SoFi HELOC review: A high loan-to-value ratio

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SoFi HELOC at a glance

Fixed or variable rate: Variable
How to withdraw funds: By check
Origination fee: $499
Loan-to-value ratio: 95%
Time to fund: 21 days

SoFi Bank is an online bank that offers various financial products and services, including home, personal, student and auto refinance loans, bank accounts and investment accounts. SoFi partners with Spring EQ to offer borrowers a home equity line of credit.

Pros

High loan-to-value maximum
Flexible repayment
No in-home appraisal requirement in most cases

Cons

High minimum loan amount
The website is difficult to navigate
Limited withdrawal options

3 things to know about a SoFi HELOC

If you’re considering a HELOC from SoFi and its partner Spring EQ, here are some key features to know before you start.

1. A mix of flexibility and limitations

SoFi, together with Spring EQ, offers HELOCs with 30-year terms, including a 10-year draw period and a 20-year repayment period. During the draw period, you only have to make interest payments, giving you a lot of flexibility with your budget.

You can borrow up to 95% of the equity in your home — higher than the more typical 80% to 90% for other HELOC lenders. The maximum loan amount is $500,000.

But the minimum initial draw amount is $50,000, so you’ll still need significant equity to get approved — some HELOC lenders go as low as $10,000. Subsequent draws must be $1,000 or more.

Additionally, Spring EQ only allows withdrawals via paper check, which may delay access to your funds depending on your bank’s deposit policies. Some other lenders may also offer access via bank transfers, wire transfers or even a debit card.

2. Eligibility criteria are clear

You can find just about all the information you need about a SoFi HELOC on its partner’s website — though you have to dig to find it all. To qualify for a HELOC, you need to have a FICO score of 680 or higher — 700 or higher to get the maximum loan-to-value ratio — and a debt-to-income ratio of 45% or less.

The lender also doesn’t offer HELOCS on investment properties, and the maximum LTV for a second home is 80%. While you’ll need to provide some basic documentation to prove your identity, income, current mortgage balance and insurance coverage, the lender doesn’t typically require an in-home appraisal.

3. There’s an annual fee

SoFi’s partner Spring EQ charges a host of closing costs, which can total more than $1,000 in some cases. Additionally, the lender charges a $99 annual fee, which is charged on the anniversary of your closing date each year.

What can you use a HELOC for?

You can use a HELOC for just about anything you want. Common uses include home renovations, debt consolidation, educational expenses, weddings and other large purchases.

But before you apply for a HELOC, consider the potential fees and the impact of a variable interest rate. Then, research and compare your other borrowing options, such as home equity loans, personal loans and credit cards, to determine the best fit for you.

Who is a SoFi HELOC good for?

You may consider a SoFi if you want a higher LTV maximum, have enough equity in your home to meet the $50,000 minimum loan amount and meet the eligibility criteria set by SoFi’s partner, Spring EQ. It could also be a good fit if you don’t mind the limitations of accessing your funds.

Other HELOC lenders may not charge an annual fee or even closing costs. Take your time to shop around and compare HELOCs from multiple lenders to find the right one for you.

Also, note that SoFi HELOCs aren’t available in all states. State availability can vary depending on whether or not you have a primary mortgage loan and whether the loan is considered retail or wholesale.

How to apply for a SoFi HELOC

You’ll need a FICO score of 680 or higher and a DTI of 45% or lower to have a chance of getting approved for a SoFi HELOC. To get a sense of whether you’d be approved and potential terms, you can go through the prequalification process on Spring EQ’s website.

During the process, you’ll need to provide the following documents:

Mortgage statement
Photo ID
Proof of income
Proof of homeowners insurance

Note that some of these requirements may be waived for qualified borrowers. Also, if you’re self-employed, you may need to provide additional documentation to prove your income.

Not sure if SoFi is right for you? Consider these alternatives.

Bank of America: Consider this lender if you want access to a larger line of credit, more flexible withdrawal options and no closing costs or annual fee.
PenFed Credit Union: Consider this lender if you like the idea of converting some or all of your HELOC balance to a fixed-rate installment loan.

About the author: Ben Luthi is a personal finance freelance writer and credit cards expert. He holds a bachelor’s degree in business management and finance from Brigham Young University. In addition to Credit Karma, you can find his wo… Read more.