How Do Home Equity Loans Work in the State of Washington?

Understanding what a home equity loan is and how it works is important if you want to take advantage of this financing tool. A HELOAN, or home equity loan, is a type of mortgage that allows homeowners to tap into their home equity and exchange that equity for cash. 

Making consistent payments on your mortgage over time accumulates equity in your property. Equity is the difference in the amount you owe on the mortgage and the current value of your property. The less you owe on your mortgage, the more equity you have in your home.

When applying for a home equity loan in Washington, several factors are used to determine the loan amount, such as the amount of equity available in the home, the borrower’s credit history, and other financial considerations. 

Your financial profile—which includes things like your credit score, DTI ratio, and income—will also play a role in determining the home equity loan rate you qualify for in Washington state. It is crucial to understand interest rate and home equity when researching a HELOAN, as they use a fixed interest rate to ensure payments are paid monthly and consistently throughout the life of the loan.

Types of Home Equity Loans

There are three main types of home equity loans a homeowner can choose from:

  1. Fixed-rate HELOAN: Lenders provide a one time, lump-sum payment to the borrower to be repaid monthly with a fixed interest rate that will remain the same throughout the lifespan of the loan. Fixed-rate home equity loans must be paid back in full if the home is sold. HELOANs can have fixed terms of up to forty years.
  2. HELOC: A home equity line of credit, or HELOC loan, is an open line of credit with a limit that’s determined based on the value of your home and the amount of equity you have. HELOCs have variable interest rates, so your monthly payment will fluctuate depending on your current rate and the amount you spend in a given month. 
  3. Cash-out refinance: With a cash-out refinance, you replace your current mortgage with a bigger one and keep the difference between the two mortgages. 

Pros and Cons of Washington Home Equity Loans

While a HELOAN can be a solution to many different financial situations, there are pros and cons you need to weigh to make sure a home equity loan is the right solution for you.


  • Lump-sum payment that allows access to capital, improved cash flow, and flexible use of funds for investments.
  • Relatively low interest rates compared to other high interest loans. 
  • Griffin Funding offers competitive HELOAN and HELOC rates in Washington state. 
  • Potentially write off the interest on a HELOAN on your taxes. 
  • Access equity in your home without touching your low-rate first mortgage.
  • Primary residences, second homes, and investment properties are eligible for HELOANs. 


  • Potential to increase your debt burden.
  • Failure to complete monthly payments can result in foreclosure and the loss of your home.
  • Home equity loan interest rates are often higher than rates for first mortgages.

What Makes You Qualified for a Home Equity Loan in Washington?

When qualifying for a home equity loan in Washington, you must meet a few standard requirements: 

  • Sufficient home equity: To qualify for a home equity loan in Washington, you ‘ll typically need at least 15 to 20 percent equity in your home. At the end of the day, you’ll need to hold on to between five and 15 percent of your equity after receiving funds from your HELOAN. 
  • Credit Score: A good credit score demonstrates responsible credit management and a history of timely payments. A higher credit score will lead to lower HELOAN and HELOC rates in Seattle and other Washington cities. 
  • Stable employment and income: Pay stubs, W-2s, and your tax returns verify your income and employment status to convince the lender you can meet payment obligations. People with a more variable income or those who are self-employed can apply for a bank statement home equity loan, which allows borrowers to qualify using bank statements from the past 12 or 24 months as verification. 
  • Debt-to-income (DTI) ratio: Your DTI ratio measures the amount of income you bring versus your outstanding debts. A lower DTI ratio will help you qualify for better rates and terms. 

Not sure whether you qualify for a home equity loan in Washington? Reach out to our team or download the Griffin Gold app to learn more about qualification requirements and the application process. With the Griffin Gold app, you can also explore other financing options, access smart budgeting tools, monitor your credit, and get personalized advice from our experienced loan officers. 

Apply for a Home Equity Loan in Washington

Your home is one of the biggest investments of your life. Tapping into your home’s equity by applying for a HELOAN can leverage the value you have built up in your home into helping improve your life and investments. 

Griffin Funding is committed to providing financial solutions based on your unique situation. Our experienced team helps you find financing that brings you closer to your dreams and goals. Contact us today to learn more about home equity loans and lock in a HELOAN or HELOC rate in Seattle. If you’re ready to get started, feel free to fill out our online application