A home equity investment (HEI), also called a home equity agreement, gives you a lump sum now in exchange for a share of your home's future value or appreciation. There's no monthly payment and no interest; you settle when you sell, refinance or reach the end of the term, usually 10 to 30 years.

Is an HEI cheaper than a HELOC?

Usually not if your home appreciates. HEIs charge upfront fees, commonly around 3% to 5%, and the payoff grows with your home's value. A HELOC or home equity loan charges interest you can see and plan for. An HEI can make sense when you can't qualify for or afford a monthly payment.

HELOC or home equity loan: which should I choose?

Choose a HELOC for ongoing or uncertain costs, like a renovation paid in stages, because you only pay interest on what you draw. Choose a home equity loan for a one-time amount, like paying off debt, when you want a fixed rate and payment.

Can self-employed borrowers get a HELOC in California?

Yes. Full-documentation HELOCs use tax returns. If write-offs lower your taxable income, bank statement and other non-QM HELOC and home equity loan programs can qualify you on deposits instead, usually at a somewhat higher margin.

Should I refinance instead of taking a HELOC?

If your first mortgage rate is well below today's rates, a cash-out refinance replaces your whole balance at the current rate. A HELOC or home equity loan lets you borrow only the new money and keep the low rate on the rest. Compare the blended rate before deciding.

Home Equity · 8 min read

HEI vs HELOC vs Home Equity Loan: Which Is Better in 2026?

By Mike Basti·November 11, 2026

A HELOC is a revolving line of credit with a variable rate. A home equity loan is a lump sum with a fixed rate and payment. A home equity investment (HEI) gives you cash now for a share of your home's future value, with no monthly payment. For most California homeowners who can afford a payment, especially those keeping a low first-mortgage rate, a HELOC or home equity loan costs less than an HEI over time.

The three options at a glance

	HELOC	Home equity loan (HELOAN)	Home equity investment (HEI)
What you get	A credit line you draw from as needed	One lump sum	One lump sum
Rate	Usually variable (prime plus a margin)	Fixed	No interest rate
Monthly payment	Yes; often interest-only during the draw period	Yes, fixed	None
What it really costs	Interest on what you use, plus closing costs	Interest over the term, plus closing costs	Upfront fees (commonly about 3%–5%) plus a share of your home's future value or appreciation
Term	Draw period, then repayment period	Commonly 10–30 years	Usually 10–30 years, settled at sale, refinance or term end
Best for	Renovations in stages, ongoing or uncertain costs	Debt payoff or a one-time purchase	Owners who can't qualify for or afford a payment

How a HELOC works

A HELOC works like a credit card secured by your home. You get a limit, draw what you need during the draw period and pay interest only on the balance you use. Most HELOCs carry a variable rate tied to the prime rate, so your payment moves when rates move. Some lenders let you lock part of the balance at a fixed rate. See our HELOC program and how HELOC rates are set.

How a home equity loan works

A home equity loan, sometimes called a HELOAN or second mortgage, pays you a single lump sum at a fixed rate with a fixed monthly payment. It's predictable, which makes it a good fit for consolidating higher-rate debt or a defined project. See our home equity loan program.

How a home equity investment (HEI) works

An HEI provider gives you cash today in exchange for a share of your home's future value or appreciation. You make no monthly payments and pay no interest. Instead, you settle when you sell, refinance or reach the end of the term, usually 10 to 30 years. Upfront fees commonly run about 3% to 5% of the amount, plus appraisal and closing costs. If your home rises a lot in value, the HEI can end up costing much more than a loan.

A $100,000 example

Here's a simplified example on a $1,000,000 California home. These are illustrative numbers, not quotes.

Home equity loan: $100,000 at an illustrative 8% fixed for 15 years is about $956 a month. Total interest over 15 years is about $72,000, less if you pay it off early.
HEI: suppose the provider takes 25% of appreciation. If the home rises to $1,300,000 over 10 years, you repay $100,000 plus 25% of $300,000, or $175,000, with no payments along the way. If the home rises more, you owe more.
HELOC: if you draw $100,000 for a renovation over a year and pay it down quickly, you pay interest only on what's outstanding, often the cheapest option for short-term needs.

The HEI's appeal is no payment; its cost is giving up part of your appreciation. In California, where home values have historically risen over long periods, that trade can be expensive.

Which is best for California homeowners in 2026?

You have a low first-mortgage rate: keep it. Use a HELOC or home equity loan for the new money instead of a cash-out refinance. Our guide to HELOC vs home equity loan vs cash-out refinance shows the blended-rate math.
You need money in stages: a HELOC.
You want a fixed payment for debt payoff: a home equity loan.
You're self-employed and your tax returns show low income: bank statement and other non-QM HELOC and home equity programs can qualify you on deposits.
You can't qualify for or afford any payment: an HEI may work, but read the settlement terms closely and model what you'd owe if your home rises 20%, 40% or more.

Sources: Consumer Financial Protection Bureau on home equity products and shared-equity agreements. HEI terms vary by provider; read your agreement carefully.

About this article: Save Financial is a California-licensed independent mortgage brokerage (NMLS #377740, DRE #01875766) in business since 2009, with offices in Newport Beach and Marina del Rey, serving all 58 counties. This article is general education, not a loan offer or commitment to lend. Rates and examples are illustrative. For a real quote, apply online or call 949-379-5320.