Fixed-rate second mortgage
California Home Equity Loans — Fixed-Rate HELOAN
California home equity loans (HELOAN) let homeowners borrow a fixed-rate lump sum against their home's equity. A HELOAN (home equity loan) in California is a FIXED-rate second mortgage that gives you a lump sum of cash at closing, secured by your home equity. Unlike a HELOC's variable rate that adjusts monthly, a HELOAN locks your rate for the full term — typically 10, 15, or 20 years — and you start repaying principal and interest immediately. HELOANs are ideal when you need a known amount of money (kitchen remodel, debt consolidation, ADU build) and want budgeting certainty. Save Financial offers HELOANs up to $500,000 with rates from 7.99% APR.
Quick Answer
A HELOAN (Home Equity Loan) is a fixed-rate second mortgage secured by your home's equity. Unlike a HELOC, you receive the entire loan amount as a lump sum at closing and repay it over a fixed term (typically 10, 15, 20, or 30 years) with predictable monthly payments. HELOANs are ideal when you need a specific amount for a known cost and want payment certainty.
Quick reference: key facts
| Specification | Detail |
|---|---|
| Type of credit | Fixed-rate lump-sum second mortgage |
| Term | 10, 15, 20, or 30 years |
| Rate type | Fixed |
| Max CLTV | Up to 85% combined |
| Best for | Predictable fixed payment, one-time large expense |
What is a heloan (home equity loan) in California?
A HELOAN is a closed-end second mortgage. You receive the entire loan amount as a lump sum at closing, then pay it back in fixed monthly installments of principal and interest over a set term, just like a first mortgage. It sits in 'second lien position' behind your existing first mortgage — meaning your first mortgage gets paid first if the home is ever sold or foreclosed.
HELOANs are different from HELOCs (which are open lines you draw from over time at a variable rate) and different from cash-out refinances (which REPLACE your first mortgage). A HELOAN leaves your existing first mortgage untouched — critical when your existing rate is much lower than today's market rate.
Who is a HELOAN (Home Equity Loan) best for?
- Homeowners with a low existing first-mortgage rate they want to preserve
- Borrowers who need a known, specific lump sum (not a flexible draw line)
- People who prefer rate certainty over a variable HELOC
- Consolidating high-rate debt into a fixed-term, fixed-rate payoff plan
- ADU construction or major home renovation with a fixed budget
- Buyers using equity from one home for a down payment on another
Key facts: HELOAN (Home Equity Loan) in California
| Maximum combined LTV (CLTV) | Up to 90% (80% standard) |
|---|---|
| Maximum loan amount | $500,000 |
| Minimum FICO | 680 (700+ for best pricing) |
| Maximum DTI | 45% |
| Loan terms | 10, 15, or 20 years |
| Repayment | Fixed P&I from day one — no draw period |
| Closing costs | $1,500 – $4,500 (Save Financial often credits these) |
| Closing time | 14-21 days typical |
How the HELOAN (Home Equity Loan) process works
1. Apply online
Application takes 10 minutes — no SSN required initially.
2. Soft credit pull
Quote and pre-approval based on soft pull within 1 hour.
3. Income verification
30 days of paystubs OR 2 years tax returns if self-employed.
4. Property valuation
Drive-by appraisal or AVM for most files — full appraisal only on larger loans.
5. Close & fund
Sign at home or e-sign; funds wired 3 business days after closing.
Frequently asked questions about HELOAN (Home Equity Loan) in California
What is the difference between a HELOAN and a HELOC in California?
A HELOAN is a fixed-rate, lump-sum second mortgage — you receive all the cash at closing and start paying it back immediately at a locked rate. A HELOC is a revolving variable-rate line of credit — you draw from it over a 10-year period as needed, paying interest only on the balance you use, with the rate adjusting monthly based on Prime. Choose a HELOAN when you need a specific amount and want payment certainty; choose a HELOC when you want flexibility and may not need all the funds at once.
How much equity can I borrow against with a California HELOAN?
Most California HELOAN programs allow up to 80% combined loan-to-value (CLTV), with select investors going to 90% CLTV for strong borrowers. Example: $800,000 home, $400,000 existing first mortgage. At 80% CLTV, the maximum total debt is $640,000, so the maximum HELOAN is $240,000. At 90% CLTV, the maximum HELOAN would be $320,000. Save Financial accesses both 80% and 90% CLTV programs.
Are HELOAN interest rates higher than first mortgage rates?
Yes — typically 1.5% – 2.5% higher than first mortgage rates because HELOANs sit in second lien position, meaning they carry more risk for the lender. In a typical California market, if 30-year first-mortgage rates are 6.5%, HELOAN rates run 8.0% – 9.0%. The trade-off is worth it when your existing first mortgage is at 3%-4% — preserving that low rate while adding a second is almost always cheaper than refinancing the whole thing into a cash-out at today's rates.
Can I deduct HELOAN interest on my California taxes?
Sometimes. Under the 2017 Tax Cuts and Jobs Act, mortgage interest on a HELOAN is tax-deductible ONLY when the loan proceeds are used to 'buy, build, or substantially improve' the home that secures the loan. If you use the HELOAN for a kitchen remodel — deductible. If you use it to consolidate credit-card debt or pay tuition — not deductible. The deduction cap is $750,000 of total mortgage debt for loans originated after December 15, 2017. Confirm with a CPA.
How long does it take to close a HELOAN in California?
Most California HELOANs close efficiently from complete application. Save Financial's average is 17 days. The federal Truth-in-Lending Act requires a 3-day right-of-rescission period after closing on any second mortgage on a primary residence, so funds wire to your bank 3 business days after signing.
Will a HELOAN affect my first mortgage?
No. A HELOAN is a completely separate second mortgage. Your existing first mortgage, interest rate, balance, and payment all stay exactly the same. The HELOAN simply attaches a second lien on the property behind the first. This is the main advantage of a HELOAN over a cash-out refinance: you preserve a low first-mortgage rate.
Can I get a HELOAN on a rental property in California?
Yes, but the terms are stricter. Investment-property HELOANs cap at 70% – 75% CLTV (vs 80% – 90% on primary), require 720+ FICO, charge 0.75% – 1.25% higher rates, and have stricter DTI requirements. Save Financial works with portfolio lenders that specialize in investor HELOANs.
What credit score do I need for a California HELOAN?
Most California HELOAN programs require a minimum FICO of 680, with best pricing reserved for 720+ scores. Some portfolio lenders Save Financial works with allow scores as low as 660 with compensating factors (low DTI, strong equity, large reserves). Below 660, a cash-out refinance is usually the better option.
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