How Do You Qualify for a Home Equity Loan? | OCCU

•  Learn how to qualify for home equity loans, including equity, credit score, and income requirements.
•  Most lenders require 15–20% equity and a credit score of at least 620 for competitive terms.
•  Understand home equity loan vs HELOC requirements and which option fits your borrowing needs.
•  Prepare documentation and improve credit to secure the best home equity loan rates.

Your home isn’t just the place you live. It’s also one of your most valuable financial assets. If you’ve built up equity over time, you can tap into that value to fund renovations, pay for education, consolidate debt, or cover other major expenses. But before you apply, it’s important to understand how to qualify for home equity loans and what lenders look for.

What Is a Home Equity Loan?

How Do You Qualify for a Home Equity LoanA home equity loan lets you borrow a lump sum against the value you’ve built in your home. You repay it over a set term with a fixed interest rate, which means predictable monthly payments.

At Oklahoma Central Credit Union (OCCU), these loans are a popular choice for members who want stability and competitive terms. You can explore our current home equity loan options to see how they work.

What Are the Minimum Requirements?

Every lender has slightly different guidelines, but most credit unions and banks look for the same core qualifications:

•    Sufficient equity in your home (often at least 15–20%)
•    A solid credit history and manageable debt-to-income ratio
•    Stable income to ensure you can repay the loan

At OCCU, we review each application individually, focusing on your overall financial picture rather than just one number. That’s part of the credit union difference — personalized lending that works with you, not against you.

How Much Equity Do You Need?

Your home equity is the difference between your home’s current market value and the amount you still owe on your mortgage. For example, if your home is worth $250,000 and your mortgage balance is $150,000, you have $100,000 in equity.

Most lenders require you to keep a certain amount of equity in the home after borrowing, often 15–20%. That means you can’t borrow the full amount of your equity.

OCCU’s home equity resources can help you calculate how much you may be able to access based on your current situation.

What Credit Score Do You Need for a Home Equity Loan?

If you’re asking what credit score do you need for a home equity loan, the answer depends on the lender and your overall financial profile. Many institutions look for a score of at least 620, but higher scores can help you secure better rates and terms.

That said, your credit score is just one piece of the puzzle. OCCU also considers your income stability, payment history, and the amount of equity you have in your home.

Home Equity Loan vs HELOC Requirements

When comparing home equity loan vs HELOC requirements, you’ll notice they share many similarities — such as equity, credit score, and income verification — but differ in how the funds are accessed.

•    Home equity loan: You receive a one-time lump sum with a fixed interest rate.
•    Home equity line of credit (HELOC): You can borrow as needed up to a set limit, often with a variable rate.

To explore the differences in detail, visit our guide on home equity loan vs line of credit. OCCU offers both options and can help you decide which is right for your goals.

Documents You’ll Need

When applying for a home equity loan, be ready to provide:

•    Proof of income (pay stubs, W-2 forms, or tax returns)
•    Mortgage statement showing your current balance
•    Property tax information
•    Homeowners insurance policy
•    Government-issued ID

This documentation helps verify your ability to repay and confirms the property details. If you’re self-employed, you may need to submit additional income verification, such as profit-and-loss statements.

Do You Need to Verify Your Income?

Yes. Even with significant equity, lenders need to confirm that you can comfortably make your monthly payments. Verification typically includes recent pay stubs, W-2s, or bank statements. Self-employed applicants may need to provide two years of tax returns or other proof of consistent income.

This step protects both you and the lender, ensuring you don’t take on a loan that strains your budget.

Can You Qualify Right After Buying Your Home?

Qualifying for a home equity loan immediately after purchasing a home is rare, as you likely haven’t built enough equity. However, if you made a very large down payment — say 40% or more — you may be eligible sooner.

Most members benefit from waiting until they’ve built more equity, either through mortgage payments, home value appreciation, or both. For tips on maximizing your home’s value, check out our guide on how to leverage your home equity.

Getting the Best Home Equity Loan Rates

If you want the best home equity loan rates, preparation matters. Steps you can take before applying include:

•    Paying down existing debt to improve your debt-to-income ratio
•    Reviewing your credit report for errors and correcting them
•    Building a strong savings history to demonstrate financial stability

OCCU’s current rates are designed to be competitive for members, and we work with you to find the best fit for your needs.

Applying With OCCU

When you’re ready, you can start the process by scheduling an appointment or reaching out through our contact page.

Our team will walk you through each step, from confirming your eligibility to securing a competitive rate. And because we’re member-owned, you can trust that our focus is on finding the right solution for you, not just closing a loan.

Apply for Your Home Equity Loan with Oklahoma Central Credit Union Today!