Home Equity Investment Loan vs HELOC: True 10-Year Cost
Key takeaways
- An HEI trades cash today for a share of your home's value, settled in one lump sum when you sell or at the end of a 10- to 30-year term, with no monthly payments.
- Providers market HEIs as not a loan; the CFPB has argued in court that some are credit under the Truth in Lending Act.
- In our illustrative $50,000 model, the HEI costs $0 at 0% growth, $34,392 at 3% and $79,085 at 6%, versus $42,500 of HELOC interest at an assumed 8.5%.
- A 10% starting-value discount adds $10,000 to the HEI cost even if your home never appreciates.
- The CFPB found HEI settlement amounts can grow 19.5% to 22% a year in the early years.
A home equity investment (HEI) gives you cash today for a share of your home's future value, settled in one lump sum when you sell or at the end of a 10- to 30-year term, without monthly payments. A HELOC is a credit line repaid with interest. Strong appreciation usually makes the HEI costlier; flat markets can make it cheaper.
People often search for a "home equity investment loan," but HEI companies market the product as an investment, not a loan. The Consumer Financial Protection Bureau has argued in court that some of these contracts are credit. This guide shows the math behind both options so you can price an offer yourself. It is general information, not financial advice.
What a home equity investment is (and is it a loan?)
A home equity investment, also called a home equity agreement, home equity sharing agreement or home equity contract, is a deal in which a company hands you a lump sum today. In return, it takes a stake in your home's value. You make no monthly payments. Instead, you settle the contract in a single payment, often described as a balloon payment, when you sell the home or reach the end of the term, or earlier if the contract allows it.
The CFPB's January 2025 Issue Spotlight on home equity contracts describes the market in detail. It found that the four largest companies, Unison, Point, Hometap and Unlock, securitized about $1.1 billion backed by about 11,000 contracts in the first ten months of 2024. The median customer was in their 50s, and most people used the money for debt consolidation and home improvements.
Provider position vs the CFPB's argument
HEI companies present the product as an investment rather than a loan. There is no interest rate and no monthly bill. The CFPB sees it differently. In January 2025 the bureau filed an amicus brief in Roberts v. Unlock arguing that the company does not meaningfully risk loss of capital, so the product should be treated as a residential mortgage loan, that is, credit under the Truth in Lending Act. That is the CFPB's argument in a court filing, not a ruling, and this guide makes no claim about how the case ends. For a homeowner, the practical point is this: an HEI is secured by your home, it must be repaid, and its price is just harder to see than an interest rate.
A related structure is the shared appreciation mortgage, in which a lender also shares in the home's future gain.
HEI vs HELOC side by side
A home equity line of credit is a revolving credit line secured by your house. According to the CFPB, you can generally borrow up to your limit during a draw period, which could last 10 years, for example. Many HELOCs require minimum monthly payments based on the balance, the rate is usually variable, and after the draw period you repay what you owe, often over ten or 20 years. Before choosing an HEI, it is worth taking a real HELOC quote and using our calculator to compare HELOC options on the same amount.
| Feature | Home equity investment | HELOC |
|---|---|---|
| What you get | Lump sum in exchange for a share of the home's value | A credit line you draw from as needed |
| Monthly payments | None | Usually a minimum payment based on the balance |
| What drives the cost | Home appreciation, multiplier, starting-value discount, fees | Interest rate (usually variable) and fees |
| Term | 10 to 30 years (CFPB); Hometap 10 years, Point 30 years (CNBC Select) | Draw period (could be 10 years) followed by a repayment period |
| Repayment | One lump sum at sale or maturity; some providers, such as Point, allow payoff at any time | Monthly payments during repayment |
| Typical credit minimum | 500 to 585 (CNBC Select) | Set by each lender |
| Equity needed | Usually 20% to 25% | Set by each lender's loan-to-value limit |
| Income requirement | None, per CNBC Select and Point | Set by each lender |
| Upfront fees | Origination usually 3% to 5% of the advance (CNBC Select) | Vary by lender |
| Main risk | Giving up a large share of a rising home value; lump-sum due date | Variable rate can rise; a repayment period follows the draw period |
If you want a deeper look at the two classic borrowing products, see our guide to HELOC vs home equity loan.
The true cost over 10 years: worked example
Most comparisons publish a single cost table without showing the formula. Here is ours, with every assumption in plain view. It is an illustrative model, not any provider's pricing.
- Home value today: $500,000. Cash taken: $50,000.
- HEI settlement = $50,000 + 20% of the home's appreciation. That reflects a 10% stake doubled by a 2x multiplier, which the CFPB says is a common feature.
- HELOC: $50,000 drawn and kept on interest-only payments for 10 years at an illustrative 8.5%, which equals $4,250 a year or $42,500 in total. This rate is an assumption, not a current market rate.
| Home growth per year | Home value after 10 years | HEI cost | HEI cost with 10% starting-value discount | HELOC interest at 8.5% (illustrative) |
|---|---|---|---|---|
| 0% | $500,000 | $0 plus fees | $10,000 plus fees | $42,500 |
| 3% | $671,958 | $34,392 plus fees | $44,392 plus fees | $42,500 |
| 6% | $895,424 | $79,085 plus fees | $89,085 plus fees | $42,500 |
In every row you also repay the original $50,000, so the table shows only the cost on top of it. An origination fee of 3% to 5% adds $1,500 to $2,500 to the HEI column.
How the HEI number is calculated
Take the home value after 10 years, subtract the starting value, and multiply the gain by 20%. At 3% a year, the home grows from $500,000 to $671,958, a gain of $171,958; 20% of that is $34,392. At 6% a year, the gain is $395,424 and the HEI's share is $79,085. With no growth there is no gain, so in this model the HEI costs only its fees.
Notice the break-even. Without a discount, the HEI beats our illustrative HELOC at 3% growth ($34,392 vs $42,500) but costs nearly twice as much at 6% ($79,085 vs $42,500). This matches the general conclusion in a March 2026 Mortgage Reports comparison: an HEI can cost less when appreciation is low or negative, and the main cost is the equity you give up.
What a discounted starting value adds
Some contracts use a risk adjustment: instead of measuring growth from today's appraised value, they start from a lower figure. Point calls this the appreciation starting value. In our model, a 10% discount means growth is measured from $450,000, so the company collects 20% of an extra $50,000, or $10,000, even if your home never gains a dollar. That pushes the 3% scenario to $44,392, which is now slightly more than the HELOC interest.
One caveat: this is an appreciation-share model of the kind Point and Unison use. Some providers, such as Hometap according to CNBC Select, take a stake in the current and future value of the home and settle on a share of the total value, so their costs follow a different formula. Contract caps would also reduce the high-growth figures.
Timing matters too. HELOC interest is paid month by month, while the HEI settlement arrives as one bill at the end. That is easier on monthly cash flow but makes the total cost easy to underestimate.
Fees, caps and contract terms to read closely
The settlement formula is only part of the price. CNBC Select reports that origination fees usually run 3% to 5% of the cash advance. Point's own page lists a processing fee of up to 3.9% with a $2,000 minimum, plus third-party closing costs; on a $50,000 advance the $2,000 minimum would apply. Hometap, per CNBC Select, requires a 585 credit score and 25% equity, with a 10-year term or settlement upon sale. Point lists a 500+ credit score, no income requirement and a 30-year term, and lets you pay back in one lump sum at any time during the term.
Caps are the main protection against a runaway settlement. Point's Homeowner Protection Cap is a maximum percentage calculated annually. The CFPB notes that caps work like a maximum interest rate. Maximum amounts change often: Point's own page shows both "up to $500k" and "up to $600k," and Wikipedia reports investments usually range from $15,000 to $600,000, capped around 25% of home value, so check current limits directly.
Questions to ask any HEI company before you sign:
- What is the multiplier, and what share of appreciation (or of total value) will I owe?
- Is there a starting-value discount or risk adjustment, and how large is it in dollars?
- Is there a cap, how is it calculated, and what is it at year 5 and year 10?
- What are the origination or processing fees and third-party closing costs?
- Does my mortgage lender allow this agreement? CNBC Select notes some mortgage companies prohibit them.
- How can I exit early, and how is the home valued at settlement?
- What happens if I cannot pay the lump sum when the term ends?
What the CFPB found about home equity contracts
The Consumer Financial Protection Bureau's January 15, 2025 market overview is a government report on these products. Its main findings:
- Settlement amounts can grow at 19.5% to 22% per year in the early years of a contract.
- Repayment periods run 10 to 30 years and are triggered by a sale or by maturity, with a single lump-sum repayment.
- Contracts often include multipliers (often 2x), discounted starting home values and caps. In the CFPB's 2x example, a homeowner receives 10% of the home's value for a 20% stake.
- In the 38 complaints the CFPB reviewed, consumers raised financing terms, surprise repayment amounts, appraisal disputes and difficulty refinancing.
An early-year growth rate of roughly 20% a year is far above our illustrative 8.5% HELOC rate. That is why an HEI you settle after only a few years can be expensive. CNBC Select also lists foreclosure as possible if the settlement is not paid, so a missed lump sum is a real risk to the home.
When an HEI can make sense, and when a HELOC wins
An HEI may fit if you have a lot of home equity but cannot handle a monthly payment, or your credit score makes a HELOC hard to get. CNBC Select reports HEI minimums of 500 to 585, and providers usually require 20% to 25% equity. Put another way, your mortgage's loan-to-value ratio has to be roughly 75% to 80% or lower. It can also fit if you expect to sell within the term and believe local prices will stay flat.
A HELOC usually wins if you expect steady appreciation, can afford monthly payments, and plan to stay in the home long-term. It also gives you more control, because you borrow only what you need and paying down the balance cuts your cost right away. If your HELOC would be your only mortgage, our guide to the first-lien HELOC explains how that structure works.
Whichever way you lean, start with numbers, not marketing. Get a HELOC quote, run it through the HELOC vs home equity loan calculator, and set the result against the HEI company's own settlement estimate at 0%, 3% and 6% growth. Compare the totals for the growth scenario you consider most likely, and keep your home equity working for you.
Frequently asked questions
Is a home equity investment a loan?
HEI companies say it is not, because there is no interest rate and no monthly payment. The CFPB has argued in a January 2025 court filing (Roberts v. Unlock) that such a product can be credit under the Truth in Lending Act. Either way, it is secured by your home and must be settled.
Can a home equity investment cost more than a HELOC?
Yes. In our illustrative model on a $500,000 home and $50,000 of cash, the HEI costs $79,085 after 10 years of 6% annual growth versus $42,500 of interest-only HELOC interest at an assumed 8.5%. In flat or slow markets the HEI can cost less.
Do you need good credit for a home equity investment?
Not necessarily. CNBC Select reports typical minimum credit scores of 500 to 585, with no income requirement, though providers usually require 20% to 25% equity. Hometap was reported at 585 and Point at 500.
Can you pay off a home equity investment early?
Often, but check the contract. Point says you can pay back in one lump sum at any time during its 30-year term. The CFPB notes repayment is also triggered by a sale. Ask how the home will be valued at settlement, because appraisal disputes appear in CFPB complaints.
What happens if my home loses value with an HEI?
It depends on the contract. Read how the settlement is calculated if the home is worth less than the starting value, and whether a discounted starting value still leaves you owing more than the cash you received.
Can I get an HEI if I already have a HELOC?
Possibly. Providers look at the equity you have left, and CNBC Select reports typical minimums of 20% to 25%, so an existing HELOC balance reduces what you can access. Check with your current lenders too, since some mortgage companies prohibit these agreements.
Run your own numbers free.
Open calculatorThis article is general information, not financial, tax or legal advice. Figures are approximate and change over time — always verify with a qualified professional or the official source before making a decision.
Written and reviewed by the HELOC Payment Calculator editorial team. Facts checked against primary sources; see the reference above.