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To qualify for a HELOC, lenders typically look for several key criteria:
1. **Home Equity**: You generally need to have at least 15-20% equity in your home. This is calculated by subtracting your current mortgage balance from your home's market value3.
2. **Credit Score**: A good credit score is crucial. Most lenders require a minimum score of 620, but higher scores can help you secure better rates4.
3. **Debt-to-Income Ratio**: Lenders generally prefer a debt-to-income ratio of 43% or less. This ratio compares your monthly debt payments to your monthly income5.
4. **Income and Employment History**: Stable income and employment history are also important factors that lenders consider when approving a HELOC6.