One of the main benefits of homeownership is building up equity. While that equity will amount to profit when it’s time to sell your house, you can also turn your home’s increased value into cash without putting it on the market. Home equity loans, home equity lines of credit (HELOCs) and reverse mortgages are the most common tools for accessing equity while you’re still in your home. However, another option has emerged in recent years: home equity sharing agreements.
These unique arrangements allow you to sell a portion of your future equity to an investment company in exchange for a lump sum payment. And unlike other options, they don’t come with interest or monthly payments. If you’re considering using your equity for cash and are looking for an alternative to traditional home equity products, equity sharing might be a good option. Read on for our reviews of the top home equity sharing companies.
What to know about home equity sharing
- Home equity sharing allows you to turn the equity you’ve gained into cash without taking out a loan.
- With home equity sharing agreements, an investor purchases a portion of your home’s future value, giving you a lump sum of cash in return.
- You repay the amount borrowed, plus the investor’s portion of your home’s appreciation, when the agreement’s term is up or you sell the house.
- There are no interest or monthly payments with home equity agreements.
How we chose our top picks
Home equity sharing is a small industry. To choose our top home equity sharing companies, Money’s writers and editors evaluated the nine main home equity investors on the market, focusing on fees, payoff terms, geographic availability, credit score minimums, loan amounts and eligible property types. Our winners highlight the best options for home equity sharing overall, as well as the top choices for certain consumer niches — investors, low-credit consumers or those looking for high payment amounts, for example.
Read the full methodology to learn more.
Our top picks for home equity sharing companies
- Low credit score minimum
- Upfront fee on the lower side of companies analyzed
- 30-year payoff term
- Fairly wide availability
- Requires 30% equity
- No mobile or manufactured homes allowed
HIGHLIGHTS
- Upfront fee:
- 3.9% of payment amount
- Availability:
- 26 states, plus Washington, D.C.
- Loan amounts:
- $30,000 to $500,000 (max of 20% of the home’s value)
- Minimum credit score:
- 500
- Payoff term:
- 30 years
- Property types allowed:
- Single-family residences, condos, one- to four-unit multifamily properties, townhomes, investment properties and second homes
Why we chose this company: According to our analysis, Point takes the crown for the top home equity sharing company. Its wide nationwide availability, fairly low upfront fee, low credit score requirements and flexibility regarding property type make it a good choice for a wide swath of homeowners and investors looking to access their equity. Its long payoff term is notable, too, allowing you a full three decades before repayment comes due.
- One of the lowest upfront transaction fees
- Low credit score minimum
- Highest loan amounts of all analyzed
- Multiple property types allowed
- Only a 10-year payoff term
- Limited availability
HIGHLIGHTS
- Upfront fee:
- 3.5% of payment amount
- Availability:
- 17 states, plus Washington, D.C.
- Loan amounts:
- Up to $600,000 (max of 25% of the home’s value)
- Minimum credit score:
- 500
- Payoff term:
- 10 years
- Property types allowed:
- Single-family homes, condos, vacation properties, rental properties, one- to four-unit multifamily homes and manufactured homes
Why we chose this company: If you’re looking for a lot of cash or to access a sizable portion of your home’s equity, Hometap is likely your best bet. The investment company offers a maximum amount of $600,000 — higher than any other option we found. You can even cash in on the equity in your vacation home, rental property or a multifamily property, if you have one, and you need just a 500 credit score to qualify.
- Low minimum credit score
- Multiple property types allowed
- Only 20% equity required
- High upfront fee
- Limited availability
- Only a 10-year payoff term
HIGHLIGHTS
- Upfront fee:
- 4.9% of payment amount
- Availability:
- 13 states
- Loan amounts:
- $30,000 to $500,000
- Minimum credit score:
- 500
- Payoff term:
- 10 years
- Property types allowed:
- Single-family homes, condos, two- to four-unit multifamily properties, townhomes, primary residences, second homes and rental properties
Why we chose this company: Unlock lets you access the equity in single-family homes, multi-unit properties, townhomes, second houses, rentals and more, and they can be a great option for investors looking to pull from a property’s equity to purchase their next investment. The best part: The company requires just a 20% equity stake to qualify — less than any other company on our list, meaning you may be able to build onto that portfolio sooner than other options would allow.
- Widest availability among all companies
- 30-year payoff term
- Lower upfront fee compared to other options
- Higher credit score minimum than other options
- Second homes and rentals aren’t always eligible
HIGHLIGHTS
- Upfront fee:
- 3.9% of payment amount
- Availability:
- 29 states, plus Washington, D.C.
- Loan amounts:
- $30,000 to $500,000 (max of 15% of the home’s value)
- Minimum credit score:
- 620
- Payoff term:
- 30 years
- Property types allowed:
- Owner-occupied primary residences, including single-family homes, townhouses and condos. Second homes and rentals may be approved on a case-by-case basis
Why we chose this company: If you’ve got a great credit score, then Unison can be a smart choice for accessing your home equity. The company offers home equity sharing agreements in 29 states plus Washington, D.C., making it the most accessible option currently on the market, and its loan amounts go up to $500,000. Its lengthy 30-year payoff timeline (with no early payment penalties) is a perk, too, but just take note: While Unison does occasionally approve second homes and rental properties, this company primarily considers owner-occupied primary residences for its investments.
- Allows payoff terms as long as your main mortgage lasts
- Low minimum credit score
- Has an affiliated brokerage that will help you sell your house when it’s time
- Highest upfront fee of companies analyzed
- Limited availability
- No non-owner-occupied homes allowed
HIGHLIGHTS
- Upfront fee:
- 4.99% of payment amount
- Availability:
- 13 states
- Loan amounts:
- Up to $500,000 (max of 25% of the home’s value)
- Minimum credit score:
- 500
- Payoff term:
- Up to your main mortgage’s term
- Property types allowed:
- Owner-occupied single-family homes, condos, townhomes, two- to four-unit multifamily properties
Why we chose this company: Splitero might have the highest upfront fee of all the equity sharing options we analyzed, but it has some interesting perks that some consumers might find appealing. First, its terms are flexible. If you have a first-lien mortgage on your property, you won’t have to pay Splitero back until that first mortgage term is up. And if you want to sell your house? The company has a brokerage that can do the heavy lifting for you. Plus, with the company invested in selling the property for as much as possible, it may even boost your sales profits.
- Low upfront fee
- Offers shared appreciation mortgage loans
- Only a 10-year payoff term
- High minimum credit score
HIGHLIGHTS
- Upfront fee:
- 3% of payment amount
- Availability:
- 19 states
- Loan amounts:
- Up to $500,000 (max of 16% of the home’s value)
- Minimum credit score:
- 680
- Payoff term:
- 10 years
- Property types allowed:
- Primary residences
Why we chose this company: If you’re open to other forms of equity sharing, EquityChoice share appreciation mortgages deserve a look. These act like a combination of a mortgage and a home equity sharing agreement and allow you to borrow a large, lump-sum payment in exchange for a share of your home’s future appreciation — plus a small, “below market” interest rate. You still won’t make monthly payments, though, and the money isn’t due until the 10-year term is up.
What you need to know about home equity sharing
Home equity sharing agreements, also known as home equity investments, allow you to sell a portion of your home’s future equity to an investor in exchange for a lump sum payment. You can then use the money for any purpose you’d like.
There are only a few home equity sharing options on the market, and each one is pretty limited geographically, with even the most accessible company offering agreements in just 29 states. To choose the right home equity sharing company, you should start with your location to find out what options are available.
Read more about how equity sharing works, who qualifies and the pros and cons of entering into this type of agreement. There are also other alternatives to consider if home equity investments aren’t right for you.
How does home equity sharing work?
Equity sharing is an alternative financing option for people with high amounts of equity who can’t qualify or afford to make payments on a second mortgage or other type of loan.
Unlike a traditional home or equity loan, the homeowner doesn’t take on debt, pay an interest rate or make monthly payments. Instead, when the home sells or the agreement ends, the investor receives their initial investment plus a share of the home’s appraised value, which may have increased or decreased since entering the agreement.
This arrangement allows homeowners to access the increased value resulting from their home’s appreciation while sharing the risks and rewards of homeownership with an investor.
Who is eligible for home equity sharing?
Although specific eligibility requirements vary by company, homeowners generally need to meet the following criteria:
- Credit: Credit score and income requirements are more lenient than on traditional loans. Typically, companies require homeowners to have a credit score of at least 500.
- Loan-to-value ratio (LTV): The LTV is the current loan balance — and the new loan or home equity share agreement — divided by the home’s current value. The resulting number reflects how much you owe on your debt; generally, you need an LTV of 70% or better. If you owe more money, you may not qualify.
- Investment amount: A home equity sharing agreement usually offers between $25,000 and $500,000 in investment. The amount you can receive depends on your home value, credit, and the company’s restrictions.
- Property use: Some companies limit the types of property eligible for home equity share agreements. For example, some only accept single-family, single-owner primary residences.
What are the pros and cons of home equity sharing?
As with any type of loan, there are benefits and risks when you enter into an equity sharing agreement. Fully understanding the pros and cons will help you determine if a home equity investment is the right choice for you.
Pros:
- Access to cash without incurring debt: Home equity sharing enables you to tap into the value of your home without borrowing money or paying interest. Although you will have to pay back the investment, repayment usually occurs at the end of the agreed-upon term or when you sell your home.
- No monthly payments: Because you’re not taking out a loan, you won’t have any monthly payments that can strain your budget or accumulate interest that will increase the borrowed balance.
- Flexibility: You can use the money you get any way you like, from making home repairs to paying off high-interest debt. This flexibility lets you make financial decisions that prioritize your needs and are best suited to your current circumstances.
- Easier qualification requirements: Home equity sharing companies tend to have lower credit score minimums, so you can qualify even if your credit score is below 600.
Cons:
- Loss of full ownership: When you enter an equity-sharing agreement, the investment company becomes a secondary lien holder, much like a traditional mortgage lender. If you don’t want to give up control, you may be better off if you get a home equity loan or home equity line of credit (HELOC).
- Risks associated with both appreciation and depreciation: If your property appreciates, you’ll have to share that appreciation with the investor based on the equity percentage they own. This can mean parting with a substantial sum when the agreement concludes. Conversely, if your property decreases in value, the investor may still be entitled to a return on their investment, meaning you owe more than anticipated.
- Having to make a lump sum payment: At the end of the equity sharing agreement, you will likely have to make a large balloon payment to the investor. This payment can be substantial, particularly if the property has appreciated significantly. If you don’t have the funds readily available, you may need to sell your home or take out a loan to repay the investor.
Alternatives to home equity sharing
Although home equity shares can be helpful, they can be risky, particularly if you think you’ll need to refinance or sell your home within the next few years. If you decide against home equity sharing but need access to cash, consider one of these alternatives:
- Cash-out refinance: With a cash-out refinance loan, you apply for a new mortgage that is larger than your existing balance. You use the loan to pay off the existing mortgage, and you receive the additional funds in cash to use for home improvements, medical expenses or other needs.
- Home equity loan: If you need a large lump sum and have good credit, a home equity loan allows you to borrow against your established equity. The loan has a fixed repayment term and predictable monthly payments.
- Home equity line of credit (HELOC): A HELOC is similar to a home equity loan, except it gives you a revolving line of credit. It’s best for those who may have ongoing expenses or are unsure of the total project cost.
- Personal loan: A personal loan could be a helpful alternative if you need a smaller sum or haven’t built enough equity in your house yet. Personal loan lenders offer loans between $1,000 and $100,000, and you usually have two to seven years to repay the loan. However, these loans tend to have higher interest rates than home equity loans since they’re unsecured.
Home Equity Sharing Companies FAQs
When does a home equity agreement make sense?
A home equity agreement can make sense if you need to access cash but don’t want or can’t afford to take on additional debt that requires making monthly payments. However, you will be responsible for paying back the initial investment amount plus the agreed upon appreciation percentage once the agreement ends. You need to ensure you’ll be in a financial position to make that payment.
What are the negatives of a home equity sharing agreement?
The biggest downside of a home equity sharing agreement is that you could end up repaying the investor much more than you initially borrowed — and more than you might have paid for a traditional home equity loan or other borrowing product. Another drawback is that if you don’t have enough cash to repay the money by the end of your agreement’s term, you may have to sell your house.
How do you pay back a home equity sharing agreement?
You can pay a home equity sharing agreement back in cash, or you might sell your house and pay the money back out of your sale proceeds. In some cases, you may need to take out a loan to repay the investor.
How we chose the best home equity sharing companies
To choose our top home equity sharing picks, we did extensive research to pinpoint five key data points we could use to assess companies. We then scored each company on those categories, giving an overall weighted score. Our weightings were as follows: Geographic availability (25%), payoff term (20%), maximum loan amount (20%), credit score minimum (20%) and eligible property types (15%). We favored companies with wide availability, long payoff terms, high loan amounts and low credit score requirements.
Below are details of each data point we looked at.
- Geographic availability: We considered the accessibility of equity sharing agreements were and gave greater weight to companies licensed to operate in a greater number of states.
- Payoff terms: We evaluated each company on how much time their clients had to pay back the investment, with greater emphasis on longer terms.
- Maximum loan amount: Companies that offered higher maximum investment amounts were prioritized over those with lower caps.
- Credit score minimum: Home equity investments work differently than traditional loans. Although most will accept lower-than-usual credit scores, we prioritized those that had the lowest minimums.
- Eligible property types: Companies considering many different properties were ranked higher than those with limited options.
Aside from the above winners, other companies we considered included EquiFi, QuantumRE and HomePace.
Summary of our top picks for home equity sharing companies
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