What is a Bank of America Home Equity Loan?

Man and woman at park considering a home equity loan Bank of America.

Tap into your home equity

home equity cta - What is a Bank of America Home Equity Loan?

Bank of America is one of the largest banks in the United States and ranks as one of the top five home loan providers in the United States. If you already own a home, a home equity loan can be a great way to tap into the value stored in your property. Bank of America offers home equity loans in the form of a HELOC, or home equity line of credit. If you’re considering borrowing against the equity built up in your home, read more to find out if Bank of America lines of credit could be a good fit for your needs.

How Bank of America Home Equity Loans Work

A home equity loan from Bank of America comes in the form of a home equity line of credit. This is commonly referred to as a HELOC. A HELOC works very similarly to a credit card.Unlike an installment loan where you borrow a fixed amount and make fixed payments over time, a home equity line of credit allows you to add to the balance over time.

Bank of America home equity lines of credit are available with no application fees, closing costs, or annual fees when opening a line of credit up to $1 million. These credit lines charge a variable rate, which means your interest rate can go up and down over time.

Existing HELOC balances can be converted to a fixed rate loan once they are already open. You cannot apply for a traditional home equity installment loan, sometimes called a second mortgage, from Bank of America.

Once your credit line is open, you can borrow up to the limit through online banking, by phone, or by checks available at Bank of America branch locations. You may be able to get a checkbook to draw on the account with the same ease as your checking account.

bank of america home equity loan rates - What is a Bank of America Home Equity Loan?

Just beware the temptation to overspend. While a credit card is an unsecured line of credit, a home equity line of credit is secured by the value of your home. That means if you stop paying, you could lose your home to foreclosure.

Once you draw on your loan, you’ll have a minimum monthly payment ($100 minimum for all customers) that includes interest and principal. The minimum payment you’ll owe is based on your balance and current interest rate.

The typical loan has a 10 year draw period followed by a 20 year repayment period. Your monthly payment can change as you add to or pay down the balance and with current market interest rates.

Qualification & Requirements for a Bank of America Home Equity Loan

Bank of America generally allows borrowers to open a line of credit up to 85% of the home’s value, also known as the loan-to-value. For example, if you have a home worth $250,000, the maximum you can borrow is $212,500 including both the mortgage and home equity line of credit.

If you already have an outstanding mortgage, subtract that to find your maximum line of credit. If you have a $250,000 home, your maximum loan-to-value would be the $212,500 calculated above.

Your credit score is also a major factor in getting a mortgage. Interest rates are usually calculated using the prime rate (best interest rate available) plus an added APR (annual percentage rate) for your risk. Getting the best rates typically requires a score of around 740 or above.

According to Bankrate, you can qualify for less favorable rates with a credit score of 620 or above. If you don’t know what’s on your credit report, head to AnnualCreditReport.com to get free copies of your credit report from the three large credit bureaus, Equifax, Experian, and TransUnion.

The total loan amount, home equity, and your credit history come together to decide if you will be approved. If you don’t know your credit score Credit Karma and Mint are both excellent resources. You can use the loan proceeds for anything you want. That can be a cash-out scenario, home improvement, or other real estate projects.

The bank will also look at your total debt-to-income ratio, which factors in other debts like credit cards and student loans that have a monthly payment.

Typical Interest Rates

Bank of America advertises a current typical home equity line of credit APR of 6.75%. Remember that this is a variable rate, so it can go up or down at any time with market interest rates. You can lower your rate with a series of discounts, such as a 0.25% discount for automatic payments.

The loan gives you a 0.10% discount for every $10,000 you borrow in the initial draw up to a 1.5% discount. For example, if you draw $50,000 in your initial withdrawal, you’ll earn a 0.50% interest rate discount.

bank of america home equity loan - What is a Bank of America Home Equity Loan?

As a second loan after your mortgage, you can expect a higher rate than typical mortgage rates but a lower interest rate than most other loans such as car loans, student loans, and credit cards. With a valuable asset tied to the loan, a bank or credit union usually offers the best rates for mortgages followed by other home equity loans.

Customers with a stronger relationship with this bank can sign up for Preferred Rewards to qualify for an additional discount up to 0.375%. Preferred Rewards offers discounts across banking, investment, and borrowing products. If you are a big Bank of America customer, give this program a serious look.

Tap into your home equity

home equity cta - What is a Bank of America Home Equity Loan?

There is no origination fee. As mentioned above, you can convert your home equity line of credit balance into a fixed rate balance through a conversion process. Check the loan terms for more details.

Pros & Cons

If you have enough home value to get a Bank of America home equity loan, consider these pros and cons:


  • Loan-to-value ratio up to 85% of your home value
  • Use your home’s equity to pay for upgrades or consolidate other debt
  • Use a HELOC for a cash-out refinance to pay for a second home or other major purchase
  • Discounts available


  • Variable APR means monthly payments are less predictable
  • Bank of America does not have a stellar reputation for customer service

The Verdict

Bank of America is a huge financial institution. Its home equity line of credit is a reasonable loan option with competitive rates. It offers flexible options to draw on your credit line with several discounts to minimize the cost. If you are in the market for a HELOC, Bank of America is definitely worth considering.

eric rosenberg - What is a Bank of America Home Equity Loan?

Eric Rosenberg is a personal finance expert residing in Southern California. He holds a BSBA in finance from the University of Colorado and an MBA in finance from the University of Denver. He has over a decade of experience writing about financial topics online. His work has been featured on Business Insider, Investopedia, The Balance, Investor Junkie, and a wide range of quality financial publications.

Chris Granwehr is a personal finance writer for Home Equity Wiz. In addition to helping homeowners access the value in their most treasured asset, Chris also manages a life insurance business. He is a graduate of Penn State University and currently resides in San Francisco.