What Is a Home Equity Agreement (HEA/HEI) and How Does It Work?

Q: What Are the Alternatives?

It depends on your situation:You want cash from your home equity with no monthly payment, and you are not 62 or older. A home equity agreement is one option, but its cost is variable and tied to future home value. A standard fixed-rate home equity loan or line of credit, roughly 7% to 12% depending on credit and loan-to-value as of mid-2026, has a payment and a cost you can calculate in advance, though it does require monthly payments.You are 62 or older. A reverse mortgage (HECM) is generally only available at this age or older. Like an HEA/HEI, it requires no monthly payment. Unlike an HEA/HEI, its cost is an accruing interest balance at a set or indexed rate, a debt that compounds over time, rather than a share of the home's future appreciation. That structure is generally easier to predict than an HEA/HEI's cost.You want the lowest, most predictable cost and can handle monthly payments. A cash-out refinance on a first mortgage, roughly 6% to 7% as of mid-2026, or a standard home equity loan is typically more predictable than an HEA/HEI, since the rate is fixed at closing.Many lenders refer HEA/HEI requests to a specialized third-party provider, since the product works differently from a standard mortgage or home equity loan and is not something every lender originates directly.

A home equity agreement (also called a home equity investment) lets you turn part of your home's equity into cash with no monthly payment owed, repaid instead with a single lump sum share of your home's future value when you sell the home or when the contract term ends, commonly 10 to 30 years later, rather than through charged interest.

Last updated July 22, 2026

What Is a Home Equity Agreement (HEA/HEI)?

With an HEA or HEI, a company gives you a lump sum of cash today in exchange for a share of your home's future value. There is no interest rate and no monthly bill. You keep living in and owning the home. The company's return comes later, when the home is sold or when the contract term ends, based on how much the home has appreciated (or in some cases depreciated) since the agreement started.

How Do You Pay It Back?

You do not make payments during the term. Repayment happens as one lump sum, either when you sell the home or at the end of the agreed term, which is commonly 10 to 30 years. The amount owed is tied to the home's value at that point, not to a fixed loan balance. That means the payoff amount is not fully known in advance, since it depends on how the local housing market and your home's value move over time.

How Much Does an HEA/HEI Really Cost?

Because there is no stated interest rate, an HEA/HEI can look cheaper than it is. Regulatory analysis of these products shows the effective annualized cost commonly runs from around 6.5% up to 20% or more, depending on how much the home appreciates and how long the contract runs. Costs tend to run higher in the early years of a contract and in cases where the home appreciates quickly, since the company's share is based on that higher value. This makes an HEA/HEI harder to compare to a standard loan, where the cost is fixed and known upfront.

What Are the Alternatives?

It depends on your situation:

You want cash from your home equity with no monthly payment, and you are not 62 or older. A home equity agreement is one option, but its cost is variable and tied to future home value. A standard fixed-rate home equity loan or line of credit, roughly 7% to 12% depending on credit and loan-to-value as of mid-2026, has a payment and a cost you can calculate in advance, though it does require monthly payments.
You are 62 or older. A reverse mortgage (HECM) is generally only available at this age or older. Like an HEA/HEI, it requires no monthly payment. Unlike an HEA/HEI, its cost is an accruing interest balance at a set or indexed rate, a debt that compounds over time, rather than a share of the home's future appreciation. That structure is generally easier to predict than an HEA/HEI's cost.
You want the lowest, most predictable cost and can handle monthly payments. A cash-out refinance on a first mortgage, roughly 6% to 7% as of mid-2026, or a standard home equity loan is typically more predictable than an HEA/HEI, since the rate is fixed at closing.

Many lenders refer HEA/HEI requests to a specialized third-party provider, since the product works differently from a standard mortgage or home equity loan and is not something every lender originates directly.

Key facts
Monthly payment	None, for HEA/HEI or reverse mortgage
HEA/HEI repayment trigger	Home sale or end of contract term
HEA/HEI typical term	10 to 30 years
HEA/HEI effective annual cost	Roughly 6.5% to 20%+, depending on appreciation
Reverse mortgage minimum age	62 or older
Home equity loan/HELOC rates (2026-07)	Roughly 7% to 12%, depending on credit and LTV
Cash-out refinance rates (2026-07)	Roughly 6% to 7%

Sources

https://www.consumerfinance.gov/data-research/research-reports/issue-spotlight-home-equity-contracts-market-overview
https://www.consumerfinance.gov/consumer-tools/reverse-mortgages/

Educational information only, not individualized financial or legal advice. Program details and rates change; verify current terms with a licensed loan officer before making a decision.