A home equity loan and a home equity investment (HEI) both put cash in your hand against your house. The difference is how you pay for it. With a home equity loan you pay a fixed amount every month until it’s gone. With an HEI, also called a home equity agreement, you pay nothing monthly and settle once, later, with a share of what your home is worth.
Which costs less? On the example worked out below, $50,000 over 10 years, the loan costs $69,665 to $82,650 in total payments across rates of 7% to 11%. The HEI settles for $82,800 to $194,303, depending on what the home is worth in year 10. Every input is an assumption of ours, listed below, and none of it is a quote.
The short answer: If you can qualify for a home equity loan and the payment fits your budget, it is very likely the cheaper of the two. An HEI is for the homeowner whose credit, income paperwork or monthly budget rules the loan out. It costs more in almost every scenario below, and it only comes out ahead if the home loses a lot of value.
The two products side by side
The loan column rests on the Federal Trade Commission’s description of home equity loans. The HEI column rests on the published terms of the companies we’ve reviewed.
| What to compare | Home equity loan | Home equity investment (HEI) |
|---|---|---|
| Cash | A lump sum paid out upfront, for a specific amount | A lump sum paid out upfront |
| Monthly payment | Yes. Usually equal monthly payments over a fixed term | None |
| What sets the cost | A rate, usually fixed. The FTC says home equity loans usually have a fixed APR | The home’s value when you settle. Several companies publish a cap on the result |
| What you owe at the end | Nothing, once the payments have covered it. An interest-only option could end in a large balloon payment | One settlement: an agreed share of your home’s value or of its change in value, due by the end of the term |
| If your home’s value changes | Nothing changes. You owe the same amount | What you owe moves with it. It could still be more than you received |
| Who qualifies | Set by each lender, using your credit, income and equity. There’s no single national minimum | Published minimums of 500 to 620 credit at the companies we’ve reviewed. Hometap, Point and Splitero have no income requirement |
| Term | A fixed term set by the lender | 10 years at most companies, up to 30 at Point, Splitero and Unison |
| Closing costs | Lenders must disclose their charges and third-party charges, such as application, appraisal, credit report and attorney fees | A company fee of 3.9% to 4.99% plus third-party costs, taken out of your proceeds |
| Right to cancel | Three business days on a loan against your main home, in writing | Point describes a three-day rescission period. Ask any company you consider |
| Is the home at risk? | Yes. It’s the collateral | Yes. A lien secures it, and you must settle by the end of the term |
Loan column: FTC, Home Equity Loans and Home Equity Lines of Credit, read October 13, 2026. HEI column: our reviews of Hometap, Point, Splitero and Unison and the roundup of home equity agreement companies. Tax treatment differs too, and our HEI vs HELOC comparison covers it.
More: HEI vs HELOC, compared in full, and our comparison of home equity agreement companies.
The worked example
Here’s the setup you’ll be reading. Every row is an assumption we picked to make the arithmetic readable, not a quote from any lender or company.
| Input | Our assumption | Why we chose it |
|---|---|---|
| Home value today | $500,000 | A round number |
| Cash you want | $50,000 | 10% of the home’s value |
| Time | 10 years | The term at most agreement companies |
| Loan rate (fixed APR) | 7%, 9% and 11% | A spread we picked. Not any lender’s rate |
| Closing costs | $1,500 in each case | A placeholder. Real costs vary by lender, company, state and county |
| HEI company fee | 4.5% of $50,000, or $2,250 | The fee Hometap publishes: 4.5% of the Investment amount, up to $20,000 |
| HEI settlement | 18% of the home’s value in year 10 | Hometap’s published percentage for a 10% investment settled in years 6 to 10 |
| Home value in year 10 | $460,000, $500,000, $688,447 or $1,079,462 | Hometap’s calculator settings: down 8% in total, flat, up 3.25% a year, up 8% a year |
The HEI inputs follow numbers already on this site in our Hometap review. Other companies price differently, and Point, Splitero and Unison each use their own methods. Hometap’s cap on the result, about $313,534 at 10 years, is higher than every settlement below, so it never applies here.
The loan: the monthly payment
A fixed-rate loan paid off in equal monthly payments follows one formula. With P as the amount, r as the APR divided by 12, and n as the number of payments:
Monthly payment = P × r × (1 + r)n ÷ ((1 + r)n minus 1)
For $50,000 at 9% over 10 years, r is 0.09 ÷ 12 = 0.0075 and n is 120. Raise 1.0075 to the 120th power and you get about 2.4514. Then the payment works out to $633.38. Multiply by 120 and you’ve paid $76,005 in total, of which $26,005 is interest.
| Loan APR | Monthly payment | Total paid over 10 years | Interest | Cash after $1,500 closing |
|---|---|---|---|---|
| 7% | $580.54 | $69,665 | $19,665 | $48,500 |
| 9% | $633.38 | $76,005 | $26,005 | $48,500 |
| 11% | $688.75 | $82,650 | $32,650 | $48,500 |
Our arithmetic. Payments are rounded to the cent and totals to the nearest dollar, with totals computed from the unrounded payment. Closing costs are on top of the total paid.
The HEI: the settlement
There’s no payment to calculate. You settle once, in year 10, and the amount is 18% of whatever the home is worth then. For a $500,000 home, $50,000 is 10% of its value. Hometap‘s company fee is 4.5%, which is $2,250, and with our $1,500 for third-party costs you’d receive $46,250 of the $50,000.
| Home value in year 10 | Home is worth | HEI settlement (18%) | Extra over the 9% loan’s total |
|---|---|---|---|
| Value falls 8% in total | $460,000 | $82,800 | $6,795 |
| No change in value | $500,000 | $90,000 | $13,995 |
| Rises 3.25% a year | $688,447 | $123,920 | $47,915 |
| Rises 8% a year | $1,079,462 | $194,303 | $118,298 |
Our arithmetic: 18% of the home’s value, rounded to the nearest dollar. The last column subtracts the 9% loan’s $76,005 total. Closing costs and the company fee are on top at the HEI as well, and the cash you receive is lower than $50,000 in both cases.
The two together
Set the totals next to each other and the HEI costs more in every row at every rate. The closest call is the 11% loan against a home that loses 8% of its value: $82,650 against $82,800.
When would the HEI win? When the settlement is smaller than what the loan would have cost. Because the settlement is 18% of the home’s value, the break-even home value is the loan’s total divided by 0.18. For the 7% loan that’s $387,028, a drop of 22.6% from today’s $500,000. For 9% it’s $422,253, down 15.5%. For 11% it’s $459,167, down 8.2%. So the HEI is the cheaper option only if the home loses more than about 8% to 23% of its value over the decade, depending on the loan’s rate, and in a rising market it costs a good deal more.
On cash, the loan puts $48,500 in your hand and the HEI $46,250.
Both cash numbers rest on our $1,500 placeholder.
What the example leaves out
The loan’s payments are spread across 10 years, and the settlement is one payment at the end. The totals aren’t adjusted for when the money leaves your account, which flatters the HEI a little. On the other side, the loan asks for $633.38 every month starting now, and you have to qualify for it. The HEI asks for nothing until settlement and then everything at once.
The year 10 value is the one number nobody knows, you included. And the percentage isn’t the same at every company: a different company could use a different method entirely, and your own offer sets your own figures. Point, Splitero and Unison each publish an example, and we compare them in our roundup. The CFPB reached a similar finding in a January 2025 report on home equity contracts, which our HEI vs HELOC comparison covers: the contract cost more whenever the home appreciated.
Taxes are left out too. Our HEI vs HELOC comparison covers how IRS Publication 936 treats loan interest and what it doesn’t say about agreements.
Which one fits you
A home equity loan fits you if
- You can document your income and the payment fits your budget
- Your credit clears the lender’s bar
- You know exactly how much you need, and you want a payment that never changes
- You expect the home to gain value and you want to keep all of the gain
- You might sell or refinance within a few years
A home equity investment could fit you if
- Your credit score falls between 500 and the low 600s
- Your income is hard to document, or you’re between jobs
- Your budget can’t carry another monthly payment
- You have at least 25% to 30% equity
- You can name how you’ll settle: a sale, a refinance or savings
If you’re leaning toward an HEI, our reviews give you the numbers one company at a time: Hometap, Point, Splitero and Unison. If a loan or line of credit looks more like you, Figure is the lender we’ve reviewed. It offers a HELOC that’s drawn in full at closing, with fixed and variable rates.
Home equity loan vs home equity investment questions, answered
A home equity loan is repaid in monthly payments with interest, and an HEI has no monthly payments and settles once with a share of your home’s value. The FTC describes the loan as a lump sum, usually at a fixed rate, repaid in equal monthly payments over a fixed term.
In our example, the HEI costs more in every scenario we ran. The loan totals $69,665 to $82,650 over 10 years at 7% to 11%, and the HEI settles for $82,800 to $194,303 depending on the home’s value. The HEI comes out cheaper only if the home loses more than about 8% to 23% of its value, depending on the loan’s rate.
Someone whose credit or income paperwork falls short of a lender’s bar. The companies we’ve reviewed publish minimum credit scores of 500 to 620, and Hometap, Point and Splitero have no income requirement. Qualifying also depends on equity, property and state.
The companies we’ve reviewed charge a company fee of 3.9% to 4.99% plus third-party costs, taken out of your proceeds at closing. On $50,000, a 4.5% fee is $2,250. Nothing is due out of pocket to apply.
Hometap, Point and Splitero say there is no prepayment penalty. Unison lets you buy it out at any point, though it doesn’t share in a loss on a buyout. Settling in the first year or two costs a lot relative to the cash received, because the company’s percentage applies from the start.
Start with the home equity agreement roundup, then each company’s review. Every company publishes its own example, and none of them is a quote.
How we worked it out
All the arithmetic on this page comes from a short script. Loan payments use the standard amortization formula shown above. HEI settlements are the stated percentage of the stated home value. Payments are rounded to the cent and totals to the nearest dollar, and the totals use the unrounded payment times 120. The loan side of the comparison draws on the FTC’s description of home equity loans, read October 13, 2026. The HEI side draws on our published reviews, whose company figures were read on October 6, 2026.
Sources (4)
Government sources were read on the date shown. The company figures in our reviews were read on each company’s own website on October 6, 2026.
- Federal Trade Commission. Home Equity Loans and Home Equity Lines of Credit. consumer.ftc.gov. Accessed October 13, 2026.
- Banks Done Right. Hometap Review 2026. banksdoneright.com. Accessed October 13, 2026. Source of the 4.5% fee, the 18% percentage for years 6 to 10, the cap formula and the calculator settings.
- Banks Done Right. HEI vs HELOC in 2026. banksdoneright.com. Accessed October 13, 2026. Source of the CFPB home equity contracts finding.
- Banks Done Right. Top Home Equity Agreement Companies of 2026. banksdoneright.com. Accessed October 13, 2026. Source of the company table, terms and credit minimums.
Take the next step.
If a payment doesn’t fit, see what an agreement could offer. If it does, price the credit line.
$15,000 to $750,000. The minimum credit score is 600 in most states. Funding in as few as 5 days on qualifying loans under $400,000.
Keep reading
RoundupTop Home Equity Agreement Companies ComparedCompare costs, minimum credit scores and state coverage for each company.
ComparisonHEI vs HELOC: Which One Fits YouHow the monthly payment, total cost and qualifying rules compare.
GuideWays to Tap Home Equity Without RefinancingWays to reach your equity while keeping your current mortgage.
Terms, pricing and availability change. Check the current terms on each company’s site before you apply.