By Steven Hyde, Founder, Hyde Funding · NMLS #391380. Reviewed 2027-02-05. Hyde Funding is a mortgage lender headquartered in San Diego, lending nationwide since 2015.
Short answer: A home equity line of credit (HELOC) is a revolving credit line secured by your home, usually in second position behind your existing mortgage. A home equity loan is the fixed, lump-sum version. Both let you borrow against your equity without replacing a first mortgage that may carry a lower rate than today’s. Hyde Funding offers both.
| HELOC | Home equity loan | Cash-out refinance | |
|---|---|---|---|
| Funds | Draw as needed | Lump sum | Lump sum |
| Rate | Usually variable | Usually fixed | Fixed or ARM |
| First mortgage | Kept | Kept | Replaced |
Lenders cap combined loan-to-value (CLTV): your first-mortgage balance plus the new line, divided by the home’s value. Example: on a $700,000 home with a $400,000 first mortgage, an 85% CLTV cap allows up to $195,000 ($595,000 − $400,000). Limits vary by program and property.
HELOCs on a dwelling are covered by Regulation Z’s home equity rules (12 CFR 1026.40), which require specific disclosures and limit when a lender can terminate, freeze, or change the line. On your primary home you generally have a three-day right to rescind (12 CFR 1026.23).
Renovations, debt consolidation, tuition, a down payment on an investment property, or a cash reserve. Interest deductibility depends on how you use the funds (see IRS Publication 936).
A revolving line of credit secured by your home that you can draw on, repay, and draw again during the draw period.
No. A HELOC or home equity loan is a separate second lien, so your first mortgage stays as it is.
Only in some cases. The IRS generally allows it when the funds buy, build, or substantially improve the home that secures the loan. Ask your tax advisor.
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Steven Hyde, NMLS #391380. Equal Housing Opportunity. Hyde Funding is not a government agency and is not affiliated with the VA. This is general information, not a loan commitment; terms depend on credit, income, property, and lender approval.