan typically $50K or 50% of balance
• Not all plans allow loans

Typical rates: Prime + 1-2% (you're paying yourself)

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Alternative 5: 0% APR Credit Card

What it is: Credit card with promotional 0% interest period.

How it differs from HELOC:

• No collateral
• 0% interest for 12-21 months
• Easy approval if credit is good

Best for:

• Small amounts ($5K-$20K)
• Short-term needs you can repay quickly
• Balance transfer from high-rate debt

Watch out for:

• Rate jumps to 20-25% after promo period
• Balance transfer fees (3-5%)
• Can hurt credit utilization if maxed

Typical rates: 0% for 12-21 months, then 20-25%

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Alternative 6: Family Loan

What it is: Borrow from relatives.

How it differs from HELOC:

• Flexible terms
• Potentially low/no interest
• No formal qualification

Best for:

• People with family who can help
• Bridge financing
• Situations where traditional lending fails

Watch out for:

• Strain on relationships if not repaid
• IRS rules for large loans (interest may be required)
• Should still document the agreement in writing

Typical rates: Negotiable (often 0-5%)

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Alternative 7: Shared Equity Agreement

What it is: Company gives you cash now in exchange for a share of future home appreciation.

How it differs from HELOC:

• No monthly payments
• No interest rate
• You give up future equity instead

Companies offering this:

• Hometap
• Unison
• Point

Best for:

• People who need cash but can't afford payments
• Those with poor credit or high DTI
• Homeowners who plan to sell in 10+ years

Watch out for:

• You're selling future appreciation (can be expensive)
• Typically must settle within 10-30 years
• Complex terms—read carefully

Typical cost: 15-30% of your home's appreciation

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Alternative 8: Wait and Improve

What it is: Don't borrow now. Fix what's preventing HELOC approval.

How long it takes:

• Credit score improvement: 3-12 months
• DTI reduction: As fast as you can pay down debt
• Equity building: Time + market appreciation

Best for:

• Non-urgent needs
• People close to qualifying
• Those who want the best rates long-term

How to improve:

For credit score:

• Pay down credit card balances (under 30% utilization)
• Don't close old accounts
• Dispute errors on credit report
• Become authorized user on old account

For DTI:

• Pay off car loans or credit cards
• Increase income (side gig, raise)
• Don't take on new debt

For equity:

• Make extra mortgage payments
• Wait for home values to rise
• Make improvements that increase value

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Quick Comparison

*401(k) loan puts retirement at risk, not home

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FAQ

What's the best HELOC alternative for bad credit?

Personal loans from lenders like Upstart or Avant work with lower credit scores. 401(k) loans don't check credit at all. Shared equity agreements (Hometap, Point) also don't rely on credit score.

Can I get a HELOC alternative with high debt-to-income?

Shared equity agreements don't require monthly payments, so DTI doesn't matter as much. 401(k) loans also bypass DTI requirements. Personal loans may work if your credit score is strong.

What if I was denied a HELOC but have good credit?

The issue is probably equity or DTI. Consider: personal loan (no equity needed), cash-out refi (different underwriting), or wait for home value to increase.

Is a personal loan better than a HELOC?

Personal loans have higher rates but don't risk your home. They're better for smaller amounts, short-term needs, or when you don't want collateral. HELOCs are better for larger amounts and long-term flexibility at lower rates.

Should I borrow from my 401(k)?

Usually not. The opportunity cost (missed investment gains) often exceeds the interest you'd pay elsewhere. Use it only as a last resort or for very short-term needs you're certain you can repay.

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Not Sure What's Right for You?

Before giving up on a HELOC, check what you actually qualify for. HonestCasa shows you real offers based on your situation—not assumptions.

[See If You Qualify →]