Quick answer
An HEI (home equity investment) gives you a lump sum of cash today in exchange for a share of your home's future value. There are no monthly payments and no interest; you settle when you sell, refinance, buy it out, or reach the end of the term (often 10–30 years). A HELOC is a line of credit with monthly payments and interest. In our 10-year example below, the HEI costs less if home values rise less than about 2.8% a year, and the HELOC costs less if they rise faster.
What is an HEI?
A home equity investment — also called a home equity agreement or home equity sharing agreement, and often searched as an “HEI loan” — is a contract between you and an investor. The investor gives you cash, usually a lump sum worth up to roughly 10–25% of your home's value depending on the provider and your equity (our program goes up to 25%, with a $500,000 maximum). In return, the investor receives a share of your home's value when the agreement ends.
You keep living in and owning your home. You still pay your mortgage, property taxes, and insurance, and you keep the home maintained. What you don't have is a new monthly payment: the investor gets paid from the home, when you sell, refinance, use savings to buy them out, or reach the end of the term.
How an HEI works, step by step
- Valuation. The provider values your home, often with an appraisal.
- Offer. You're offered an amount and the investor's share. Many contracts also set a starting value slightly below the appraised value (a “risk adjustment”).
- Closing. The investor records a lien on the home, and you receive the cash minus fees.
- The term. No monthly payments. You can usually settle early.
- Settlement. You repay the original amount plus the investor's share, based on the home's value at that time.
What an HEI really costs
Because there's no interest rate, an HEI's cost isn't obvious until you model it. Four things drive it:
- The investor's share. Some contracts take a share of the home's appreciation; others take a share of its total future value. The second type can cost more even if the home doesn't rise much.
- The starting value (risk adjustment). If the contract starts from a value below today's appraisal, part of your current equity counts as “appreciation” that the investor shares in.
- Upfront fees. Typically about 3–5% of the amount you receive, plus appraisal and third-party costs.
- Caps. Many contracts cap the investor's return, often expressed as a maximum annualized cost. A cap limits the cost if your home appreciates quickly.
When you compare offers, ask each provider for the total amount you would owe at settlement under flat, moderate, and strong appreciation. Some states now require that disclosure.
HEI vs. HELOC side by side
| Item | HELOC | HEI |
|---|---|---|
| What it is | A loan: revolving line of credit secured by your home | An investment contract secured by your home; some states regulate it as credit |
| Monthly payment | Yes (often interest-only during the draw period) | None |
| Cost | Interest on what you draw, usually at a variable rate | A share of your home's future value, plus upfront fees |
| How you get the money | Draw as needed | One lump sum |
| Qualifying | Credit, income, and combined loan-to-value | Mainly equity and property; credit is often more flexible |
| Your home's appreciation | 100% yours | Shared with the investor |
| Upfront costs | Often low | Typically about 3–5% plus third-party costs |
| Term | Often a 10-year draw period, then repayment | Often 10–30 years |
| Cost if home values are flat | Interest still accrues | Usually just the original amount plus fees |
| Cost if home values rise fast | Unchanged by home value | Rises with the home's value (subject to any cap) |
The 10-year math: HEI vs. HELOC on a $500,000 home
You need $50,000 from a $500,000 home and will keep it 10 years.
HELOC path (example rate 8%): interest-only at 8% is $4,000 a year, or $40,000 over 10 years, plus the $50,000 you borrowed = $90,000.
HEI path (example terms): $50,000 (10% of the home's value) in exchange for 25% of the appreciation. At settlement you repay $50,000 plus 25% of the gain:
| Yearly growth | Value in 10 yrs | Gain | Investor's 25% | HEI payback |
|---|---|---|---|---|
| 0% (flat) | $500,000 | $0 | $0 | $50,000 |
| 3% | $672,000 | $172,000 | $43,000 | $93,000 |
| 5% | $814,000 | $314,000 | $79,000 | $129,000 |
| 7% | $984,000 | $484,000 | $121,000 | $171,000 |
| Annual appreciation | HELOC total | HEI total | Lower cost |
|---|---|---|---|
| 0% | $90,000 | $50,000 | HEI by about $40,000 |
| 3% | $90,000 | $93,000 | HELOC by about $3,000 |
| 5% | $90,000 | $129,000 | HELOC by about $39,000 |
| 7% | $90,000 | $171,000 | HELOC by about $81,000 |
In this example the break-even is about 2.8% annual appreciation. Below that the HEI costs less; above it the HELOC does. Real results shift with the details: HEI upfront fees (about $1,500–$2,500 here) lower the break-even, while a HELOC rate that rises, or paying the HELOC down early, moves it in the other direction. A cap on the HEI's cost can also change the high-appreciation rows significantly.
Illustration only. Rates, investor shares, and fees are examples, not offers. We'll run these numbers with actual terms for your home.
Who an HEI fits
- You need cash but a new monthly payment would strain your budget. This is the main reason to choose an HEI.
- Your income is hard to document or uneven, so qualifying for a HELOC payment is difficult.
- Your credit is still recovering. HEI credit requirements are often more flexible.
- You plan to sell within the term, so settlement happens naturally from the sale.
- You're paying off high-interest debt to improve monthly cash flow, and a payment-free option solves the actual problem.
- You expect modest appreciation in your area over the period you'll hold the HEI.
Who a HELOC fits better
- You can comfortably make the monthly payment.
- You expect your home to appreciate at a normal pace and want to keep all of it.
- You'll repay within a few years, so interest stays small.
- You want to draw money over time instead of taking it all at once.
- You're self-employed and can qualify with bank statements instead of tax returns.
HEI vs. reverse mortgage (if you're 62+)
Both have no required monthly payment. A reverse mortgage (HECM) is federally insured, requires independent counseling, has no fixed end date while you live in the home, and lets you keep all of your home's appreciation, but interest accrues on the balance. An HEI has a set term that can require you to sell or refinance at the end, and it shares your appreciation, but it has no accruing interest. For many homeowners 62 and older, the reverse mortgage is worth comparing first.
Questions to ask before you sign an HEI
- Is the investor's share based on appreciation or on the home's total value?
- What starting value is used, and how does it compare with the appraisal?
- Is there a cap on the total I could owe? What is it as an annualized cost?
- What are all the upfront fees and third-party costs?
- What happens at the end of the term if I can't pay without selling?
- Do I get credit for improvements I make to the home?
- Can I settle early, and are there any early-settlement costs?
- What happens if my home's value falls?
- Are there restrictions on renting the home or on mandatory arbitration?
How HEIs are regulated (2026 update)
HEIs have traditionally been structured as option or investment contracts rather than loans, which kept many of them outside mortgage lending rules. That's changing:
- Maine enacted LD 1901 in April 2026, treating HEIs as credit under the Maine Consumer Credit Code. Providers need a supervised lender license. The law bans prepayment penalties, mandatory arbitration, and rental restrictions, and it requires cost disclosures (including an annualized cost), HUD-approved counseling, and independent legal counsel.
- Connecticut, Illinois, and Maryland have enacted rules that cover HEIs.
- Pennsylvania, North Carolina, and Massachusetts have bills pending.
- Washington: the Ninth Circuit held that an HEI is a reverse mortgage under Washington law.
The direction is toward more disclosure and more consumer protection. Rules change often, so availability and terms depend on your state. Sources: Maine Legislature (LD 1901); Mayer Brown; HousingWire; NerdWallet (citing CFPB fee data).
How we help you choose
Because we offer HEIs and HELOCs, we can put both on the table for your home: the HELOC payment and total interest, and the HEI settlement amount under flat, moderate, and strong appreciation. If a cash-out refinance or, at 62+, a reverse mortgage fits better, we'll show that too. Start with our HEI program page or request a rate check below.
More HEI guides
HEI Requirements: Credit Score, Equity & Property Rules
What it takes to qualify for a home equity investment, plus a quick HEI-or-HELOC self-check.
HEI Pros and Cons: Is a Home Equity Investment a Good Idea?
The real advantages and drawbacks, who an HEI fits, and how to reduce the risks.
How to Get Out of an HEI: Buyout, Refinance, or Sell
Every way to settle a home equity investment, with example buyout math.
HEI vs Home Equity Loan: Which Costs Less?
No payment or a fixed payment? 10-year cost comparison on $50,000.
HEI vs Reverse Mortgage for Retirees
Two no-payment options for homeowners 62+, compared on cost, term, and protections.
Frequently asked questions
What is an HEI?
An HEI, or home equity investment, gives you a lump sum of cash today in exchange for a share of your home's future value. There are no monthly payments and no interest. You settle the agreement when you sell, refinance, buy it out, or reach the end of the term, which is often 10 to 30 years.
What is an HEI loan?
"HEI loan" is a common name for a home equity investment, but an HEI isn't a traditional loan: there's no interest rate and no monthly payment. The investor is repaid from a share of your home's value. Some states, including Maine as of 2026, now regulate HEIs as consumer credit.
Is an HEI better than a HELOC?
It depends on your budget and on how much your home appreciates. If you can comfortably make a monthly payment and expect normal appreciation, a HELOC usually costs less. If monthly payments would strain your budget, your income is hard to document, or you expect modest appreciation, an HEI can be the better fit. In our $500,000-home example the break-even is about 2.8% annual appreciation.
How much does a home equity investment cost?
Upfront fees are typically about 3-5% of the amount you receive. At settlement you repay the original amount plus the investor's share of your home's appreciation or total value. On a $50,000 HEI for 25% of appreciation on a $500,000 home, the 10-year payback in our example ranges from about $50,000 if values are flat to about $171,000 at 7% annual appreciation, before fees and any cap.
What happens if my home loses value with an HEI?
The investor shares in the loss as well as the gain. Depending on the contract, you may repay less than you received, though many agreements include a minimum or other protections for the investor. Check the settlement terms for a declining-value scenario before you sign.
Can I pay off an HEI early?
Usually, yes. You can settle by selling, refinancing, or using savings. The amount owed is based on the home's value at that time. Check whether the contract has early-settlement costs or a minimum return; some states now ban prepayment penalties.
Does an HEI affect my credit or require income?
HEI providers usually check credit, but requirements are often more flexible than for a HELOC, and some accept scores in the 500s. Because there's no monthly payment, income is less central, though you still need to keep up with your mortgage, taxes, and insurance.
Do you offer HEIs?
Yes. We offer home equity investments alongside HELOCs, so we can compare both for your home. Our HEI program offers up to 25% of your home's value (up to $500,000), accepts credit scores from 500, and has no prepayment penalty. Availability depends on your property's location.
Compare an HEI and a HELOC for your home
Tell us how much you need. We'll show the HELOC payment and total cost next to the HEI settlement under different appreciation scenarios. Soft credit pull for HELOC quotes.
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Popular guides: Self-employed HELOC · DSCR loans for rental property · HELOC vs. home equity loan · State guides: Florida, California, Maryland, Tennessee
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