There are multiple ways to tap into your home equity, and each option offers a unique set of benefits to borrowers.
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Homeowners have been leaning on their equity more often this year, and not just for big renovations, either. With interest rates gradually easing after the Federal Reserve's recent cuts, and household budgets still feeling the effects of years of elevated inflation, tapping home equity has become a popular way to consolidate debt, manage unexpected expenses or even lock in money for future goals. And as borrowers explore their options, many are also discovering that one product alone may not meet every financial need.
A home equity loan, for example, offers predictability via a lump sum loan amount with a fixed interest rate and a repayment schedule that never changes. A home equity line of credit (HELOC), on the other hand, gives borrowers flexible access to funds as needed, often at lower introductory rates, but with a variable-rate structure that can rise or fall over time. Each product solves a different problem, which is why some homeowners wonder whether using them together could help them better manage near-term costs and longer-term plans.
But pairing a HELOC with a home equity loan isn't really as straightforward as opening two credit cards. So is this route even possible to take, and if so, what should borrowers know beforehand?
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Can you have both a HELOC and a home equity loan?
Yes, you can have both a HELOC and a home equity loan at the same time, as long as you meet your lender's requirements and have enough equity to justify it. Home equity lenders will allow borrowers to carry multiple home equity products because each is secured by the property. However, they're careful about how much combined debt they're willing to approve. In general, here's what lenders look for:
Sufficient equity to support both products
Most lenders cap the total combined loan-to-value ratio (CLTV) at between 80% and 90%. That means the sum of your mortgage, your home equity loan balance and the maximum HELOC limit cannot exceed that percentage of your home's appraised value. If your equity has grown significantly, either because you've paid down your mortgage or your home's value has increased, you may have an easier time qualifying.
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Strong credit and stable income
In this scenario, you'd be taking on two separate payment obligations (even if the HELOC isn't fully drawn yet), so lenders want reassurance that you can comfortably manage the added monthly cost. As a result, borrowers with higher credit scores, lower existing debt and stable employment will have an advantage.
A clear purpose for each product
Most lenders will ask why you want both a HELOC and a home equity loan. Since each is structured differently, they want to know how you plan to use the money. Using the home equity loan for a fixed, one-time expense (like a major home project) and the HELOC for ongoing or unpredictable needs (like medical costs or cash-flow flexibility) tends to make the most sense.
Sequential approval requirements
If you already have one home equity product, the lender may require an updated appraisal or documentation before approving a second home equity borrowing option. Some lenders also prefer that both products come from the same lending institution, though it's not always mandatory.
When does it make sense to use both a HELOC and a home equity loan?
Having two home equity products isn't right for everyone, but for certain borrowers, the combination can offer strategic advantages. Here's when it could make sense:
When you want to balance flexibility with predictability
A home equity loan's fixed rate shields you from market volatility, which can be especially valuable if interest rates fluctuate again in the coming years. Meanwhile, keeping a HELOC open gives you ongoing access to credit if you need it later. Borrowers who want stability but don't want to give up liquidity may find this pairing appealing.
If you need to consolidate high-rate debt while preserving cash flow
Some borrowers use a home equity loan to pay off expensive debt at a stable rate and then keep a HELOC available for unexpected expenses. This keeps them from putting everything on a variable line of credit while still maintaining a buffer for emergencies.
When you want to stagger borrowing over time
If you know you'll need funds in phases, let's say for a multi-stage renovation, a home equity loan can cover the first project, while the HELOC allows you to draw additional funds later without reapplying for a loan.
If you want to take advantage of declining interest rates
When rates are falling, some borrowers will initially lock in a fixed loan and then wait for their HELOC rate to adjust downward over time. This lets them benefit from today's stability and tomorrow's potential savings.
The bottom line
You can have both a HELOC and a home equity loan, and for the right homeowner, using both can create a balanced borrowing strategy, pairing the stability of a fixed-rate loan with the flexibility of a revolving line of credit. Before moving forward, though, you need to be realistic about the budgeting implications. Two home equity products mean two potential payments, two sets of fees and greater long-term exposure if home values drop. So, it's essential to run the numbers and ensure that both products support your financial plan rather than stretch it thinner.
Edited by Matt Richardson
