Home equity investments, also called home equity contracts or shared-equity agreements, pay you cash now with “no monthly payments” in exchange for a share of your home’s future value.
Home Equity Investment vs. HELOC Calculator
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The catch is the payoff: one lump sum, due when you sell or the term ends, that grows with your home’s value. Enter the terms from your offer to estimate what you’d repay at different home price growth rates, the yearly cost it works out to, and how it compares with a HELOC or home equity loan. Nothing you enter is sent anywhere.
How home equity investments work
- You get cash up front, usually a percentage of your home’s value, minus fees (often a few percent of the cash).
- The company gets a share of your home’s future value or appreciation. The share is often larger than the cash percentage, and some companies start from a value below your appraisal (a “risk adjustment”).
- You repay once, when the term ends (often 10 to 30 years), when you sell, or at another trigger in the contract. Partial payments usually aren’t allowed.
- You keep living in and paying for the home, including your mortgage, taxes, insurance and maintenance.
What the CFPB found
In its January 2025 market overview of home equity contracts, the Consumer Financial Protection Bureau found that payoffs often grow about 19.5% to 22% a year in the early years under typical caps, that disclosures aren’t standardized, and that homeowners who can’t pay the lump sum may have to sell. In its 10-year example, a $50,000 contract cost more than a 9% interest-only HELOC unless home values fell about 5% or more.
When a home equity investment can make sense
It may fit if you can’t qualify for or afford monthly loan payments, need cash for a limited time, and plan to sell within the term. If you can qualify for a HELOC or home equity loan, compare the total cost first; when home prices rise, borrowing is usually cheaper. Also consider a cash-out refinance or, for homeowners 62 and older, a reverse mortgage with HUD counseling.
Frequently asked questions
Is a home equity investment a loan?
Companies generally don’t structure them as loans: there’s no interest rate and no monthly payment. But the company places a lien on your home, and you must pay the settlement amount when the term ends or you sell, so the cost can be compared with a loan’s.
What happens if my home loses value?
You’d usually owe less, and in some contracts less than the cash you received. But a starting-value discount can mean you still owe more than you got even if prices stay flat. Check your contract’s examples for a falling-price scenario.
Can I pay off a home equity investment early?
Usually yes, by paying the full settlement amount based on a current appraisal. Partial payments generally aren’t allowed, and some contracts have minimum costs for early buyouts.
HELOC or home equity investment: which is cheaper?
If your home appreciates, a HELOC or home equity loan is usually cheaper. A home equity investment can cost less only if home prices fall or stay nearly flat, and even then fees and starting-value discounts matter. Use the scenarios table above with your offer’s numbers.
Sources: Consumer Financial Protection Bureau, “Issue Spotlight: Home Equity Contracts: Market Overview” (January 15, 2025); Federal Reserve (prime rate, November 2026). Checked November 2026. This calculator uses simplified payoff formulas for education; your contract’s terms control, and this isn’t financial advice.
Related: Home equity loan vs. HELOC, Home equity calculator, Lines of credit explained.
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