Can I get a HELOC if I've paid off my mortgage?​

Yes, you can get a HELOC if you’ve paid off your mortgage. 

Home equity lines of credits, or HELOCs, are not just for those who currently have home loans. HELOCs typically work as a second mortgage for those who already have home loans. But if you have paid off your mortgage, a HELOC will be your first and only mortgage. 

In fact, borrowers who have paid off their homes and choose to get HELOCs could end up accessing more funds than those with mortgages. 

To access your HELOC funds for any expenses you may have, begin your HELOC application today. 

Whether you have paid off your house for a while or have just finished your final monthly mortgage payment, you can take equity out of your home. 

There are several options for those with paid-off homes or those who still have mortgages to tap into their equity: HELOC, home equity loan or cash-out refinance. 

With a paid off home, all three of these options will work as a first mortgage.  

If you already have a home loan, HELOCs and home equity loans work as second mortgages, while a cash-out refinance will replace your original loan.  

Depending on your lender, you could access anywhere from 80% to 90% of the equity from your paid-off house. 

Your home equity is based on the difference between your home’s current value and the remaining mortgage balance you have. But because your home will be paid off, you will be able to access up to 90% of your home’s current value.  

Your home’s current value will be determined by a home appraisal. To better see how much you could borrow, you could use an online HELOC calculator. 

Those looking to access their home equity to update their home could look at which home improvements have the best return on investments. These improvements could increase your home equity as you tap into it. 

If you are looking to access your home’s value without selling, you can tap into your home equity through a HELOC, home equity loan or cash-out refinance. 

HELOCs offer borrowers a line of credit based on their home equity, similar to a credit card. With a paid-off home, you potentially would be able to make draws for more funds than you would if you still had a mortgage. 

Typically, HELOCs work in two periods: a draw period and a repayment period.  

During your draw period, you can access funds based on your approved amount while only paying interest on your accessed funds. After that, you are no longer able to make draws and will have to pay back your loan amount and interest. 

Another HELOC option is one where you will get your full amount up front, and as you pay the amount down, you will have the option to make additional draws. 

HELOCs are second mortgage if you have a home loan, so you will have to pay it back alongside your existing mortgage. 

Home equity loans offer you a lump-sum amount up front. The amount you receive will be based on your home’s current market value and will need to be paid back monthly. The funds from a home equity loan, similar to a HELOC, can be used for any expenses you may have.  
If you still have a mortgage left, this will work as a second mortgage and will need to be paid back monthly alongside your original home loan. 

A cash-out refinance is typically used, as the name suggests, as a refinance of an original mortgage. But unlike a traditional mortgage refinance, this option give you access to funds. 

A cash-out refinance changes the terms of your loan and offers you a lump-sum based on your current home’s value minus your remaining mortgage balance. A cash-out refinance replaces your original mortgage, so you don’t have to pay two loans at the same time. 

If you own your home, a cash-out refinance will give you your total approved loan amount up front. 

If you are looking to get a HELOC without a mortgage, you can start your application online with a trusted lender. 

Rate’s HELOC application is 100% digital and could get you access to up to $400,000 in funds in as little as five days. During your application, you will be connected with a professional Loan Officer who is there to assist you and answer any questions you may have about your HELOC or application. 

Whether your mortgage is paid off or you are still working on it, you can start your HELOC application online today! 

Information provided is for educational purposes only. It should not be construed as financial or legal advice or instruction. Rate  does not guarantee or assume liability for the accuracy, completeness or timelines of the information. You should conduct additional research before making any mortgage related decisions. 

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