Home Equity

Using a Home Equity Loan for Medical Expenses

By Tom Burchnell
home equity loan for medical expenses

Need help paying off medical expenses or outstanding bills? Learn how you can use your home equity to pay them off.

Your home is your largest investment and asset. When a health crisis occurs in a family, figuring out how to pay for it is one of many worries, and your home can be a tool in helping secure the necessary care. 

There are numerous ways to leverage your home equity to pay for financial necessities. A home equity loan for medical expenses is one option, but it’s not the only choice. You also have home equity loan alternatives that can help you achieve the same goal.

In this short guide, we’ll break down how home equity loans work and take a look at some pros and cons to help you arrive at the best solution for your near-term expenses and your long-term financial health. 

Can I Use a Home Equity Loan for Medical Expenses?

If you own substantial equity in your home, you can access its value to pay for large expenses. The basic requirements to obtaining a home equity loan are: 

  • Owned equity – You must own at least 20% of your home’s value. If you’re a new homeowner with just a year or two of mortgage payments under your belt, you may not yet qualify for a home equity loan or line of credit.
  • Credit score – Most lenders are looking for a minimum 600 credit score, and better interest rates are available for those scoring above 700.
  • Financial history – Lenders are looking for two or more years of successful mortgage payments and verifiable income.

If you’re eligible for a home equity loan, there are no limits to how you use the funds. That means your secured loan can be used to pay for any of the following medical expenses:

  • Hospital, doctor, and clinic bills
  • Durable medical equipment
  • Modifications to the home for accessibility and ease of use
  • Travel, lodging, and other expenses related to seeking care 
  • Monthly payment for premiums

There are many ways to use home equity to your advantage when it comes to medical expenses.

How Do I Take Out a Home Equity Loan? 

Qualifying homeowners can generally access a home equity loan quickly and easily. The steps are as follows:

  1. Creating a budget – How much do you need to pay for your medical expenses? While it may be tempting to take out extra cash, keep in mind that your loan functions as a second mortgage on your house. This comes with risks, so it’s important to take out only the required amount.
  2. Credit check – Once you apply, the lender will check your credit score and history and make you an offer. 
  3. Shop around – Compare at least three loan offers to find the best deal for you. Look for loans with low interest rates and low closing costs. If you hope to repay the loan early, make sure there’s no early repayment penalty.
  4. Appraisal – The bank will require that you have your home appraised by a professional to determine its market value and your owned equity. You’ll usually pay for a home equity loan appraisal out-of-pocket.
  5. Loan verification – Along with the appraisal, you’ll need to submit relevant financial documents. These will be used during the underwriting process.

If all goes according to plan, you’ll close on the loan and receive a lump sum payment that you can use towards your medical expenses.

Pros and Cons of a Home Equity Loan for Medical Expenses

Is a home equity loan for medical expenses the right choice for you? Let’s take a look at the benefits and disadvantages. 

Pros of a Home Equity Loan for Medical Expenses

There are benefits to using a home equity loan under the right circumstances. Consider: 

  • Access to your owned asset – Homeowners don’t always realize that owning equity means you can indeed tap into it—you don’t have to wait until you sell your property to make use of the money that you’ve been paying on it for years.
  • Growing value – Your equity may be more than you realize. It’s not only based on payments you’ve made toward your mortgage but also on how the property value has increased with rising real estate values.

Cons of a Home Equity Loan for Medical Expenses

While home equity loans are a fairly common transaction, there are some serious concerns to consider. These include: 

  • Risk of foreclosure – You’ll receive a lower interest rate with a home equity loan versus a personal loan because it’s secured by collateral: your property. That means you’re putting your home at risk of loss if you fail to meet the repayment timeline. Most financial planners recommend avoiding them if you can find another alternative.
  • Higher interest rates for some borrowers – Your interest rate will depend on how much you’re borrowing, along with your mortgage payment history and credit score. If you don’t have a pristine credit footprint, then you may end up with an unappealing interest rate alongside the risk to your home.

A Better Way to Cover Medical Expenses With Home Equity

Dealing with a family health crisis—and the resulting costs—makes it that much more difficult to wade through the red tape of a new loan or refinance. But if you’ve been making mortgage payments over time, then the equity you own in your home can be a valuable source of funds.

Before you lock yourself into a traditional loan, consult with a financial advisor to explore alternative options, such as a sale-leaseback.

Key Takeaways

Need help paying off medical expenses or outstanding bills? Learn how you can use your home equity to pay them off. If you are still unsure of alternative options on how to use your home equity to pay off bills after reading this article, consult a financial advisor to discuss your options.


  1. Investopedia. Home Equity Loan. https://www.investopedia.com/terms/h/homeequityloan.asp
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Tom Burchnell
Written by Tom Burchnell
Director of Product Marketing

This article is published for educational and informational purposes only. This article is not offered as advice and should not be relied on as such. This content is based on research and/or other relevant articles and contains trusted sources, but does not express the concerns of EasyKnock. Our goal at EasyKnock is to provide readers with up-to-date and objective resources on real estate and mortgage-related topics. Our content is written by experienced contributors in the finance and real-estate space and all articles undergo an in-depth review process. EasyKnock is not a debt collector, a collection agency, nor a credit counseling service company.