You need money. The question isn’t “from where,” it’s “at what cost and risk?” Personal loans and home equity loans solve different problems, even if they look interchangeable at first glance. Pick the one that still works when life—and interest rates—get jumpy.
The core difference
- Personal loan: Unsecured. No lien on your home. Fixed rate, fixed term, smaller limits, faster funding, higher APRs.
- Home equity loan: Secured by your house. Lump sum, usually fixed rate, larger limits, lower APRs than unsecured options—but your home is collateral.
Cost and payment reality
Personal loans generally carry higher APRs but shorter terms (often 2–5 years), which can push the payment higher even on modest balances. Home equity loans typically offer lower rates and longer terms (5–20 years), keeping payments manageable—but increasing total interest if you stretch the payoff.
Eligibility and how lenders think
- Personal loan: Credit score and DTI do most of the heavy lifting. Strong profiles get better pricing; weaker profiles see steep rates or caps on the amount.
- Home equity loan: Lenders look at combined loan‑to‑value (CLTV), credit score, income stability, and property type. Many cap CLTV around 80–85%. Great equity plus clean income can offset a middling score; thin equity can sink an otherwise solid file.
Speed and paperwork
Personal loans can fund in days, sometimes within 24–72 hours. Home equity loans usually need an appraisal, title work, and a closing, so think 2–6 weeks. If your timeline is urgent, speed alone can tip the scales.
Mid-check: where to compare options
If you’re weighing structures—fixed payments, line of credit, or a refinance—platforms like Tiger Loans offer a range of solutions tailored to different financial needs and can help you map rate, term, and payment trade‑offs before you commit. If you’re a qualifying service member or veteran, you may also be eligible for VA Loans that provide favorable terms compared with many conventional products and could reduce the need for higher‑cost unsecured debt.
Risks you shouldn’t ignore
- Collateral risk (home equity loan). Missed payments can lead to foreclosure. Budget like it’s your primary mortgage—because it is a lien right behind it.
- Payment shock (personal loan). Short terms mean stout monthly payments. Make sure cash flow can carry the load.
- Fee drag. Home equity loans add appraisal, title, and recording costs; personal loans often charge origination fees. Always compare APR, not just the sticker rate.
- Term trap. Spreading a balance over 15–20 years feels easy—but you may pay far more interest over time.
When a personal loan makes more sense
- Small, defined need. You’re borrowing a modest amount and can pay it off quickly.
- You want speed. Funds are needed within days, not weeks.
- You refuse to pledge your home. Preserving housing security outranks chasing the lowest rate.
- Short payoff discipline. You plan to eliminate the debt fast and avoid long interest tails.
When a home equity loan is the better fit
- Larger balance at lower cost. You need more money than typical unsecured limits and want a lower APR.
- Fixed, predictable payments. Budgeting certainty matters more than absolute speed.
- You’ll keep the home. You plan to stay put long enough that closing costs make sense.
- Debt consolidation with structure. You want one fixed payment and a clear payoff timeline—without touching your low‑rate first mortgage.
Practical prep to improve terms (either way)
- Crush utilization. Drive credit card balances under 30% (under 10% is better) before applying.
- Right‑size the amount. Borrow a little less than the maximum; approvals and pricing often improve.
- Tidy the file. Clean documents, consistent income, and fast responses shorten timelines and reduce underwriting friction.
- Plan the exit. Set an extra‑payment plan for either loan so today’s solution doesn’t become tomorrow’s anchor.
Bottom line
Choose a personal loan when speed, simplicity, and keeping your home unencumbered matter most—and the balance is small enough to clear quickly. Choose a home equity loan when you need a larger sum, want a lower rate and fixed payment, and are comfortable pledging your home with a plan to pay it down. Run both scenarios, stress‑test the payment, and pick the option that still fits when things get noisy.