A home equity investment gets you a lump sum today with no monthly payments, and the price is a share of your home’s value when you settle. That’s the whole trade. The pros are about cash flow and easier qualifying, and the cons are about what settling could cost you down the road.
Our take: An HEI could make sense if you have plenty of equity, you need cash without adding a monthly bill, and you already know how you’ll settle, whether by selling, refinancing or using savings. If you’d be counting on a rising home value to make the math work, or you could qualify for a HELOC at a decent rate, look there first.
How a home equity investment works
A company gives you cash now. In return it earns a share of your home’s value when the agreement ends. You keep living there, and you keep paying your traditional mortgage, property taxes and insurance.
There’s no monthly bill to the company. You settle one time, at or before the end of the term, usually by selling the home, refinancing or using savings. To secure its interest, the company records a lien on the property.
Sounds simple, right? Not quite.
Not every company measures its share the same way. Hometap, Splitero and Unlock earn a percentage of the home’s value at settlement. Unison shares in the change in value instead, so the equity you built before signing stays yours. Point also describes its product as a share of appreciation. That one difference changes the math a lot, so check which model you’re looking at before you compare offers.
Home equity investment pros and cons at a glance
Pros
- No monthly payments. Nothing is due to the company until you settle.
- Qualifying leans on the home. Hometap has no income or employment requirements, and Splitero won’t ask for income documents.
- Lower credit floors. Unlock and Splitero publish a 500 minimum score.
- Nothing out of pocket at closing. Fees come out of the cash you receive.
- Settle early with no penalty. Hometap, Splitero and Unlock all allow it.
- You share the downside. If the home loses value, the dollar amount you settle for falls too.
Cons
- It could cost a lot. In Hometap’s own pricing, $50,000 on a $500,000 home settles for $123,920 after 10 years of moderate growth.
- One big lump sum. The full amount is due in a single settlement by the end of the term.
- Upfront fees add up. Company fees run 3.9% to 4.99%, plus appraisal, title and recording costs.
- Refinancing gets harder. Some lenders won’t refinance a home with an active agreement.
- Spotty availability. Hometap and Unlock cover 26 states each, Unison 22 plus D.C., Splitero 17.
The pros, explained
No monthly payment is the real draw
This is why people look at HEIs at all.
A HELOC or home equity loan adds a payment the month after you close. An HEI doesn’t.
If your budget is tight right now but you expect to sell in a few years, that matters. You get the cash, keep your monthly costs where they are, and settle out of the sale proceeds.
Qualifying is built around your home
Because there’s no monthly payment, the companies care more about your equity and your property than your paycheck. Hometap says it has no income or employment requirements. Splitero says it won’t ask for any documentation about employment or income.
Credit floors are lower than most lenders, too. Unlock and Splitero each publish a 500 minimum, Hometap asks for a 575 FICO score, and Unison wants a mid-FICO score of at least 620. That’s why HEIs show up a lot for self-employed folks and anyone with bruised credit.
You still need real equity. Hometap looks for at least 25%, and Unlock asks for at least 30%. Approval also depends on the home being located in an eligible state, among other qualifying criteria.
Nothing out of pocket at the start
Fees are deducted from your investment proceeds rather than paid upfront. You’ll see the full breakdown before you sign, and the cash you get is the investment amount minus those costs.
If your home loses value, the amount you settle for drops with it. Splitero puts it simply: your repurchase amount is always tied to a percentage of the home’s value, whether that value goes up or down.
Unison goes a step further and says that after its restriction period, a big enough drop could take its final payment to zero. Just know that a lower value doesn’t mean you’ll settle for less than you received. More on that below.
There’s a ceiling on the cost
Most companies publish a cap on what they could receive. Hometap’s cap is an 18.5% annual rate, compounded monthly. Splitero’s Safety Cap is 17.99% a year, compounded monthly. Unlock’s Annual Cost Limit is typically 19.9%, and it doesn’t compound. The cap mostly matters if you settle early or your home’s value jumps fast.
The cons, explained
Settling could cost far more than you got
This is the big one.
Your cost isn’t set when you sign. It depends on what the home is worth when you settle, and in a rising market that number just keeps climbing, so the longer you hold the agreement and the hotter your local market, the more you could end up handing over.
The Consumer Financial Protection Bureau looked at this market and called these contracts expensive compared to other home-secured financing. It found that under many contracts, the amount due grows about 19.5% to 22% a year in the early years.
What does that look like on a real offer? One homeowner on Reddit (u/Typical-Try-2849) said Point wanted 57% of their appreciation for about $100k. Their home appraised at $590K, but the starting point for appreciation was set at $489K, a full $100K less.
It all comes due at once
There are no partial payments with Hometap. You settle in one transaction for the full amount. Unlock does allow partial buyouts during the term, subject to its approval.
If you can’t settle by the end of the term, the agreement doesn’t just roll over. Hometap says it may acquire a percent ownership interest in the property and work with you to sell it. Point says it could become a co-owner with the right to sell the home. So go in with an exit plan.
The fees aren’t small
Company fees run from Unison’s 3.9% to Splitero’s 4.99%, with Hometap at 4.5% (capped at $20,000) and Unlock typically at 4.9%. Then come third-party costs for things like the appraisal and title work. On a $100,000 investment, a 4.5% fee alone is $4,500.
Your future borrowing gets more complicated
The company’s lien sits on your title for the whole term. Unison warns that lenders following Fannie Mae and Freddie Mac guidelines may decline to refinance a home with its agreement. Unlock says a cash-out refinance requires settling its agreement first. We broke this down company by company in our guide to refinancing with an HEI.
It may not be offered where you live
Coverage is patchy. Hometap is in 26 states, Unlock in 26, Unison in 22 plus D.C. and Splitero in 17. Some states have no company at all right now.
What settling could cost: one example
So what does that look like in actual dollars?
Here’s an example using Hometap’s published pricing. You receive $50,000 on a $500,000 home, which is 10% of its value. Hometap’s percentage for that is 16.5% if you settle in years 0 to 5 and 18% in years 6 to 10. The home grows 3.25% a year, the moderate setting in Hometap’s calculator.
| Settle after | Home value | Share | What you’d settle for | Cost over what you received |
|---|---|---|---|---|
| 5 years | $586,706 | 16.5% | $96,806 | $46,806 |
| 6 years | $605,774 | 18% | $109,039 | $59,039 |
| 10 years | $688,447 | 18% | $123,920 | $73,920 |
Example only, built from Hometap’s published percentages and 3.25% yearly growth. In each row the percentage amount is below the Hometap Cap, so it’s what you’d settle for. Fees at closing come on top. Your offer, home value and state could change every figure.
Run the same deal with the home losing 8% of its value, and settling at year 10 still comes to $82,800 on $50,000 received. That’s the part people miss. The downside protection lowers the bill, but it doesn’t erase it.
Get an estimate from Hometap and try different settlement years in its calculator. Hometap says the estimate takes less than 2 minutes and has no credit impact.
How the main companies compare
Each company publishes its own rules. Here’s how the big ones line up on the things that move your cost and your odds of approval.
| Company | Minimum credit | Term | Company fee | Cap on cost | States |
|---|---|---|---|---|---|
| Hometap | 575 FICO | 10 years | 4.5%, up to $20,000 | 18.5% a year, compounded monthly | 26 |
| Splitero | 500 | 10 to 30 years, matched to your mortgage | 4.99% | 17.99% a year, compounded monthly | 17 |
| Unlock | 500 (550 for some properties) | Up to 10 years | Typically 4.9% | Typically 19.9%, non-compounding | 26 |
| Unison | 620 mid-FICO | 30 years | 3.9% | Shares only the change in value | 22 plus D.C. |
From each company’s own website. Terms change, so check the current figures before you apply.
Want the full rundown? Our comparison of home equity investment companies goes deeper, and Splitero vs Hometap puts two of the most common picks side by side.
HEI vs a HELOC, home equity loan or cash-out refi
An HEI isn’t the only way to get at your equity. The right pick mostly comes down to whether you can handle a monthly payment.
| Option | Monthly payment | How you qualify | What it costs you |
|---|---|---|---|
| Home equity investment | None | Mostly equity, credit and the property | A share of the home’s value at settlement, plus fees |
| HELOC | Yes, on what you draw | Credit, income and equity | Interest on what you draw, plus any fees |
| Home equity loan | Yes, fixed | Credit, income and equity | Interest over the term, plus closing costs |
| Cash-out refinance | Yes, a new, larger traditional mortgage | Credit, income and equity | A new rate on the whole balance, plus closing costs |
If you can qualify for a HELOC and the payment fits your budget, it’ll often cost less over time. We worked through the dollars in home equity loan vs HEI and HEI vs HELOC. If you’re trying to avoid touching your first traditional mortgage, see getting equity out without refinancing.
Who it fits and who should skip it
An HEI could fit you if:
- You have at least 25% to 30% equity and want cash without a new monthly bill
- Your income is hard to document, like self-employed or commission pay
- Your credit is below what HELOC lenders want
- You plan to sell or refinance within the term and know roughly when
- You’re using the money for something that leaves you better off, like clearing high-cost debt
Skip it, or at least slow down, if:
- You can get a HELOC or home equity loan and afford the payment
- You expect your home to appreciate fast
- You’d have no clear way to settle by the end of the term
- You plan to refinance your traditional mortgage soon
- You need a small amount, since minimums run from $15,000 to $50,000
Not everyone who has one agrees with the debt payoff idea on that first list. One borrower on Reddit (u/Bulky_Loquat_1397) went through Hometap and Point, ended up with Point, and called it “a horrible deal for any other use such as paying off debt.” Their view is that it only makes sense if you invest every dollar.
Another (u/Medical_Garage5063) said they used a Unison agreement to clear unsecured debt, really regret it, and are now filing Chapter 13. That’s one person’s story, but if debt is the plan, run the settlement math before you sign.
How to decide
- Check which companies serve your state. That can narrow the list to one or two fast.
- Get estimates from at least two. They’re quick, and you’ll see real numbers for your home.
- Pick the year you’d most likely settle and work out the cost at that year, at flat, moderate and strong home growth.
- Compare the cap, the fee and the term side by side, not just the cash offer.
- Price the alternatives. Ask a lender what a HELOC would cost you, even if you think you won’t qualify.
- Read the full agreement before you sign, and ask about refinancing, renting and what happens if you die during the term.
Bottom line
The pros of a home equity investment are real: no monthly payment, qualifying that rests on your home, and nothing out of pocket at closing. The cons are just as real. Settling could cost far more than the cash you received, and it all comes due at once.
So treat it as a tool for a specific plan, not a cheap source of cash. If you know how you’ll settle and the math still works at a few different home values, it could be a good fit.
An HEI could make sense if you have at least 25% equity in your home, it’s located in an eligible state, and you already know whether you’ll settle with a sale, a refinance or savings.
Home equity investment questions, answered
It could be if you need cash, can’t or don’t want to take on a monthly payment, and have a clear plan to settle within the term. It’s a poor fit if you can afford a HELOC payment or expect your home’s value to climb fast, since that’s when settling costs the most.
No. You settle one time, at or before the end of the term, usually by selling the home, refinancing or using savings. You still pay your traditional mortgage, property taxes and insurance as usual.
The cost at settlement. In Hometap’s published pricing, $50,000 on a $500,000 home settles for $123,920 after 10 years of 3.25% yearly growth. The CFPB also found that under many contracts the amount due grows about 19.5% to 22% a year early on.
The amount you settle for falls with the home’s value, but it could still be more than you received. In the same Hometap example, a home that loses 8% of its value still settles for $82,800 after 10 years.
The companies that address it say the cash generally isn’t treated as taxable income when you receive it, but none of them give tax advice. Our guide on whether HEI proceeds are taxable covers what we found.
Yes. Hometap, Splitero and Unlock all let you settle any time during the term with no prepayment penalty. You’d settle based on the home’s value at that point, and the cap matters most in the early years.
It depends on the company. Unlock and Splitero publish a 500 minimum, Hometap requires a 575 FICO score, and Unison wants a mid-FICO score of at least 620. You’ll also need enough equity and a home located in an eligible state, among other qualifying criteria.
How we put this together
This guide is Banks Done Right’s editorial view. Every company figure comes from that company’s own website: Hometap’s FAQs and pricing guide, Splitero’s How It Works, pricing and FAQ pages, Unlock’s FAQs and Unison’s FAQs. The market-wide findings come from the Consumer Financial Protection Bureau’s report on home equity contracts.
The cost table uses Hometap’s published percentages for a 10% investment and the 3.25% yearly growth setting in its calculator. We did the multiplication. Your own offer will differ.
| What we looked at | What we used |
|---|---|
| What we compared | Monthly payments, qualifying rules, fees, caps, terms and state coverage |
| Companies covered | Hometap, Splitero, Unlock and Unison, plus Point where noted |
| Cost example | $50,000 on a $500,000 home, settled in years 5, 6 and 10 |
| Independent source | CFPB report on home equity contracts |
Sources
- Hometap: FAQs and the pricing guide “How Hometap’s Home Equity Investment Pricing Model Works” (hometap.com)
- Splitero: How It Works, Pricing and FAQs (splitero.com)
- Unlock: FAQs (unlock.com)
- Unison: FAQs, including costs, qualification, refinancing and available states (unison.com)
- Point: Help Center, end of term options (help.point.com)
- Consumer Financial Protection Bureau: Home Equity Contracts, Market Overview
Take the next step.
Find out what Hometap could offer you.
Keep reading
ComparisonSplitero vs HometapCredit, term and cost for two common picks.
ComparisonHEI vs HELOC: Which One Fits YouHow the monthly payment, total cost and qualifying rules compare.
GuideRefinancing With an HEIWhat each company allows when you refinance.
Terms, pricing and availability change. Check the current terms on each company’s site before you apply.