Is a home equity investment for you?

FAQs

Have more questions about HEIs and other financing options? We’ve got answers.

What is a home equity investment, and how do I know if it’s right for me?

A home equity investment is a flexible, alternative financing solution that allows homeowners to tap into their home’s equity without taking on monthly payments or dealing with the stress of traditional financing. With a Hometap Investment, homeowners receive cash in exchange for a share of their home’s future value, and enjoy breathing room to pursue their most important financial goals without straining their monthly budget. There are no monthly payments, and no restrictions on how the funds are used for the life of the Investment (10 years). The online application is streamlined and simple, and each homeowner is paired with a dedicated Investment Manager to guide them through the process. Whether it’s right for you depends on a few key factors: how much equity you have, how long you plan to stay in the home, how much you need, and whether avoiding a new monthly payment is a priority. The Hometap HEI Fit Quiz walks through these questions and gives you a personalized recommendation in about two minutes.

Who is a good candidate for a home equity investment?

A home equity investment tends to be a strong fit for homeowners who have at least 25% equity in their home, need a lump sum of cash between $15,000 and $600,000, and want to avoid adding a new monthly payment. It’s also a good option for homeowners who don’t want to give up a low mortgage rate by refinancing, or who may not qualify for a traditional home equity loan or HELOC due to income type, employment status, or credit score. Homeowners who plan to sell, refinance, or otherwise settle within 10 years are the best candidates. If you’re unsure whether you fit this profile, the Hometap HEI Fit Quiz can help you assess your situation in a few questions.

When does a home equity investment NOT make sense?

A home equity investment may not be the right fit if you have less than 25% equity in your home, need less than $15,000 or more than $600,000, or plan to stay in your home beyond 10 years without a clear plan to settle the investment. It may also be less cost-effective than a HELOC or home equity loan if you’re comfortable with monthly payments and your home is expected to appreciate significantly — since you’d be sharing more of that upside with the investor. An honest fit assessment matters here: Hometap’s HEI Fit Quiz is designed to tell you directly if an HEI doesn’t look like the right match, and suggest what to consider instead.

How long does a home equity investment last?

A Hometap home equity investment has a 10-year term. During that time, there are no monthly payments, and you can settle anytime that works for you — whether that’s in year 2 or year 9. Settlement typically happens when you sell your home, refinance, or use other funds to buy out Hometap’s share.

What does Hometap get out of a home equity investment?

In exchange for providing you cash upfront, Hometap receives a percentage of your home’s future value when you settle. Unlike traditional financing options, Hometap earns money based on how your home performs over time — so our return isn’t guaranteed. The exact share depends on the size of your investment and when you choose to settle within your 10-year term.

What happens to my home equity investment if I sell my home?

Selling your home is one of the most common ways homeowners settle their investment. When you sell, Hometap’s share is paid out from the proceeds at closing — you keep the rest. It’s a straightforward process, and because you can settle anytime within your 10-year term, a sale at any point during that window works. Your Investment Manager can walk you through exactly what to expect when the time comes.

Which financing option is better for a home improvement project: a home equity investment or personal loan?

If you’re funding a renovation, a Hometap HEI lets you access up to $600,000 with no monthly payments during your Investment term and no impact on your credit score or debt-to-income (DTI) ratio — freeing up cash flow to put toward the project. Personal loans are a common solution for home improvement needs, but they come with fixed monthly repayment schedules, rates that average around 12% APR (and can reach 36%), and loan amounts that are typically far lower — most lenders cap personal loans at $50,000–$100,000. If you’re planning a larger renovation, that ceiling can be a challenge. With a Hometap HEI, you settle through a home sale, refinance, or buyout anytime within the 10-year term. This can give you flexibility that a personal loan’s fixed repayment schedule simply doesn’t offer.

What’s the difference between a home equity investment and a home equity line of credit?

A home equity line of credit (HELOC) is a revolving line of credit secured by your home. You draw from it as needed and pay interest on what you borrow — usually at a variable interest rate. HELOCs have a typical credit score minimum of 620 and a DTI requirement of 43–50%.

A Hometap HEI gives you a lump sum up front with no monthly payments during your Investment term, no income or employment requirements, and no impact on your credit or DTI. If you’ve faced HELOC qualification challenges due to your income or debt levels, a Hometap HEI may offer a more accessible path to your equity.

Does taking a home equity investment affect my credit score?

A Hometap home equity investment does not impact your credit score or debt-to-income ratio during the investment term. It does not appear on your credit report as a monthly obligation, which means it won’t affect your ability to qualify for other financing while the investment is active. There may be a credit check as part of the application process, but the ongoing investment itself has no effect on your credit standing.