HELOC For Debt Consolidation
Use a home equity line of credit to pay off credit cards and other debts. Both HELOC programs we offer allow debt consolidation, and paying off debts can lower the debt-to-income ratio you qualify with.
What a debt consolidation HELOC requires
Each item below is a requirement of at least one HELOC we offer.
- Debt consolidation is an allowed use of the line, and at least one program lets it reduce your debt-to-income ratio.
- Your debt-to-income ratio can be up to 50%, or up to 45% with a score below 680, and at least one program checks it again with the new line included.
- At least one program can give debt-to-income credit for paying off credit cards, an option still rolling out to a limited group of applicants, if you have a 680 score, no charged-off cards, and monthly card payments of 20% or less of your stated income.
- Where at least one program pays off credit cards directly, an option still rolling out to a limited group of applicants, it does not close those accounts.
- Past-due consumer debts can be no more than 90 days late at closing; anything later, plus judgments and tax liens, must be paid off before or at closing.
- At least one program can decline a line behind an existing mortgage at a 640 to 679 score when your open accounts are 50% or more used, depending on employment type and recent inquiries, and always when they are over 100% used.
Debt consolidation allowed
Payoffs can lower your DTI
Fixed-rate option
Small collections can stay open
No prepayment penalty
Lines from $5,000
How Does A Debt Consolidation HELOC Work?
You open a line of credit against your home and use the funds drawn at closing to pay off other debts.
Both HELOC programs we offer allow debt consolidation. At least one program draws the full line at closing, and another requires at least 75% drawn at closing, so size the line to the debts you plan to pay off. Lines start at $5,000.
Paying off debts can help you qualify. At least one program allows debt consolidation to reduce your debt-to-income ratio. Another gives debt-to-income credit for debts it pays off directly, but only for open accounts in good standing, and that payoff option is still rolling out to a limited group of applicants. For credit cards, that credit needs a 680 score, no charged-off cards, and monthly card payments of 20% or less of your stated income. The cards are not closed.
Already have a HELOC or second mortgage? At least one program can pay off another lender’s lien on your home and give the new line credit for lien position, under the same limited rollout. In Texas, at least one program declines a home that already has a HELOC or home equity loan. If you would rather fold your debts into a new first mortgage, see our debt consolidation refinance page.
Why choose Saxton for a debt consolidation HELOC
This page is for homeowners who want to use home equity to pay off credit cards, loans or an existing second lien.
Consolidation Is An Allowed Use
Both HELOC programs we offer allow debt consolidation as a use of the line.
Payoffs Can Lower Your DTI
At least one program allows debt consolidation to reduce your debt-to-income ratio, which can help you qualify.
Cards Stay Open
Where at least one program pays off your cards directly, an option still rolling out to a limited group of applicants, it does not close those accounts. Keeping the balances down afterward is up to you.
Fixed-Rate Option
At least one program lets you choose a fixed rate on the line.
Small Collections Can Stay Open
At least one program lets collections stay open up to $2,000 when under 24 months old, or $2,500 each when older, and medical collections at any balance.
No Prepayment Penalty
At least one program has no prepayment penalty.
Hear From Homeowners Like You
Frequently Asked Questions
Straight answers about using a HELOC to consolidate debt.
Yes. Both HELOC programs we offer allow debt consolidation. Where at least one program pays off your cards directly, an option still rolling out to a limited group of applicants, the cards are not closed.
It can. At least one program allows debt consolidation to reduce your debt-to-income ratio. Another gives debt-to-income credit for debts it pays off directly, an option still rolling out to a limited group of applicants.
At least 680 with at least one program. You also need no charged-off cards, and your monthly card payments must be 20% or less of your stated income. That payoff option is still rolling out to a limited group of applicants.
Possibly. At least one program can pay off another lender’s lien on your home and give the new line credit for lien position, but that option is still rolling out to a limited group of applicants. In Texas, at least one program declines a home that already has a HELOC or home equity loan.
Consumer debts more than 90 days past due must be paid off before or at closing with at least one program, along with judgments and tax liens.
They can. At least one program declines an application with more than 2 bankcard inquiries, more than 2 retail inquiries, or more than 2 personal finance inquiries in the last 3 months. It also has separate limits on inquiries made in the last 14 and 30 days.
At some scores. With a score of 640 to 679, at least one program always declines a line behind an existing mortgage when overall use of your open accounts in the last 6 months is above 100%, and it can decline at 50% or more depending on your employment type and recent inquiries. At 680 to 699, it declines at 90% or more when you also have more than one inquiry in the last 3 months.
Find out what you qualify for
Tell us which debts you want to pay off and what you owe on your home, and we will show you the options that fit.
Get Pre-Qualified- Consumer Financial Protection Bureau, home equity loan compared with a HELOC
- Consumer Financial Protection Bureau, mortgages
Loan amounts, rates, terms, and eligibility are subject to credit approval, asset and income verification, appraisal, and program guidelines. Draw requirements and variable rate terms apply. Program availability varies by state. Not all applicants will qualify. Saxton Mortgage, LLC is an Equal Housing Lender.