The post What Is a Home Equity Agreement? by Benzinga Contributors appeared first on Benzinga. Visit Benzinga to get more great content like this.
American homeowners are now sitting on close to $36 trillion in home equity according to Federal Reserve data, a record, yet most of that wealth is locked inside the walls of a house and cannot easily be spent.
A home equity agreement is one of the newer ways to pull some of that money out as cash without taking on a monthly payment, and interest has grown as borrowing costs stay stubbornly high.
What Is a Home Equity Agreement
A home equity agreement, or HEA, is a contract in which an investor hands you a lump sum of cash today in exchange for a percentage of your home’s future value.
You take on no debt, you make no monthly payments, and no interest accrues.
Instead, you settle up later, when you sell the home, refinance it, or buy back the investor’s stake, usually anytime within a term of 10 to 30 years.
The same product goes by several names, including home equity investment, or HEI, shared equity agreement, and home equity sharing agreement, but they all describe the same trade: cash now for a slice of your home’s appreciation later.
How a Home Equity Agreement Works
The process starts when you apply and the company orders a valuation of your home.
If you qualify, the provider sends an offer built around three numbers: the cash amount you can receive, the share of future value the investor will collect at settlement, and the length of the term.
The investor then records a lien on your property, much like your mortgage lender already has, to secure its stake.
From that point you owe nothing month to month.
Say your home is worth $500,000 and a company gives you $50,000 in exchange for a 25% share of your home’s future value.
If you sell years later for $700,000, the investor is owed its original $50,000 plus 25% of the $200,000 in appreciation, which is another $50,000, for a $100,000 payback.
If the home loses value instead, many agreements have the investor share in the loss, so your settlement can come in below what you might expect.
What It Costs
The cash is not free, even though there is no interest rate attached to it.
Most providers charge an upfront processing fee, often around 3% to 3.9% of the amount you receive, plus third-party costs like the appraisal, escrow, and government recording fees.
The larger cost is the appreciation you give up, and that figure is unknowable when you sign.
In a hot housing market, the effective cost of an HEA can run well above what you would have paid on a traditional loan, which is the central tradeoff of the product.
How It Compares to a HELOC or Home Equity Loan
A home equity line of credit and a home equity loan both let you borrow against your equity and repay with interest over time, and you keep 100% of any appreciation.
An HEA flips that arrangement by removing the monthly payment and the interest, but handing the investor a share of your upside.
The math depends heavily on rates, and rates have stayed elevated.
As of mid-2026, the prime rate sits at 6.75%, with HELOC rates averaging in the low 7% range, far below the roughly 21% that the average credit card now charges.
That gap is part of why so many homeowners are weighing how to tap equity at all right now, especially with the Federal Reserve holding its benchmark rate at 3.50% to 3.75% for three straight meetings ahead of its June 16 and 17 decision.
If you want to see how the two products line up on cost, flexibility, and qualification, we’ve compared an HEA against a HELOC side by side.
Who Can Qualify
The appeal of an HEA is that it reaches people traditional lenders often turn away.
Because repayment depends on your home rather than your paycheck, most providers do not impose an income or debt-to-income requirement.
Credit standards are looser too, with some companies approving scores as low as 500, well under the typical HELOC floor.
What you do need is equity, generally somewhere in the range of 20% to 40% of your home’s value, since the investor wants a cushion behind its position.
When an HEA Makes Sense
The product tends to fit homeowners who cannot or do not want to add another bill to the monthly budget.
That includes self-employed borrowers with uneven income, retirees living on fixed cash flow, and people working through a stretch of unemployment or thin credit.
It is a weaker fit if you have strong credit and steady income, because a HELOC, home equity loan, or cash-out refinance will usually cost less over time.
It is also a poor fit if you expect rapid appreciation and want to keep that gain, or if you plan to sell within two or three years and a long equity-sharing term would be overkill.
How Big the Market Is
HEAs are still a small corner of the broader home equity market, but the niche has grown quickly.
According to the Consumer Financial Protection Bureau, the four largest HEI companies originated about 11,000 home equity contracts worth $1.1 billion in securitized volume between January and October of 2024.
That growth is fueled by record equity balances colliding with a rate environment that has kept many would-be borrowers on the sidelines.
A Closer Look at Point
Point is one of the more established names in the space, founded in 2015 and reporting that it has worked with more than 25,000 homeowners.
Its home equity investment gives you a lump sum in exchange for a share of your home’s future value, with no monthly payments and a 30-year window to settle by selling, refinancing, or buying out the stake.
The company accepts credit scores as low as 500, does not weigh income or debt-to-income, and can invest up to $500,000 in a single property.
It also applies a Homeowner Protection Cap that limits how large its share of appreciation can grow, which puts a ceiling on the cost if your home value soars.
Prequalification runs on a soft credit pull and takes about a minute, with a hard pull only at full application, and funding typically lands within three weeks.
If you want to run your own numbers, Point offers a no-obligation estimate that shows the cash, equity share, and term you would be offered before any hard credit check.
One detail worth confirming before you start: Point’s HEI is available in roughly 27 states plus Washington, D.C., so the first thing to check is whether your state is on the list.
The post What Is a Home Equity Agreement? by Benzinga Contributors appeared first on Benzinga. Visit Benzinga to get more great content like this.
