Home Equity

Tap into the equity in your home to access the funds you need for virtually anything. From home improvements to education expenses—even consolidating your high-interest credit card debt—a Home Equity Line of Credit (HELOC) offers one of the smartest, most affordable ways to borrow.
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Your Home, Your Equity, Your Financial Freedom

Our Home Equity Line of Credit (HELOC) empowers you to harness the value of your home and turn it into financial freedom. With flexible terms, competitive rates, and a range of features, you have the power to fund various endeavors without the stress of high fees or hidden costs.
  • Variable + Fixed Rate Flexibility: Enjoy the option to convert all or a portion of your home equity line to a fixed-rate loan.2
  • $0 Origination Fee: We believe in transparency – that's why we charge no origination, application, annual, or recording fees.4
  • Low Floor Rate: Market-leading floor rate at just 3.00% APR.

Key Features

Fixed Rate Options

Convert all or a portion of your home equity line to a fixed rate loan2 for stability and peace of mind.

Your Money, Your Way

Borrow up to 80% of the equity3 in your home, with lines available from $20,000 to $500,000.

Fast Cash

Access your funds in as little as 14 days from the application.

Interest-Only Payment Option

Enjoy the flexibility and affordability of interest-only payments during the 10-year draw period.

Home Equity Line of Credit (HELOC) Rates

Rate
APR1
Prime -0.50% for LIFE
8.0000
To see the full set of data, scroll horizontally.
Term (Years)
Rate
APR2
Cost / $1,000
5
0.0725
0.0750
19.9200
10
0.0738
0.0750
11.8100
15
0.0738
0.0788
9.2000
20
0.0800
0.0810
8.3600
View Disclosures
The rate listed is the Annual Percentage Rate (APR) which is variable and is equal to The Wall Street Journal Prime Rate minus 0.50%, subject to a minimum rate of 3.00% and a maximum rate of 18% or the maximum rate permitted by law, whichever is less. Prime as of 7/27/2023 was 8.50%. This APR is available for new home equity lines only. Line must be secured by a 1-4 family home or condo. Primary residences only. The maximum combined loan-to-value is 80%. A $395 fee will be assessed if the line is closed within the first two years. Rates are subject to change. Property insurance will be required. Subject to credit approval.
Fixed rate loan option is only available during the home equity line of credit draw period. Minimum conversion amount is $5,000. Options available for fixed rate terms of 5, 10, or 15 years provided no fixed rate loan extends more than 30 years from the initial date of the mortgage that secures your home equity line of credit. Maximum of 3 fixed rate loans. Contact us for more information.
Equity is determined based on the current year assessed value. An appraisal will be required for line amounts greater than or equal to $400,000. Appraisal to be paid by member. Appraisal fees begin at $500 for single-family and $650 for multi-family.
Homes recorded in a Trust - fees may apply.

HELOC Calculators

Navigate your financial journey with our helpful calculators. Easily estimate payments, savings, and more to make informed decisions.

Figure out how much you can borrow with a home equity line of credit.

Figure out your monthly minimum payment for your home equity line of credit (HELOC) and how much you could save by paying more. Direct Federal offers up to a 20 year term with a 10-year draw period with interest-only monthly payment options during the draw period.

Determine whether using the equity in your home to consolidate debt is right for you.

Interested in accessing the equity in your home?

Get assistance from a Home Equity specialist.
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Glossary

Annual Percentage Rate (APR)

The Annual Percentage Rate (APR) is the yearly interest rate that borrowers are charged on a sum of money. It is expressed as a percentage and represents the actual cost of funds over the term of a loan. This rate includes any fees or additional costs associated with the transaction but does not consider compounding. The APR is a helpful measure for consumers to compare among lenders as it provides a clear and standardized number.


Appraised Value

An estimate of a property’s worth by a licensed appraiser.

Ceiling Rate

The maximum rate for a variable rate loan. At Direct Federal, the maximum rate for a Home Equity Line of Credit is 18% APR. Since our Home Equity Line of Credit tied to the The Wall Street Journal Prime Rate as posted on the last business day of the month, even if that rate exceeds 18% APR, your rate will never exceed 18% APR.

Combined Loan-To-Value (CLTV) Ratio

Combined Loan-To-Value (CLTV) Ratio is an extension of Loan-To-Value (LTV) Ratio for Home Equity considerations by adding in the the desired Home Equity Line Credit to your current mortgage balance.

(Current first mortgage loan balance + Desired Home Equity Line limit) ÷ Current appraised value = CLTV

Example: You currently have a loan balance of $100,000, and you want to take out a $25,000 home equity line of credit. Your home currently appraises for $250,000. So your combined loan-to-value equation would look like this:

$125,000 ÷ $250,000 = .50

Convert .50 to a percentage, and that gives you a combined loan-to-value ratio of 50%.

Direct will lend up to 80% of Combined Loan-to-Value.

Draw Period

The Draw Period is the period of time you can access funds from your Home Equity Line. Direct offers a 10-year draw period with interest-only monthly payments.

Equity
The difference between the market value of a property and the owner's outstanding mortgage balances. Direct will lend up to 80% of Combined Loan-to-Value.
Fixed Rate

Interest rates on fixed rate loans stay the same for the loan's entire repayment term. This means the cost of borrowing money stays constant throughout the life of the loan and won't change with fluctuations in the market.

Floor Rate

For variable rate loans, like a Home Equity Line of Credit, a floor rate is a rate the lender sets as the lowest rate in your loan agreement. Currently, Direct Federal's Home Equity Line of Credit's floor rate is 3.00% APR.

Index

Measure of interest rates generally that reflects trends in the overall economy. Different lenders use different indexes in their loans. Direct Federal uses The Wall Street Journal Prime Rate as posted on the last business day of the month.

Loan-to-value (LTV)

Your loan-to-value ratio (LTV) expresses how much you owe on your current first mortgage. Basic loan-to-value ratio formula:

Current first mortgage loan balance ÷ Current appraised value = LTV

Example: You currently have a loan balance of $100,000. Your home currently appraises for $250,000. So your loan-to-value equation would look like this:

$100,000 ÷ $250,000 = .40

Convert .40 to a percentage for a loan-to-value ratio of 40%.

Margin

The Margin is the percentage that a lender adds to their index. Direct Federal calculates Home Equity Line rates using The Wall Street Journal Prime Rate as posted on the last business day of the month (the index) minus 0.50% (the margin).

Market Value

The price of a property when placed on the housing market. It is ultimately determined by what a buyer is willing to pay and what a seller is willing to sell for the property. Supply and demand are big factors.

Not-for-Profit

Direct Federal is a not-for-profit, meaning that earnings are invested right back into the credit union. And that means Direct Federal can offer lower loan rates and higher deposit rates that you simply won't see anywhere else.

Repayment Period

At the end of your Draw Period, your line will enter the Repayment Period. The Repayment Period is 10 years and is the time during which you make monthly principal and interest payments to gradually pay off your balance in full. The rate remains variable based on your Home Equity agreement.

Tax Assessed Value

A yearly estimation of your home’s worth, determined by your tax district’s municipal property assessor. It is a value assigned to a home in order to calculate its property taxes.

Term

The term is the Draw Period + Repayment Period. Direct offers a 20 year term with a 10-year draw period with interest-only monthly payments. At the end of your 10-Year Draw Period, you will enter the Repayment Period. The Repayment Period is also 10 years and is the time during which you make monthly principal and interest payments to gradually pay off your balance in full.

Variable Rate

A variable rate loan has an interest rate that adjusts over time in response to changes in the economy. Different lenders use different indexes in their loans. Direct Federal uses The Wall Street Journal Prime Rate as posted on the last business day of the month.

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Frequently Asked Questions

Use the search bar below to sort through our library of FAQs to learn more about a specific product, service, or process.
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Are properties in a trust eligible for a HELOC?

Yes, Direct Federal will allow properties that are placed in acceptable trusts.  The trust must be reviewed by our Attorney and must meet all of our guidelines and requirements for the transaction to move forward.  The applicant will need to provide a full copy of the Trust agreement for review.  The applicant must be the trustee or one of the co-trustees.  All trustees must be 18 years of age or older.  Additionally, the trustee must be authorized to borrow money and encumber real estate.

Are there closing costs for a HELOC?

There are no closing costs.

Can I pay off a home equity loan or line with another lender using a Direct Federal Home Equity Loan or Line?

Yes. In the application, please select "Refinance Home Loan" as the "Loan Purpose".

Can I prepay my HELOC?

Prepayment is allowed at any time without penalty. If you pay-off the balance and decide to close the line within the first two years, you will be charged a $395 Early Termination Fee.

Do you offer Home Equity in my area?

Direct Federal lends on properties located in the following locations:

Massachusetts Counties: Norfolk, Middlesex, Suffolk, Plymouth, Essex, Bristol, Worcester, and Barnstable

Rhode Island Counties: All Counties in Rhode Island

New Hampshire Counties: Rockingham, Hillsborough, and Cheshire

How can I check the status of an application?

If you are an existing member, the easiest way to check the status of an application is through the Application Center within Digital Banking.

Check Status as a Member >


If you are not a member, please visit our Application Status Center.

Check Application Status >

How can I increase my credit limit?

You can request a Home Equity Line of Credit and Credit Card increase through Online Banking.

Apply for a Home Equity Line increase >

Submit Credit Card Limit increase request >

How can I pay my bill?

We offer a variety of options to pay a Direct Federal Loan or Line of Credit.

View payment options for Direct Federal Loans and Lines >

How does the Home Equity Carve Out work?

This feature is for existing Home Equity Line of Credit (HELOC) only. You cannot get a Fixed-Rate Carve Out without first having a Home Equity Line of Credit. However, a HELOC can be converted to a Fixed Rate Carve Out during the initial HELOC closing.

The HELOC limit will be reduced by the amount of the fixed rate loan, but once it is paid off, the limit will replenish. Terms available: 5, 10, 15, and 20 years. 20 years can only be obtained at the time of the original HELOC closing. There are no fees associated with a Home Equity Carve Out.

Maximum number of Fixed-Rate Carve Outs: 3

We do not pull credit for carve outs.

How long does it take to apply and receive a decision for a HELOC?

It takes about five minutes to apply and you will have an answer within one business day.

How long is the payment grace period for a HELOC?

The Home Equity grace period is 10 days.

How much of my home equity can I borrow?

The amount you can borrow depends on the equity you have in your home.

Direct Federal allows up to 80% Combined Loan-To-Value (CLTV).

With Direct Federal, you can open a Home Equity Loan or Line for any amount between $20,000 and $500,000.

I would like to open a home equity loan or line. What is the minimum or maximum amount I can apply for?

With Direct Federal, you can open a Home Equity Loan or Line for any amount between $20,000 and $500,000.

If I already have a home equity line am I eligible for an increase?

You will need to submit a HELOC application and select "Home Equity Increase" as the purpose.

What are the appraisal fees for a HELOC?

Requested Lines $400,000 and above require an appraisal. Also, if you believe your home value is higher than our assessed value, an appraisal may be required in order for us to approve the amount requested.

Appraisal cost estimates:

Single-family unit - Approximately $500

Multi-unit -Approximately $650.00

What documentation is required to close a home equity loan or line?

Required documentation will include but is not limited to: an insurance binder or insurance declaration page, income verification, mortgage statement, and valid license or identification.

What fees or costs are associated with a home equity loan or line from Direct Federal?

There are no application fees, no closing costs, and no annual fees associated with a Direct Federal Home Equity Loan or Line. If the line is closed within the first two years of being opened an early termination fee of $395 would be applied.

Requested Lines $400,000 and above require an appraisal. Also, if you believe your home value is higher than our assessed value, an appraisal may be required in order for us to approve the amount requested.

Appraisal cost estimates:

Single-family unit - Approximately $500

Multi-unit -Approximately $650.00

What is the "draw period" on a home equity line?

The Draw Period is the period of time you can access funds from your Home Equity Line. Direct offers a 10-year draw period with interest-only monthly payment options.

What is the HELOC Early Termination fee?

$395 if the line is closed during the first two years.

What is the Recording fee for a HELOC?

$0 unless property is in a trust and/or there are unrecorded discharges that need to be recorded.

What is the home equity line repayment period?

At the end of your 10-Year Draw Period, you will enter the Repayment Period. The Repayment Period is 10 years of principal and interest. The rate remains variable based on your Home Equity agreement.

What is the minimum or maximum home equity line amount I can apply for?

With Direct Federal, you can open a Home Equity Loan or Line for any amount between $20,000 and $500,000.

What types of properties qualify for a Direct HELOC?

Primary Residences Only.

Single-family home, 1-4 family, or condo.

Direct Federal lends on properties located in the following locations:

Massachusetts Counties: Norfolk, Middlesex, Suffolk, Plymouth, Essex, Bristol, Worcester, and Barnstable

Rhode Island Counties: All Counties in Rhode Island

New Hampshire Counties: Rockingham, Hillsborough, and Cheshire

Where do HELOC closings take place?

HELOC closings take place at our Branch located in Needham, MA.

Will my credit be pulled if I need a Home Equity increase?

Yes, you will need to submit a HELOC application and select "Home Equity Increase" as the purpose.

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