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Debt & Credit Help

How To Use Home Equity to Pay Off Credit Card Debt (Plus 7 Options You Haven’t Considered)

Paying off debt is easier than you think if you have the right plan.

Last updated April 23, 2025 | By FinanceBuzz Editors

A HELOC (Home Equity Line of Credit) allows you to borrow against the equity in your home, typically at a lower interest rate compared to other types of debt, such as credit cards or personal loans.

If needed, you can use a HELOC to pay off high-interest debt or fund home renovations. Lenders typically allow you to borrow up to 85% of your home's value minus any outstanding mortgage balance. Once your HELOC is set up, draw funds as needed to pay off your higher-interest debts.

For example: Suppose you have $20,000 in credit card debt at an 18% interest rate. If you have $50,000 in home equity, you might get a HELOC with a 9% interest rate. By using the HELOC to pay off the credit card debt, you reduce your interest payments significantly, making it easier to pay down the principal.

HELOCs aren't for everyone, though. If it doesn't sound like the right choice for you, there are other options available, including Home Equity Agreements, debt help, incredible credit card welcome offers, and more. Take a look at the list below and find the solution that's right for you: 

Use your home's equity to pay off credit card debt

Rocket Mortgage1 could help you consolidate your debt. You could pull money out of your home without a second mortgage or HELOC … meaning you could tackle your debt head-on while eliminating multiple monthly payments.

For example, let's say you're able to take out $50,000 with a cash-out refinance. You use $20,000 to pay off high-interest debt and $30,000 for home renovations, lowering your total monthly payments and increasing your home's value. That's a win-win.

See how much could be available to you: Visit Rocket Mortgage and click “Take cash out.” Then use the simple calculator to estimate how much cash you could get out of your home.

See How Much Cash You Could Get: Calculate Your Home Equity for $0

Get out of $20,000 or more in credit card debt

If you have a lot of debt, getting out of it can feel stressful (and nearly impossible). Here’s the problem: the longer you put off tackling it, the harder it gets to fix. If you don’t take control of it early on, it can add undue stress to your life for years. But what if there was a way to get out of debt once and for all?

TurboDebt2can help. If you have more than $20,000 in debt from credit cards, medical bills, collections, or personal loans, their representatives might be able to assist you in consolidating your debt into one low monthly payment.

Best of all? There are zero fees until your debt is resolved, and you could be debt-free in as little as 24-48 months. To get started, just answer a few simple questions. It only takes 30 seconds to see if you qualify!

Try TurboDebt

Ohio Driver? Cancel your car insurance

Driving without car insurance is illegal, but if you do this, you’re not actually breaking the law.

Our new tool can help you see if you’re overpaying for car insurance in just a few clicks. You’d be shocked by the difference. $233 per month is what they wanted to charge me. I thought that was the best price, don’t even look anywhere else. Right? Wrong.

I used our new tool and now I’m able to pay just $50 a month for two cars.Too many insurance companies do this. They push up our rates and make us pay even more. But if you want to try this new tool and compare and score same-day savings, here’s what to do:

  1. Click the link below and enter your zip code, date of birth, and email.
  2. Answer a few questions about your car’s make and model to get matched with top offers.
  3. You will get a phone call from an agent and they’ll set it up for you right away.

Compare rates now and score same-day savings today!

I can hardly believe I waited so long to do this, but I’m glad I finally did. It takes two minutes. Super fast. You have to trust me on this. Just try it out.

Transfer your credit card balance and pay no interest for 21 months (yes, it is kind of remarkable)

Imagine getting rid of your credit card and high-interest payments. Sounds great — right? You could dramatically change your financial picture with one of the industry-leading low-interest cards — the Citi Simplicity® Card - and pay no interest until 2027 on balance transfers!

If you want to kick high-interest credit card debt to the curb, this is one of the leading get-out-of-debt cards available. Transfer high-interest debt to this card with a 0% intro APR for 21 months on balance transfers (APR then 18.24% - 28.99% (Variable); balance transfers must be completed within 4 months of account opening). Your payments can go directly to paying down your balance without incurring a pile of additional charges. That could save you hundreds of dollars in interest!

The best part? The Citi Simplicity® Card boasts no late fees and has no annual fee.

Click here to apply now for the Citi Simplicity® Card(Rates and fees)

Access your home equity to cover debt — no payment or interest charges for 10 years

Struggling with debt? If you want to utilize your home equity to help pay it down, you’re probably frustrated right now. The strict qualifications of the traditional financial system have left many unable to.

But there’s another option you may not have heard of, a home equity agreement (HEA) from Unlock.

With Unlock, you could tap into up to $500,000 of your home equity and make no payments for ten years. It’s not a home equity loan, HELOC, cash-out refinance, or reverse mortgage.

An Unlock HEA is not a loan at all. Instead, it gives you cash in exchange for a portion of your home’s future value:

  • Access up to $500,000 of your home’s equity.
  • No payments or interest charges for ten years.
  • Not subject to traditional interest rates.
  • Minimum credit score: 500+.

You can verify your property value and equity in 60 seconds — and with no impact on your credit score: Start by entering your property address here.

And don’t worry — Unlock has an A+ rating from the BBB. So see what you’re eligible for, and you could have the funds you need to end your toxic debt loop sooner than you think.

Apply for a home equity agreement with Unlock

Stop going into debt over expensive home repairs when this exists

Sounds crazy. And maybe you’re not even sure if this is real. But … you’re probably curious anyway. Choice Home Warranty makes it so you might be able to save $100s in home repairs!

They’ve been around since 2008 (so you know they’re legit) and they offer affordable plans to cover appliances and systems in your home that could break down from routine wear and tear.

Think of it like this: Say your air conditioning unit breaks down during a heatwave. Instead of paying $1,500 for repairs, you may only need to pay a $100 service fee with Choice Home Warranty, and their techs come and fix it ASAP. This could save you $1,400 almost instantly!

Choose a plan here and you can still lock in their ultra-low 2024 rates (for a limited time). Then, whenever a covered system in your home breaks down, all you have to do is make your claim online or give them a call. Their team is available 24 hours a day, 7 days a week.3

Choose a plan from Choice Home Warranty here and lock in 2024 rates

P.S. Use the links above and you’ll get $50 off and 1 month free. We don’t know how long this will last, so take advantage of it today before it disappears.

Ask this company to help you pay off your late tax debt

Past-due tax debt is overwhelming.

It weighs on your mind and causes massive anxiety. You end up emotionally and physically drained. Even worse when the IRS starts sending letters threatening wage garnishment and huge fines.

Alleviate Tax is designed specifically to help you get out of tax debt faster and could reduce some of the debt you owe.

While most tax companies just put you on a payment plan and file your taxes for you, Alleviate Tax talks to the IRS directly. They can help you pay off your tax debt faster while potentially reducing what you owe.

Important: Not everyone will qualify. To take advantage of this special program you must owe more than $10,000 in past-due taxes.

Answer a few questions to get started

Borrow up to $50k to finally crush your debt

Looking for some cash to pay off credit card debt? A personal loan could help.

Our partner AmONE will match you with loan providers to fit your specific needs. Just answer a few quick questions and they’ll show you multiple loan offers. There's no fee and no minimum credit score needed to see your rates.

Why not check if you qualify? As long as you’re approved, you could receive your loan as early as the next business day.

Get a loan offer here

Get rid of $20k+ debt (faster than you think)

Amazingly, there is a unique option available to people with $20k+ in debt to potentially reduce the amount you owe and possibly save hundreds each month. If you have credit card debt, paying your bill each month is anxiety-inducing … and sometimes close to impossible with what you have in the bank.

We researched 15+ companies that could help. If you owe less than $100,000 in credit card debt, we can match you with companies that could help you pay off your debt almost instantly.

You don’t need a perfect credit score, and checking your options here won't affect your credit.

See what you qualify for

Turn Home Equity Into Cash

Rocket Mortgage
4.7
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Rocket Mortgage Benefits

  • Get a cash-out refinance to access cash without a HELOC or second mortgage1
  • Use the money to consolidate high-interest debt
  • Might impact your monthly mortgage payment less than you think
  • Use the simple calculator to estimate what you could get out of your home
  • Great option for those with a 680+ credit score
See how much cash you could get

Frequently Asked Questions

What is home equity?

Home equity is the difference between the value of a home and the amount of money still outstanding on the mortgage. In other words, it’s essentially the portion of the home that is owed outright. This value can be expressed as a percentage or dollar amount. For example, a home valued at $400,000 with $100,000 remaining in mortgage payments has $300,000 or 75% worth of equity.

Some lenders may require a full appraisal to determine a home's value. However, automated valuation models, which consider local property values and recent home sales, are more common.

Visit Rocket Mortgage

How can I utilize my home equity?

Home equity is one of the greatest financial benefits of owning a home. You can tap into the equity you built for multiple reasons, including:

  • Debt consolidation: Pay off multiple other types of debt with your home equity loan or line of credit to keep your debt organized and potentially get a low interest rate.
  • Home renovations: Use your home equity to help pay for important home renovations and improvements, which can in turn increase your home value.
  • Medical bills and emergencies: Cover costly medical bills or other unexpected expenses by tapping into your home equity.
  • Large purchases: Use your home equity to cover large expenses involved with weddings, buying a new car, or moving houses.

Visit Rocket Mortgage

What are the different types of home equity products?

The most common way to access your home equity is a home equity loan or home equity line of credit (HELOC). There are a few other products as well, so let’s quickly break them down.

Home equity loan

A home equity loan is a type of second mortgage that’s granted based on the equity you currently have in your home. You’ll be limited to borrowing up to 85% of that equity value, with other factors such as your credit score and debt-to-income ratio also impacting the final loan amount.

You’ll receive your loan in one lump sum and will make monthly payments, typically at a fixed interest rate.

Pros

  • Consistent monthly payments at a fixed interest rate.
  • Relatively lower interest rates compared to personal loans or credit cards.
  • Typically have repayment periods, spanning up to 30 years.
  • If you use your loan for home improvements or repairs, your home equity loan interest payments may be tax-deductible.

Cons

  • Your home is collateral, so if you don’t repay the loan, you could face foreclosure.
  • You typically need at least 20% equity in your home to qualify for a home equity loan.
  • You’ll need to pay closing costs, with are often around 1% of the total loan.
  • It can take a month or longer to access your loan funds.

HELOC

Unlike a home equity loan, HELOCs work more like a credit card — as a revolving line of credit (with an approved credit limit) that you repay based on what you spend. Although some home equity loans have fixed interest rates, most HELOCs will have variable ones — meaning you might pay more or less interest on your borrowed amounts over the life of the loan.

HELOCs are split into two periods: the draw period and the repayment period. During the draw period, you can access funds anytime you need them. Typically, you’ll only need to pay interest on borrowed amounts during this time. Once you enter the repayment period, you can no longer borrow cash, and you’ll need to make regular payments on both the principal and interest.

The value of your HELOC likely won’t exceed 85% of your home’s equity, and approval will depend on your overall creditworthiness.

Pros

  • Only need to repay what you borrowed (similar to a credit card) and not the full approved amount.
  • Flexibility of accessing funds when you need it, sometimes in the form of debit cards, checks, ATM withdrawals, or online transfers.
  • Ability to access funds up to 10 years (the draw period) before entering the repayment period (typically 20 years).
  • Making regular payments could help boost your credit score.

Cons

  • Rates are often variable, so even if rates are low when you take out a HELOC, they could be higher when it comes time to repay.
  • Because you can access funds at any time and aren’t on a strict payment schedule during the draw period, it can be easy to run up a high balance.
  • You could have to pay additional fees, such as an early cancellation fee, an inactivity fee, or a withdrawal fee.
  • A HELOC borrows against your home equity, which can deplete your net worth and limit additional opportunities to borrow funds.

Home equity agreement (HEA)

A home equity agreement is a contract between a homeowner and an investment company that allows the homeowner to access funds from their home equity without taking out a loan. In exchange for a percentage of future equity, the homeowner receives a lump sum of cash.

The benefit of this agreement is that you don’t have to make monthly payments or account for accruing interest. Instead, you’ll need to repay the investor the principal plus the agreed-upon percentage of the home’s appreciation within a certain time period (typically between 10 and 30 years). If you sell your home within that timeframe, the investor will instead receive a portion of the home sale.

Pros

  • Access to a lump sum of cash quickly.
  • No monthly payments and no interest accrual.
  • Typically lower credit scores are accepted compared to home equity loans or HELOCs.
  • The lump sum payment is usually not taxable as income.

Cons

  • You are giving up some of the profit (equity) when it comes time to sell your home.
  • Repayments aren’t monthly, so you’ll owe a large sum by the end of the term.
  • If you aren’t able to pay what you owe, you may be forced to sell your home.
  • Your home’s value may skyrocket, increasing the amount owed at repayment.

Home equity investment (HEI)

Similar to a HEA, a home equity investment allows you to access cash from your home equity without a loan. The key difference between a HEA and a HEI comes down to the repayment process. While a HEA repayment is based on the home’s future total value, a HEI is based on the future change in value.

In other words, if your home value increases significantly when it comes time to pay off your HEI, you could be looking to pay quite a bit more than you originally received. Some HEI lenders offer a protection cap, establishing the maximum amount you need to repay regardless of home value increase. Conversely, if your home value decreases, some HEI lenders will share in the loss.

Pros

  • Most HEI companies do not take debt-to-income into consideration for approval.
  • One lump sum with no restrictions on how you can use the funds.
  • No monthly payments and a long repayment term, up to 30 years.
  • Secondary properties may qualify for a HEI as well.

Cons

  • Will need to repay the investment either when you sell the home or with a cash-out refinance.
  • Restrictions on location and property types that can qualify for a HEI.
  • Since the cost is tied to the value of your home, you won’t know exactly how much you’ll need to repay.
  • Risk of foreclosure if you are unable to repay your HEI.

Visit Rocket Mortgage

How much money can I access with my home equity?

When it comes to a home equity loan or HELOC, lenders can use different formulas to calculate how much you can borrow. The various factors taken into consideration include your creditworthiness, existing debt, your perceived ability to repay the loan, the appraised value of your home, and the loan-to-value ratio (LTV).

In general, the higher the amount of equity you have in your home, the bigger the loan amount you could receive.

With HEAs and HEIs, the current value of your home and your available equity are two large considerations. Since these companies benefit from an increase in your home’s value, some may apply a reduction to the appraised value to adjust for risks. 

Visit Rocket Mortgage