How To Get a Home Equity Loan With Bad Credit? | reAlpha Mortgage

If you’re sitting on home equity but haunted by a low credit score, you’re not alone, and you’re not out of options.

This could be a serious lifeline if you’re dealing with debt, major expenses, or just need a financial reset. But here’s the catch: qualifying for a home equity loan with bad credit means jumping through a few more hoops. Still, it’s doable-and this guide walks you through every step.

Let’s sort through the confusion and help you tap into your home’s equity-even with a bruised credit report.

• Yes, you can get a home equity loan with bad credit-but it takes strategy.
• Lenders weigh more than your credit score, like DTI, LTV, and income stability.
• Explore alternatives like HELOCs, cash-out refinancing, or co-borrowers.

A Home Equity Loan is a second mortgage that allows you to borrow against the value you’ve built up in your home. You receive a lump sum and repay it over time with fixed monthly payments.

Key Terms Simplified:

• LTV (Loan-to-Value): How much you owe vs. your home's value.
• DTI (Debt-to-Income): What percent of your income goes to debt payments?
• Equity: The difference between what you owe and your home’s market value.

Yes-but it’s not automatic. Many lenders require a credit score of 620+, but others may approve you with lower scores if other factors are strong.

• Equity Amount (ideally 15-20%+ remaining after loan)
• Stable Income History
• Low Debt-to-Income Ratio (ideally below 43%)
• Recent Payment History

Pro Tip: Don’t rely solely on your credit score. Prepare supporting documents like proof of stable income, a low debt-to-income ratio, and a clear repayment plan-these can strengthen your case with lenders.

If you’re hitting roadblocks, consider these options:

• HELOC (Home Equity Line of Credit): Revolving credit, more flexible.
• Cash-Out Refinance: Replace your mortgage with a larger one, pocket the difference.
• Co-Borrower Route: Team up with someone with stronger credit.
• Non-Traditional Lenders: Some fintechs and private lenders are more flexible.

Find the Perfect Mortgage for Your Dream Home with reAlpha Mortgage.

Compare options, calculate payments, and get expert guidance - all in one place.

Check if you qualify

Use comparison platforms and speak with multiple lenders. Local platforms like reAlpha Mortgage help you connect with trustworthy, licensed mortgage professionals who know how to work with buyers facing credit challenges.

Bad credit doesn’t have to block your home equity access. With reAlpha Mortgage, you can unlock expert advice - and serious savings.

Our smart buyer rebate lets you earn back up to 75% of your buyer agent’s commission:

• 25% for using a reAlpha agent

• 50% when you bundle your mortgage with us

• 75% total when you close with reAlpha’s title partners

That’s thousands back in your pocket - money you can use for closing costs, repairs, or a financial reset.

Get matched with a trusted mortgage advisor and start saving at reAlpha Mortgage.You’re not stuck - you’re just one smart move away.

Possibly, if you have strong equity, low debt, and stable income. Some non-bank lenders may consider you.

Depends on your needs. HELOCs offer flexibility; home equity loans offer stability.

Most lenders do a soft pull for pre-approval. A hard inquiry happens only during the final application.

No direct federal programs for bad credit home equity loans, but HUD-approved counseling can help.

Yes, and it can improve your approval odds significantly.

• This content is for educational purposes only and is not a commitment to lend.
• Loan approvals are subject to full underwriting review.
• Interest rates and terms are subject to change without notice.
• reAlpha is a homebuying platform that offers buyers up to 75% of the agent commission back through eligible rebate programs.
• reAlpha Mortgage, NMLS #1743790, operates under the SAFE Act and all applicable federal lending regulations.

Always consult a licensed mortgage advisor for personalized advice.

Find the Perfect Mortgage for Your Dream Home with reAlpha Mortgage.

Compare options, calculate payments, and get expert guidance - all in one place.

Check if you qualify