The fundamental difference
| Attribute | HELOC | HEI |
|---|---|---|
| Product type | Loan (debt) | Investment (equity) |
| Monthly payment | Yes — interest-only during draw | None |
| Interest rate | 7.43% variable (July 2026) | No interest — share of appreciation |
| Repayment trigger | Ongoing monthly, then amortized | At sale, refi, or end of term (10-30 yrs) |
| Underwriting | Income, credit, CLTV | Mainly home value + equity |
| Total cost | Known upfront (rate × years) | Variable — depends on home appreciation |
| Regulation | Federal (TILA, RESPA) | Lighter regulation, state-specific |
Major HEI providers as of 2026
- Point — largest, available in 24+ states, terms up to 30 years
- Unlock — 15+ states, 10-year terms typical
- Hometap — 20+ states, 10-year term
- Splitero — California primarily, faster closing
- Aspire (Redwood Trust) — institutional-grade HEI product
Each has different appreciation-share formulas, discount rates, term lengths, and CLTV caps. Terms vary significantly — compare 2-3 side by side.
The break-even math over 10 years
Same scenario for both: $50K needed from a $500K home.
HELOC path
- $50K at 7.43% APR interest-only for 10 years
- Annual interest cost: $3,715
- 10-year total interest: $37,150 (if never repaying principal)
- Plus $50K principal repayment at end
- Total 10-year cost: ~$87K (principal + interest)
HEI path (typical terms: 10% of home value cash advance for 25% of appreciation share)
Home appreciation scenarios over 10 years:
| Appreciation | Home value in 10 yrs | Appreciation ($) | HEI's share (25%) | Total HEI payback |
|---|---|---|---|---|
| 0% (flat) | $500K | $0 | $0 | $50K |
| 3% annual | $672K | $172K | $43K | $93K |
| 5% annual | $814K | $314K | $79K | $129K |
| 7% annual | $984K | $484K | $121K | $171K |
Head-to-head
| Appreciation | HELOC 10-yr cost | HEI 10-yr cost | Winner |
|---|---|---|---|
| 0% | $87K | $50K | HEI by $37K |
| 3% | $87K | $93K | HELOC by $6K |
| 5% | $87K | $129K | HELOC by $42K |
| 7% | $87K | $171K | HELOC by $84K |
HEI wins only if the market is flat to declining. In any normal appreciation scenario (3-7%), HELOC wins — sometimes by a lot.
Where HEIs make sense despite the cost premium
- You can't qualify for a HELOC (low income, low FICO, high DTI)
- You're comfortable trading equity for zero monthly payment obligation
- Your local market is expected to appreciate slowly or decline
- You need cash within days (some HEI providers close in 2-3 weeks vs HELOC's 3-4)
- You're planning to sell within the HEI term — the appreciation-share settles at sale automatically
Where HEIs almost never make sense
- You qualify for a HELOC and your market appreciates normally
- You plan to hold the home 15+ years in a strong market
- Your primary concern is protecting long-term equity for heirs
- You want federally regulated consumer protections
The regulation gap
HELOCs are mortgage products regulated under TILA, RESPA, ECOA, HMDA, and state mortgage lending laws. Rate disclosures required, cooling-off periods, standardized closing documents.
HEIs are treated as investment contracts, not loans. Much lighter regulation. Contract terms vary significantly across providers. Some states (California, New York) have proposed HEI-specific regulation but nothing broadly finalized. Read the actual contract carefully — appreciation-share formulas can be complex, and small differences compound into large dollar amounts over 10 years.
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