How to use your home equity to fund your next move
Finding funds for down payment options on your next home can be a daunting task, but if you’re already a homeowner, you could access the value of your property to help fund your move. Guaranteed Rate Affinity can help you figure out how much cash you could access with a couple of options.
Home prices have increased annually by an average 3.3% across the U.S. as of March 2025, so the value of your home might have gone up more than you expected. Accessing that additional value is simple and could be the key to making that move.
Ready to apply? Apply now to get started on your homebuying journey.
Home Equity Line of Credit (HELOC)
A Home Equity Line of Credit (HELOC) can be a great way to tap into a new source of funds to pay for just about anything, including as a down payment option for a new home. Unlike some other types of loans, Guaranteed Rate Affinity HELOCs don’t limit how you use your funds.*
And because Guaranteed Rate Affinity HELOCs fund so fast — especially compared with a traditional HELOC — you could have money in your account in as little as five days.**
Guaranteed Rate Affinity’s HELOC lets homeowners borrow money based on their available equity — the difference between their home’s value and what’s still owed on their mortgage. You can draw on that difference to fund your move and pay it back later.
If you’re considering a HELOC, you’ll need to meet certain lender requirements before you can access funds. Here are a few things you’ll want to check:
Credit score
Most lenders require a credit score of at least 620 to qualify for a HELOC, but a higher credit score could help you secure a lower rate.
Debt-to-income ratio
Lenders will evaluate the percentage of your monthly income that goes toward debt to ensure you can handle another financial product. A DTI below 43% is ideal, as it shows lenders that your financial situation is stable.
Home equity
Your home equity is the difference between your home’s value and what you still owe on your first mortgage. You typically need at least 15% equity in your home to qualify for a HELOC.
Home appraisal
Some lenders require a property appraisal to ensure they are lending based on accurate market value, but we use an alternative method to determine home value, so no home appraisal is required for a HELOC.
Ready to take advantage of your home equity? Start your application to get the benefits a HELOC has to offer.
Cash-out refinance
A cash-out refinance*** is just what it sounds like: You replace your current mortgage with a larger loan and get the difference back in cash to use for expenses, including down payment options for a new home.
When you sell your current home, what you get from the sale could pay off the new mortgage, including the amount of cash you took out.
With that in mind, you want to have a clear view of your financial situation and the potential risks of taking on a bigger mortgage. You will need to repay that money to your lender, but it’ll be bundled into your refinanced mortgage. As such, you should always approach a cash-out refi with an immediate purpose for your added funds.
Seeing a cash-out refi in action can help explain how it could work for you.
Let’s say you have a $400,000 home loan and you’ve already paid off $100,000 of the principal with your down payment and monthly payments.
- Total loan amount: $400,000
- Principal left to be paid: $300,000
- Current market value of property: $500,000
- Total home equity: $200,000
Lenders will never fund the full amount of equity in a cash-out refi, so that $200,000 is just a starting point. You’ll probably need to maintain at least 20% of the new loan amount as equity. In this case, that’s $100,000, so we’ll subtract that from the home equity total.
- Available home equity: $100,000
- Estimated closing costs: $5,000
- Cash-out payment: $95,000
You could then use that $95,000 as a down payment option for a new home or even on a vacation house.
Ready to take advantage of your home equity? Apply today to get the benefits a cash-out refinance has to offer.
Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Refinancing your mortgage may increase costs over the term of your loan. Restrictions may apply.
*Guaranteed Rate Affinity's home equity line of credit (HELOC) is an open-end product where the full loan amount (minus the origination fee) will be 100% drawn at the time of origination. The initial amount funded at origination will be based on a fixed rate; however, this product contains an additional draw feature. As the borrower repays the balance on the line, the borrower may make additional draws during the draw period. If the borrower elects to make an additional draw, the interest rate for that draw will be set as of the date of the draw and will be based on an Index, which is the Prime Rate published in the Wall Street Journal for the calendar month preceding the date of the additional draw, plus a fixed margin. Accordingly, the fixed rate for any additional draw may be higher than the fixed rate for the initial draw. This product is currently only offered in the states of Arizona, California, Colorado, Connecticut, Florida, Georgia, Illinois, Massachusetts, North Carolina, New Jersey, Ohio, Pennsylvania, Rhode Island, and Virginia. The HELOC requires you to pledge your home as collateral, and you could lose your home if you fail to repay. Borrowers must meet minimum lender requirements in order to be eligible for financing. Available for primary, second homes and investment properties only. Dependent on minimum credit score and debt-to-income requirements. Occupancy status, lien position and credit score are all factors to determine your rate and max available loan amount. Not all applicants will be approved. Applicants subject to credit and underwriting approval. Contact Guaranteed Rate Affinity for more information and to discuss your individual circumstances. Restrictions Apply.
**Approval may be granted in five minutes but may be subject to verification of income and employment. Five business day funding timeline assumes closing the loan with our remote online notary. Funding timelines may be longer for loans secured by properties located in counties that do not permit recording of e-signatures or that otherwise require an in-person closing. In addition, funding timelines may be longer if we cannot readily verify that your property is in at least average condition with no adverse external factors with a property condition report and may need to order a desktop appraisal to confirm the value of your property.
***Using funds from a Cash-out Refinance to consolidate debt may result in the debt taking longer to pay off as it will be combined with borrower’s mortgage principle amount and will be paid off over the full loan term. Contact Guaranteed Rate Affinity for more information
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