Home Equity Loan: What It Is, How It Works, and What Blocks Approval

When you own a home, your home equity, the portion of your home’s value you actually own after subtracting your mortgage balance. Also known as equity in your house, it’s not just a number on a statement—it’s cash you can unlock. A home equity loan, a lump-sum loan secured by your home’s equity, typically with a fixed rate and repayment term. It’s different from a HELOC, which works like a credit card. With a home equity loan, you get the money upfront and pay it back in fixed monthly payments—same as your mortgage.

But getting one isn’t automatic. Lenders don’t just look at how much equity you have. They check your credit score, a three-digit number that tells them how reliably you’ve paid bills in the past. A score below 620 often means denial. They also crunch your debt-to-income ratio, how much you owe each month compared to what you earn. If your monthly debts (including your mortgage) eat up more than 43% of your income, most lenders walk away. Your home’s appraised value matters too—if you owe nearly everything you own, there’s little room for a new loan.

People get turned down for other reasons too. A recent bankruptcy? That’s a red flag. A property in poor condition? Lenders won’t risk lending against it. Even if your numbers look okay, a shaky job history or missing paperwork can kill your application. The good news? Most of these problems can be fixed. Pay down debt. Wait a year after bankruptcy. Improve your credit. Get your home inspected before applying.

This collection of posts doesn’t just tell you what a home equity loan is. It shows you exactly why people get rejected, what lenders really care about, and how to fix the issues holding you back. You’ll find real examples of approval roadblocks, step-by-step fixes, and comparisons with other ways to tap into your home’s value—like HELOCs or cash-out refinances. Whether you’re thinking about using your equity to pay off high-interest debt, fund home repairs, or cover an emergency, these articles give you the facts—not the fluff.