How long does it take to get a HELOC?

Once you’ve decided to tackle a big financial challenge, it’s exciting to hit the ground running. Just think—if you can access funds quickly, you can say goodbye to high-interest credit card debts and start saving money on interest payments. Or you can begin your home renovation project right away, without having to wait until you’ve saved up enough money. 

If you’re a homeowner, taking out a home equity line of credit (HELOC) might be the right solution to your financial puzzle. Let’s take a look at what you can expect.

How long does it take to get a HELOC?

It’s possible to have your HELOC approved and available within two weeks—and sometimes less. Your timeline will depend on the lender you choose. Some lenders have longer processing times that could have you waiting a month or two.

You can shorten the time to approval and funding by getting ready before you apply. Your lender will help you put your paperwork in order so there’s a better chance for a faster processing time. 

The HELOC or home equity loan process

A HELOC is similar to a home equity loan and is largely based on the amount of equity, or ownership, you have in your home. Your home equity is the market value of your home minus the amount you owe on your mortgage. For example, if your home is worth $450,000 and you still owe $300,000 on your mortgage, you have $150,000 in home equity. Your lender will hire a professional appraiser or use Automated Valuation Model software (AVM) to determine the market value of your home. 

For both HELOCs and home equity loans, the lender will also check your credit and verify your income. They’ll let you know how much you can borrow, based on your equity, your credit score, your financial situation, and their loan limit.

Home equity loans and HELOCs are a little different in the way you receive the money:

• Home equity loan: You’ll receive all of the money in one lump sum. You can’t change the loan amount later if you decide you need less or more than what you borrowed. 

• HELOC: You’ll be given a limit, similar to how a credit card works. You might receive your entire credit limit up front when you first get the loan. Then, for the first few years, you can make payments and borrow more as often as you like, up to your limit. 

Home equity loans and HELOCs are second mortgages, so if you sell your home, you’ll need to pay off your loan as well as your mortgage.

The HELOC - steps in the process

The way a HELOC works is straightforward. Here are the steps to getting one and how this type of loan works:

• Application: You’ll choose a HELOC lender and submit your application. You’ll need to provide information about your income, employment, and assets, plus details about your house. 

• Wait for approval: Your HELOC application will go through underwriting. This is when the lender carefully reviews your information and determines whether to approve your loan. 

• Review the loan offer: After underwriting and approval, your HELOC lender will tell you how much you can borrow and your interest rate. Be sure to read your loan documents and ask any questions. 

• Close the loan: Once you’re satisfied with the lender’s offer, you’ll sign the documents to close the loan and receive the money. 

• Draw period: The HELOC’s draw period is the first part. It typically lasts for 5 to 10 years. The lender gives you a credit limit or maximum loan amount, and you can withdraw or spend funds as you need to. You might receive a credit card or paper checks tied to your HELOC account, or the lender might deposit the money into your bank account. If you pay down your balance, you free up more of your credit limit and could borrow against it repeatedly. It’s similar to how a credit card works. You can spend up to your limit for the entire draw period.

• Repayment: At the end of your draw period, you can’t borrow more. You’ll pay the loan back in equal monthly installments for the term (number of years) you chose when you got your loan. The repayment period can be between 5 and 30 years, depending on the lender. 

How to get your loan funded fast

Depending on the lender, you might be able to get your HELOC funded as quickly as 10 days. Ask the lender what identifying information and documents you’ll need to provide, so you’re more likely to have your HELOC funded quickly. Some items to have ready include:

• Proof of homeownership.

• Identification that verifies your name, birth date, address, and Social Security number.

• Documents that show your income, such as pay stubs or tax returns.

• Bank statements and other statements that show how much money or other assets you have (like investments).

You also don’t want any surprises when the lender checks your credit. Check your credit report ahead of time in case there are errors or issues to address before you apply.

Last, be ready for the appraisal. 

Some HELOC lenders can verify your home’s current market value using Automated Valuation Model software. In other cases, they might send a human appraiser to your home. The appraiser may or may not need to enter your home. Find out when they’re coming so you can secure your pets, unlock your gate, put away those stacks of laundry, pick up skateboards on the walkway, or do anything else you need to do to prepare for the visit.

HELOC processing times compared to other options

With some lenders, like Achieve, you could close on a HELOC as little as 10 days after you apply.

Your timeline for a HELOC is different from other borrowing options, such as a personal loan or a cash-out refinance. 

A personal loan is likely your fastest option to borrow. Personal loans are typically unsecured (not guaranteed by an asset), so there’s no appraisal. Depending on the lender, it’s possible to apply and be approved on the same day. Then you could get the money within one to three business days. 

A cash-out refinance is a new mortgage that replaces your current mortgage. The new loan is bigger than the old one, and you get the difference back in cash you could spend. Expect it to take around the same amount of time as any traditional mortgage (about 43 days on average).

Factors that impact HELOC approval time

• A lender’s approval process: Some lenders specialize in HELOCs and move quickly.

• Your credit history: Check ahead of time to ensure there are no red flags on your credit profile to clear before applying.

• Your documentation: Ask the lender for a list of what you’ll need to apply. 

• Whether you apply with a co-applicant: The lender needs time to process each person’s application.

Typical HELOC closing timeline

Choosing a lender is the first step to getting your HELOC. Talk with a lender who can give you an idea of where you stand by doing a soft credit check that won’t harm your credit score. 

Applying for the loan generally won’t take longer than a day, assuming you’ve located all the documents you’ll need to show your income, assets, and information about your home. 

Once you’ve applied for your HELOC, your loan will go to underwriting. You can expect this to be the longest part of your closing timeline. It could take several days to a few weeks for the lender’s underwriters to decide if you’re eligible based on your credit, income, and assets. 

After you’ve been approved, you’ll sign paperwork to close the loan, and should get access to your HELOC funds within a few days. 

How to prepare for a faster HELOC approval 

The best step you can take to ensure a faster HELOC approval is tracking down your paperwork. This includes pay stubs/tax returns, personal identification, bank and investment statements, mortgage statements, and information about your home (such as property tax amounts, HOA dues, date it was built, and any data the appraiser will need to value it). Be ready to turn over this information as soon as the lender asks for it. 

You can also seek out lenders that use AVM software as this could save time over those that use human appraisers who must visit your property. 

Benefits of etting your funds quickly through a HELOC

Here are some HELOC benefits to consider:

• Relatively low cost: A HELOC is tied to your home, which lowers the risk for your lender. That means HELOCs usually have a lower interest rate compared to other borrowing options.

• Potential tax benefit: The interest on a HELOC could be tax deductible if you use the funds for home improvements. Talk to a qualified tax professional about the details of your situation.

• Easy access to cash: Once your HELOC is approved, you can get your money anytime you need it. You can use the money, up to your limit, as you need it. That could be paying off other debts, fixing up your home, covering an emergency expense, upgrading your electronics, or any other financial priority you have. 

• Flexibility: You have a great deal of freedom in how you can use your HELOC. This is one way to use your most valuable asset—your home—to meet your financial goals.