How to Sell the Equity You’ve Built in Your Home to Access Cash

If you’re house rich but cash poor, you’re not alone. Maybe your home’s value has risen, but your cash flow hasn’t. Selling some of your equity can help you turn your home’s value into money you can actually use, without selling your home or taking on new monthly debt.

Here’s how selling equity through a home equity agreement works, plus other ways to access your home’s value.

Table of Contents

1. What does it mean to sell equity in your home?
   1. How it works
2. Pros and cons
3. Where can I get a home equity agreement?
4. Other ways to access home equity
   1. 1. Home equity line of credit (HELOC)
   2. 2. Home equity loan
   3. 3. Cash-out refinance
   4. 4. Home sale-leaseback
5. How much equity can you sell or borrow?

What does it mean to sell equity in your home?

When you sell equity in your home, you’re typically entering a home equity agreement (HEA), sometimes called a home equity investment (HEI). It lets you exchange a portion of your home’s future value for cash today.

Instead of a traditional home equity loan or line of credit, an HEA allows you to share a portion of your home’s future appreciation when you sell your home or reach the end of your agreement term (often 10 to 30 years).

How it works

• You receive a lump sum, often up to a percentage of your home’s current value (10% and 20% are standard).
• The company takes an ownership stake tied to your home’s future value.
• You repay the original amount plus a share of appreciation when you sell or settle.

Pros and cons

Pros

• Access home equity without new debt or monthly payments

• No credit score or income requirements

• You can stay in your home

Cons

• Give up a share of your home’s future appreciation

• Can be costly if your home gains significant value

Where can I get a home equity agreement?

These are our picks for the best home equity agreement providers:

Selling or tapping into your home equity is not a decision to take lightly. “There are real risks, like losing your home if you miss payments or owing more than it’s worth if property values fall. Always consider why you need the funds and how you’ll repay them.

Other ways to access home equity

If you’d rather borrow against your home than sell equity, you have several options. Each has unique pros, cons, and qualification requirements.

1. Home equity line of credit (HELOC)

A HELOC works like a credit card backed by your home. You can draw from the credit line as needed during a 10-year draw period and pay interest only on what you borrow.

Example:

• Home value: $500,000
• Line of credit: $100,000
• Amount drawn: $5,000 at 10.36% variable APR

Pros

• Borrow only what you need

• Lower rates than unsecured loans

• Flexible repayment options

Cons

• Variable interest rates are standard

• Must qualify based on credit and income

• Risk of foreclosure if you can’t repay

2. Home equity loan

A home equity loan provides a one-time lump sum with fixed monthly payments. It’s sometimes called a second mortgage.

Example:

• Home value: $500,000
• Loan amount: $100,000
• APR: 9.49% fixed
• Monthly payment: $1,293

Pros

• Fixed rate and predictable payments

• Long repayment terms

• All funds disbursed upfront

Cons

• Closing costs may apply

• Home secures the loan

• 2 monthly mortgage payments

3. Cash-out refinance

A cash-out refinance replaces your current mortgage with a larger one and gives you the difference in cash.

Example:

• Home value: $500,000
• Current mortgage: $200,000
• New loan (80% LTV): $400,000
• Cash out: $200,000

Pros

• 1 monthly payment

• Potential for a lower rate

• Large lump sum available

Cons

• Resets your loan term

• Closing costs required

• May raise your payment

4. Home sale-leaseback

A sale-leaseback lets you sell your home and then rent it back from the buyer. You gain full access to your equity but no longer own the property.

Pros

• Access all your equity immediately

• No mortgage payments

• Stay in your home as a renter

Cons

• Lose ownership and future appreciation

• Pay rent instead of building equity

How much equity can you sell or borrow?

How much you can access depends on your loan-to-value ratio (LTV), which compares your current mortgage balance to your home’s appraised value.

Bottom line

Selling equity through a home equity agreement can be a smart way to turn your home’s value into cash without taking on debt. But depending on your credit, income, and long-term goals, borrowing options like a HELOC or refinance may be a better fit.

Before you decide, consider how much risk you’re comfortable with and how long you plan to stay in your home.