Lenders evaluate credit score, home equity, DTI, and CLTV to approve a home equity loan. Most require 620+ credit and 15-20% combined equity. Here's everything you need to qualify. Dream Financial Management since 1994.
620+
Credit Score
15-20%
Home Equity
43%
DTI Max
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Getting approved for a home equity loan is more about your overall financial picture than any single number. Lenders weigh your credit score, how much equity you have, your debt-to-income ratio, and your combined loan-to-value (CLTV). Most lenders require a 620+ credit score and at least 15-20% equity, but strong applicants can qualify even with a lower score if they offset it with high equity and low debt. Here's what each requirement means in practice.
Most lenders require 620 FICO minimum. Rates improve significantly at 700+. Some lenders accept 580+ with compensating factors like high equity and low DTI.
Combined loan-to-value (CLTV) typically capped at 85%. Some lenders go to 90%. Example: $500K home, $300K first mortgage = $125K max home equity loan at 85% CLTV.
Total monthly debts including both mortgage payments must not exceed 43% of gross income. Some lenders allow up to 50% with high credit scores.
Pay stubs (30 days), W-2s (2 years), tax returns (2 years if self-employed), bank statements (2-3 months), mortgage statement, homeowners insurance declaration.
720+
Best rates, easiest approval
620-719
May qualify with higher equity or lower DTI
Below 620
Compensating factors needed, or improve first
Don't meet all the requirements? Don't give up. Lenders weigh the full picture — high equity can compensate for a lower credit score, and a better DTI ratio can offset higher closing costs. A qualified loan officer can help you find a lender whose guidelines fit your financial profile.
Get a personalized eligibility assessment from Dream Financial Management. We'll review your equity, credit, and DTI to find the best path forward. 500+ lenders. Since 1994.
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