Home Equity Loan With Bad Credit Lenders: Best Options for Homeowners Struggling to Get Approved in 2025

Home Equity Loans for Bad Credit: Top Picks for Homeowners in 2025

Trying to get a home equity loan is tough enough on its own, but when your credit score is dragging you down, it can feel like you’re banging your head against a wall. Lots of homeowners get turned away over and over, even if they’ve built up pretty solid equity.

If you’re in that boat, don’t panic—there are lenders out there in 2025 who work with bad credit, and the process isn’t as impossible as it seems.

This quick guide will show you the best lenders for bad credit, smart ways to boost your odds, how to dodge sky-high fees, and a few tips to help you actually get approved. No complicated jargon—just real, straightforward advice.

What’s a Home Equity Loan, and Why’s Bad Credit Such a Problem?

A home equity loan lets you tap into the value you’ve built up in your house. Say your home’s worth $300,000 and you still owe $200,000 on your mortgage—that means you’ve got $100,000 in equity, and lenders usually let you borrow a chunk of that.

But here’s the catch: with bad credit, lenders get nervous. They worry you won’t pay them back. So what happens? Sometimes they just say no. Sometimes they jack up the interest rate. Or they might let you borrow way less than you hoped for.

The upside? In 2025, more lenders are stepping up with special programs for folks with low credit scores. With higher living costs squeezing everyone, these lenders know people need real solutions.

Best Home Equity Loan Lenders for Bad Credit in 2025

These are the top lenders people trust when their credit score isn’t perfect:

1. FHA Title 1 Home Loan (Government-Backed)

If your credit is rough, this is one of the easiest ways to go. You don’t need a high score, and getting approved is usually simpler than with private banks.

Why people like it:

Works even if your credit’s bad
Interest rates are fixed
You don’t have to use your home equity directly
The government backs it, so it feels safer

Best for: Home repairs, upgrades, or small renovations.

2. LendingTree (Compare Multiple Lenders)

LendingTree lets you shop around and see offers from different lenders—some of them will work with bad credit when others won’t.

Why it’s helpful:

You can see lots of offers side by side
Get prequalified without hurting your credit
Some lenders accept scores as low as 580

Best for: Anyone who wants options and a shot at better rates.

3. Spring EQ Home Equity Loans

Spring EQ has a reputation for saying yes to applicants with credit scores down to 620. They’re good if you need to borrow more and don’t want to wait forever.

Why people go for it:

Fast approval
They really do consider bad credit
You can borrow larger amounts

Best for: Homeowners needing a bigger loan.

4. Discover Home Loans

Discover offers fixed monthly payments, which makes budgeting easier. Their standards are a bit stricter, but if your income is steady, they’ll consider you—even with less-than-perfect credit.

Why borrowers like Discover:

No hidden fees
Fixed interest rates
Simple paperwork

Best for: Individuals seeking consistent, predictable payments.

So, if bad credit’s been holding you back, don’t give up. These lenders make it possible to unlock your home’s value and get the cash you need.

5. Figure Home Equity Line of Credit (HELOC)

The figure offers a HELOC, not just a regular loan. It’s typically easier to qualify for, and it gives you more flexibility—great for folks with less-than-perfect credit.

Why pick this option?

The application’s quick and painless.
You get your money in just a few days.
Even with a low credit score, approval is easier.

Best for: Ongoing needs, such as covering medical bills or consolidating other debts into one.

How to Boost Your Chances of Approval With Bad Credit

So, your credit’s not perfect. That’s okay—you can still improve your odds with a few smart moves.

Show You Have a Steady Income

Lenders care a lot about your ability to pay them back. A steady job or any regular income—like rental payments—works in your favor.

Bring in a Co-Signer

If someone with good credit co-signs, you’re in a much better spot. A lot of people ask their spouse or a family member.

Cut Down Your Debt-to-Income Ratio

Pay off a couple of small debts before applying. Even getting rid of one credit card balance helps.

Ask for a Smaller Amount

If your credit’s shaky, lenders feel better approving a smaller loan.

Know Your Home’s Value

The more equity you’ve got, the better your application looks. Sometimes, just a bump in your home’s value makes all the difference.

Common Problems Homeowners Face (and Easy Fixes)

Problem 1: Application Gets Denied on the Spot

Fix: Go with lenders who are open to bad credit. They’re not all the same.

Problem 2: Interest Rate Feels Way Too High

Fix: Don’t settle for the first offer. Shop around and compare.

Problem 3: Paperwork Is Overwhelming

Fix: Look for lenders like Figure or Spring EQ—they keep things fast and online.

Problem 4: Not Enough Equity

Fix: FHA Title 1 loans don’t require home equity. It could be a good backup plan.

When a Home Equity Loan Makes Sense

A home equity loan’s a solid choice if you want to roll up debt, need cash for home repairs or upgrades, want better rates than credit cards, or just need emergency funds—and your income’s steady. Just stick to borrowing what you can handle.

When You Should Probably Pass on a Home Equity Loan

Think twice if your job’s shaky, you plan to sell soon, you’re already juggling too much debt, or you’re unsure about paying it back. Remember, your house is on the line—don’t risk more than you can afford.

Final Thoughts

Getting a home equity loan with bad credit isn’t always easy, but it’s doable. The right lender and a little prep go a long way. Focus on companies open to lower scores, compare rates, and have your paperwork ready.

With a smart approach, you can tap into your home’s value and get the funds you need—without making your life harder.

FAQs

1. Can I get a home equity loan with a credit score under 600?

Yes, some lenders will work with low scores—especially FHA and online platforms like LendingTree.

2. How much can I borrow with bad credit?

It depends on your home’s value, your income, and the lender, but most allow you to borrow 70% to 80% of your equity.

3. Will applying to multiple lenders hurt my credit?

Most comparison sites use soft credit checks, so your score won’t take a hit.

4. Is a HELOC easier to get than a home equity loan?

Yeah, HELOCs usually have more flexible approval rules, so they’re better for bad credit.

5. How fast can I get the money?

Online lenders can get you funds in three to seven days. Banks might take a bit longer.

Links:-