A home equity investment (HEI) pays you a lump sum for a share of your home's future appreciation. There's no monthly payment and qualifying leans on the property rather than your income, but the eventual payoff can be expensive, especially if you settle early in a rising market. If you qualify for a home equity loan or HELOC and can afford the payment, that's usually cheaper.
- HEI terms typically run 10 to 30 years; settlement happens when you sell, refinance, buy out or reach the end of the term.
- Closing fees across the category typically run about 3% to 5% of the cash received, plus appraisal and title costs.
- Many providers set the starting value 5% to 10% below the appraisal.
- Independent research found early exits (within 3 to 5 years) can cost the equivalent of high teens to low 20s percent a year.
- Point funds about $30,000 to $600,000 on terms up to 30 years, with credit scores from about 500 and no income requirement.
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Plenty of homeowners sit on real wealth they can't reach: a retired couple with a nearly paid-off house and an income too thin for a bank loan, a self-employed electrician whose tax returns understate what she earns, someone whose credit took a hit two years ago and hasn't recovered. The equity is there; the door is locked.
Home equity investments were built for that gap. A company gives you cash today for a share of your home's future value, with no monthly bill and no strict income test. Here's how they work, what they really cost, and who they genuinely fit.
Quick verdict
An HEI earns its place when monthly cash flow is tight, irregular income or a bruised credit score blocks a bank loan, or you need a long runway with no payments. If a bank would approve you and your budget can carry a payment, a home equity loan, HELOC or cash-out refinance will almost always cost less over several years. Among HEI providers, Point offers the widest door and the longest term.
How a home equity investment works
A company appraises your home, agrees on its value and hands you a lump sum. In exchange it places a lien on the property, the same kind of legal claim your mortgage lender holds. You keep living there and keep ownership, and no payments come due along the way.
You settle up when you sell, refinance, buy the company out or reach the end of the term, which typically runs 10 to 30 years. The payoff is the money you received plus an agreed share of how much your home's value rose from a starting number set when you signed. Think of the company as buying a piece of your home's future growth rather than lending against its present value.
If the home gains a lot, the company collects more. Some agreements share losses too, so if your home loses value you can repay less than you received.
The pros
- No monthly payment for the life of the agreement.
- Qualifying leans on the home, not your pay stubs, so retirees, the self-employed and people rebuilding credit can access equity.
- Long runways: terms up to 30 years with some providers.
- Shared downside: some agreements share losses if your home's value falls.
- Repayment caps limit the maximum you could owe.
The cons
- Upfront fees: closing fees across the category typically run about 3% to 5% of the cash you receive, plus appraisal and title costs, usually deducted from your payout.
- A starting-value haircut: many providers mark the starting value 5% to 10% below the appraisal, so even if your home's value stays flat you can owe more than you received.
- An expensive early exit: independent research found settling within 3 to 5 years can cost the equivalent of the high teens to low 20s percent a year. Example: receive $95,000, settle after four years at an effective 18% a year, and the payoff is about $184,000, nearly double.
- High caps: repayment caps tend to sit high, so treat them as a worst-case ceiling, not a routine shield.
- You still carry the house: property taxes, insurance, HOA fees and maintenance stay yours, and missing them can trigger a default.
- Refinancing friction: to refinance your mortgage later, the HEI company must agree to subordinate its lien. Most major providers allow it, but it's an extra approval step.
Quick fit check
Two questions: could your monthly budget carry a new loan payment right now, and would a traditional lender likely approve you? If both answers are yes, explore a home equity loan or HELOC first; it will almost always cost less over several years than sharing your home's appreciation. If your current mortgage rate is high, a cash-out refinance may be simpler and cheaper.
The HEI route fits when monthly cash flow is tight, irregular income or a bruised score blocks approval, or you need a long runway with no obligations: common for retirees on fixed incomes, real estate investors and independent contractors.
Point, Hometap and the alternatives
| Option | What it offers | Best for |
|---|---|---|
| Point | $30,000 to $600,000, terms up to 30 years, settle any year; no income requirement, scores from about 500; shares losses; homeowner protection cap | Long runway, documented income problems, low scores |
| Hometap | Equity sharing on a 10-year term | Homeowners who plan to sell within 10 years |
| Rocket Mortgage | Home equity loans and cash-out refinances | Borrowers who qualify and want predictable payments |
| AmeriSave | Cash-out refinance into one larger mortgage | Homeowners whose current mortgage rate isn't special |
| LendingTree | Free marketplace of 300+ lenders | Comparing loan and line-of-credit offers |
With Point, prequalifying takes about a minute and applying costs nothing; the appraisal is handled during the application, the full appraisal and underwriting happen before funding, and closing typically takes around three weeks. Because the payoff tracks appreciation, it suits homeowners who want a long runway rather than a quick exit in a fast-rising market.
Money.com, which sponsored the video this article is based on, compares lenders across this space, and pulling quotes there costs nothing.
Pros and cons
What works
- No monthly payments.
- Qualifying leans on the home rather than income or credit.
- Terms up to 30 years; some agreements share losses.
What doesn't
- Closing fees of about 3% to 5% plus appraisal and title.
- Starting-value haircuts mean you can owe more even if prices are flat.
- Early settlement can cost the equivalent of high teens to low 20s percent a year.
- The lien adds a step to future mortgage refinancing.
Frequently asked questions
What is a home equity investment?
An agreement where a company gives you a lump sum in exchange for a share of your home's future value. There are no monthly payments; you settle when you sell, refinance, buy out the company or reach the end of the term.
Is a home equity investment better than a HELOC?
If you qualify for a HELOC or home equity loan and can afford the monthly payment, those usually cost less because you keep your home's future appreciation. An HEI fits when a payment or approval is the obstacle.
How much does a home equity investment cost?
Expect closing fees of about 3% to 5% of the cash received plus appraisal and title costs, then the appreciation share at settlement. Independent research found early exits can cost the equivalent of the high teens to low 20s percent a year.
What credit score do you need for Point?
Point says credit scores starting around 500 can qualify and it has no income requirement. Funding runs from about $30,000 to $600,000.
Can I refinance my mortgage with a home equity investment?
Usually, but the HEI company must agree to subordinate its lien behind the new mortgage. Most major providers allow it; it adds an approval step.
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