You must meet several home equity loan requirements to apply and qualify for a loan, such as:
Having at least 15% equity. Your loan-to-value ratio should be 85% or lower, which means you have 15% equity or more in your home. In some cases, you may qualify for a home equity loan with a high LTV ratio.
Having a minimum 620 credit score. Some lenders may have higher minimum credit scores, but you’ll need a score of 740 or higher to get the best interest rates.
Having a maximum 43% debt-to-income ratio. The percentage of your gross monthly income used to repay debt — your DTI ratio — should not exceed 43%. Still, some lenders may accept a ratio as high as 50%.
It’s important to note that lenders typically limit the amount you can borrow to 85% of your home’s value, according to the Federal Trade Commission, so you likely won’t be able to tap the full amount. It’s also a good idea to leave some equity in your home in case you need to sell it suddenly due to a job change or personal financial emergency.