What Is a Home Equity Agreement (HEA)? Also Called an HEI
The Bottom Line
An HEA gives you cash from your home equity with no monthly payment, but the final cost depends on your home's value when you settle.
- It isn't a loan in the traditional sense. An HEA gives you cash now in exchange for a share of your home's future value, settled later in a single lump sum.
- Qualifying tends to be more flexible. Some HEA providers allow credit scores as low as 500, and there are typically no income or employment requirements, unlike HELOCs.
- The cost isn't fixed. You settle by paying one lump-sum amount based on your home's value at the time, which makes the total cost harder to predict compared to fixed monthly payments.
- It tends to fit a specific kind of homeowner. Strong equity, irregular income, lower credit, or a preference to avoid taking on a new monthly payment.
See What You Might Qualify For
An HEA has no income requirement, no monthly payment, and accepts lower credit scores than most traditional options. Prequalify in minutes with no impact on your credit.
What Is an HEA?
A home equity agreement is a contract where a company gives you a lump sum today in exchange for a percentage of your home's future value, which rises or falls with the market. Terms typically run 10 to 30 years, and most agreements let you repurchase early if you sell, refinance, or want to close things out sooner. You'll see this same structure marketed as a home equity agreement (HEA), home equity investment (HEI), or shared equity agreement. On this site, we use HEI and HEA interchangeably.
Instead of monthly payments, you repurchase the provider's share in one lump sum when you sell, refinance, or reach the end of the term, based on your home's value at that time. That structure — no monthly payment and no income requirement — makes an HEA fundamentally different from a HELOC, home equity loan, or cash-out refinance.
How Repayment Is Calculated
Every HEI and HEA provider we track calculates your eventual payoff using some version of the same three building blocks — just with different names depending on the provider. Here's the general framework, using the standardized terms we use throughout this site.
- Proceeds Percentage — how much you're asking for, as a percentage. Divide the amount you request by your home's appraised value. Request $50,000 on a $500,000 home, and your Proceeds Percentage is 10%.
- Multiple — a number assigned by the provider. This number may be based on your credit score, property type, or other factors, depending on the provider.
- Investor Percentage — the provider's share of your home's future value. Multiply Proceeds Percentage by Multiple. Every provider caps this at some maximum share, which varies by provider.
Put together, here's the formula that most providers use:
"Final Home Value" just means what your home is worth at the time you settle — when you sell, refinance, or buy out the agreement.
Worked example: $500,000 home, $250,000 mortgage balance. You request $50,000 (10% Proceeds Percentage), and the provider assigns a 2.0x Multiple, for a 20% Investor Percentage.
10 years later, say your home has grown to $705,000 (about 3.5% average annual appreciation) and your mortgage balance has paid down to $200,000. If you sell:
- Sale price$705,000
- Pay off mortgage−$200,000
- Pay off HEA (20% of $705,000)−$141,000
- You keep$364,000
What an HEA Actually Costs
An HEA has no monthly payment and no stated interest rate. What you owe depends on two things: how much your home appreciates, and how long you hold the agreement before settling.
To illustrate the range of outcomes that are possible, we've used Splitero's formula as an example in the table below — the total amount you'd repay at settlement, across a range of home price growth scenarios and exit years. The other providers we track follow a similar pattern, though the exact numbers differ. Check the cost calculator to compare costs for all providers using your own numbers.
Scenario assumptions
- $500K home
- 700 credit score
- $50K requested
- 10% LTV
Splitero's Estimated Share Owed ($)
| Exit Year | ||||||||
|---|---|---|---|---|---|---|---|---|
| 1 | 3 | 5 | 7 | 10 | 20 | 30 | ||
| Annual Home Growth | -1.5% | $59,775 | $85,432 | $92,722 | $89,961 | $85,973 | $73,914 | $63,546 |
| 0% (flat) | $59,775 | $85,432 | $100,000 | $100,000 | $100,000 | $100,000 | $100,000 | |
| 1.5% (low) | $59,775 | $85,432 | $107,728 | $110,984 | $116,054 | $134,686 | $156,308 | |
| 3.5% (avg) | $59,775 | $85,432 | $118,769 | $127,228 | $141,060 | $198,979 | $280,679 | |
| 5.5% (high) | $59,775 | $85,432 | $122,101 | $145,468 | $170,814 | $291,776 | $498,395 | |
Observations
- Years 1 and 3 are identical in every scenario. That's an annual rate cap kicking in to limit how fast the share can grow in the first few years, regardless of home price growth.
- In a flat or declining market, the amount owed barely grows past a certain point, since Splitero's payoff is a fixed percentage of your home's value at exit. If that value falls or stalls, so does the dollar amount owed.
- In a growing market, cost keeps climbing the longer you hold, since it's tied to whatever your home is worth when you eventually settle.
See Your Own Numbers
Your own numbers will run through whichever formula your specific provider uses. See exactly how it plays out — eligibility, estimated cost, and effective APR — for your home.
Pros & Cons of an HEA
Pros
- No monthly payments. You receive a lump sum and owe nothing month-to-month — you settle once, at the end of the term or when you sell, refinance, or exit early.
- Flexible qualification. Accepts credit scores below 620 and requires no income verification, making it easier to qualify for than a HELOC, home equity loan, or cash-out refi. See the full comparison ↓
- Keep your existing mortgage. An HEA does not impact your current mortgage, so you keep your existing rate and lender, unlike a cash-out refinance.
- A flexible lump sum. Use the cash for anything, from home improvements to paying off higher-interest debt.
- Preserves your borrowing power. Unlike a HELOC, home equity loan, or cash-out refi, an HEA doesn't hurt your debt-to-income ratio, making it easier to get approved for a car loan, credit card, or other financing later.
- It's typically non-recourse. If your home's value falls short of what's owed, most providers can't pursue your other assets — unlike a HELOC or home equity loan, which are usually recourse debt.
Cons
- You give up a share of future value. In exchange for no monthly payments, providers typically take a multiple of what they fund — e.g., 10% of your value today for a 20% share at settlement, a 2x multiple.
- The cost is uncertain until you settle. Because it's tied to your home's future value, you won't know the exact payoff in advance — but the cost calculator can show you a realistic best-to-worst case range.
- Repayment is a lump sum, not a gradual payoff. Unlike a HELOC or home equity loan that pays down automatically each month, the full amount comes due at the end of your 10- to 30-year term — you need a plan to sell, refinance (not guaranteed), or pay cash, and falling short risks foreclosure.
- Not available everywhere. A smaller provider pool than HELOCs, uneven state coverage, and property restrictions mean it's worth confirming eligibility early — see the cost calculator.
HEA Qualification and Repayment Comparison
Here's how qualification and repayment stack up across the common ways to access home equity:
| HEA / HEI | HELOC | Home Equity Loan | Cash-Out Refi | Reverse Mortgage | |
|---|---|---|---|---|---|
| Monthly payment? | None | Yes — interest-only, then principal & interest | Yes — principal & interest | Yes — principal & interest | None |
| Credit score (typical) | 500+ (varies by provider) | 620+ | 620+ | 620+ | No strict minimum; financial assessment required |
| Income requirement | None | Steady income, DTI under ~43% | Steady income, DTI under ~43% | Income verification, DTI under ~43–50% | Financial assessment, age 62+ |
| How you repay | Repay when you sell, refinance, or reach the end of the term | Monthly payments over the draw and repayment periods | Fixed monthly payments over the loan term | Fixed monthly payments over the loan term | Repaid when the home is sold, refinanced, or you move out |
HEA Risks
The core risk with an HEA is being forced to sell your home before you're ready. That can happen if you fall behind on your obligations, or if you can't come up with the lump sum when it's due.
What Could Force a Sale
- Falling behind on your primary mortgage, property taxes, HOA/condo dues, or homeowners insurance — the same baseline requirements as a HELOC, mortgage, or home equity loan.
- Letting the property fall into disrepair, since most agreements require you to maintain it.
- Being unable to pay, sell, or refinance when the lump sum comes due. This one's HEA-specific, since a HELOC or home equity loan pays down gradually instead.
HEA Restrictions
Because the provider holds a financial stake in your home, most HEAs also come with ongoing restrictions and disclosure duties. In our experience, these tend to be broader than what a HELOC or home equity loan requires.
Restrictions While Your HEA Is Active
- Getting a new home loan generally needs the provider's consent. They'll typically allow a rate/term refinance of your existing mortgage, but often refuse a cash-out refinance, reverse mortgage, or another equity-share product, since those add debt or a competing claim on your home's value.
- You're usually required to promptly disclose major changes, such as a pending sale, a new lien, a lawsuit or tax claim, bankruptcy, a change in who lives there, or damage to the property.
- Violating these terms can put you in default, which — as with any home-secured loan — can ultimately lead to foreclosure.
Exact terms vary by provider and are set out in your HEA contract. The details above reflect common patterns among HEA providers.
Compare What You'd Actually Get
See side-by-side eligibility and estimated cost across the HEI and HEA providers we track — no income requirements, no monthly payments, and credit scores as low as 500 may qualify.
Is an HEA Right for You?
May Be a Good Fit If
- Your income is irregular or hard to document — self-employed, freelance, or otherwise. There's no income requirement, and no new monthly payment to make.
- Your credit is below what most lenders want. HEA providers typically have lower minimum credit thresholds than the roughly 620 a typical HELOC lender looks for.
- You've been turned down for a HELOC, home equity loan, or cash-out refinance over income documentation, debt-to-income, or credit score. Qualifying for an HEA relies less on those factors, so it can open a door traditional financing has closed — though a recent bankruptcy or foreclosure will usually disqualify you here too. See our HEI vs. HELOC comparison for the full breakdown.
- You're already struggling to keep up with existing debt, to the point that a personal loan or HELOC payment isn't realistically something you could take on. An HEA's lack of a monthly payment can provide real breathing room, though it's rarely the cheapest way to solve the underlying problem, so treat it as a lifeline, not a bargain.
- You expect your home's value to stay flat or decline over the years you'd hold the agreement. An HEA's payoff is tied to your home's value at settlement, so if that value doesn't grow, what you owe doesn't grow much either. A fixed-rate loan, by contrast, keeps accruing interest regardless of what your home is worth.
- You're 62 or older and considering a reverse mortgage. An HEA can come out cheaper in some scenarios — see our HEI vs. reverse mortgage comparison to see how the two stack up.
Think Twice If
- You can qualify for a HELOC, home equity loan, or cash-out refinance and can comfortably support a new monthly payment. That route is often less expensive over time.
- You need to know your exact payoff amount in advance. The total isn't fixed until you settle, which makes budgeting harder than with a fixed monthly payment.
- You want to keep as much of your home's future appreciation as possible. You're giving up a real share of it in exchange for cash today.
- You can't picture coming up with a lump sum later to repay the HEA. Settling requires savings, a refinance, or a sale of your home.
Conclusion
An HEA can be a strong fit for the right homeowner, but it's not the only way to access your equity. Before deciding, compare it against your other options, weigh the total cost against what you actually need the money for, and consider talking to a financial advisor about your specific situation. The right choice depends on your equity, your income, your timeline, and how you expect your home's value to change.
Frequently Asked Questions
Is a home equity agreement a loan?
No. It's structured as an agreement to share a percentage of your home's future value, not a loan. There are no monthly payments — you settle with a single repurchase amount later, based on your home's value at that time. Some states treat HEAs as loans, while others treat them as real estate option contracts; the legal treatment can affect your specific rights, so it's worth understanding how your state classifies it.
Do I owe less if my home loses value?
Generally, yes. Because your settlement amount is based on your home's value when you exit, a lower value usually means a lower repurchase amount. That shared-downside feature is one of the biggest structural differences between an HEA and a HELOC or home equity loan, where what you owe doesn't change based on your home's value.
Do the fees come out of my payout, and how much are they?
Usually, yes. Processing or origination fees are typically 3% to 5% of the amount funded (it varies by provider), plus third-party costs like appraisal and recording fees — these are generally deducted from the amount you actually receive at closing rather than billed separately.
What happens at the end of the term if I can't repurchase?
You settle by repurchasing the provider's share — typically through savings, a refinance, or selling the home. If you genuinely can't do any of those by the end of the term, some providers may extend it or take other steps, but in the worst case, failing to settle can lead to a forced sale or foreclosure, the same risk you'd face with other home-secured financing.