Discover: 2024 Home Equity Review

Benefits

• No closing costs: Discover doesn’t charge any application, appraisal, origination or processing fees.
• Generous sums: The lender allows borrowers to have a combined loan-to-value (CLTV) ratio of up to 90 percent between their mortgage and home equity loan. Among other lenders, 80 percent is a common maximum.

Drawbacks

• Just one option: Discover offers only fixed-rate home equity loans. If you’d rather get a HELOC, you’ll need to apply elsewhere.
• High minimum: Discover home equity loans start at $35,000, which might be too high for some borrowers. 

Home equity loan products offered

Discover offers home equity loans between $35,000 and $300,000, with repayment terms of 10, 15, 20 and 30 years. How much you can borrow, though, depends on your credit score and how much equity you have in your home.

Types of fees charged

Discover doesn’t charge any upfront fees on its home equity loans — no application, origination, processing or appraisal fees. It also doesn’t charge a prepayment penalty. Discover might charge a fee, however, if your payment is late or you do not have sufficient funds to cover payments.

How to qualify for a home equity loan with Discover

Discover requires borrowers to have a FICO credit score of at least 680 to qualify for a home equity loan, as well as a history of responsible credit use and verifiable employment and income. There’s also a maximum debt-to-income (DTI) ratio — your monthly debt payments divided by your monthly gross income — of 43 percent.

Between your first mortgage and a Discover home equity loan, you can have a combined loan-to-value (CLTV) ratio of up to 90 percent (although the loan amount with that ratio is capped at $200,000). There are no minimum assets needed to close on the loan.

How to apply with Discover

You can apply for a home equity loan with Discover online or by phone at 855-361-3435. Its customer service team is available Monday through Friday from 8 a.m. to midnight ET or Saturday or Sunday, 10 a.m. to 6 p.m. ET.

How Bankrate scored Discover

• Methodology

  To determine a home equity lender's Bankrate Score, Bankrate rates lenders on a scale of one (1) to five (5) stars — with five (5) the highest rating — based on a variety of factors relating to the lender's products and services. To assign our ratings, we assessed each mortgage lender across three core areas:

  • Affordability: Annual percentage rate (APR) - 80%; introductory APR - 20%
  • Availability: Licensing - 50%; credit score - 20%; loan minimum - 10%; draw requirement - 10%; loan products - 10% 
  • Borrower experience: Rate transparency - 45%; convenience - 35%; customer service - 10%; fixed-rate options - 10%

  Learn more about our methodology.