How To Get a Discover Home Equity Loan: Requirements, Benefits and Tips
Written by
Rudri Patel
Edited by
Elizabeth Constantineau
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If you’re dealing with high-interest credit card debt or have a major expense coming up, a home equity loan could be a smart way to access the funds you need — often at a lower rate. Discover, Member FDIC, offers home equity loans that can be used for just about any purpose.
Here’s what you need to know about a Discover Home Equity Loan.Â
Who Can Qualify for a Discover Home Equity Loan?
If you’re thinking about applying for a Discover Home Equity Loan, you may want to know if you meet the qualifications. Here’s what you need to have:
- A credit score of 680 or more.
- Debt-to-income ratio of at least 43%.
- Verifiable employment and income.
- History of responsible credit use.
- Your home must be a single-family, primary residence.
What Makes Discover Home Equity Loans Different?
Discover offers a range of features that make its home equity loans stand out.
No fees
There are no origination, application or appraisal fees with the Discover Home Equity Loan. There are also no closing costs.Â
Fixed interest ratesÂ
The interest rates on Discover Home Equity Loans are fixed. The current interest rates are from 7.85% to 12.92%. A fixed interest rate means predictable monthly payments.Â
Generous Loan Amounts
Discover offers loans from $35,000 to $500,000 for first-lien and mortgage refinance loans.
For second-lien loans, the range is $35,000 to $300,000.
Long Terms
Loan terms are available from 10 to 30 years.Â
How To Apply for a Discover Home Equity Loan: 5-Step Guide
Here’s an overview of what to expect when you apply for a Discover Home Equity Loan.
Step 1: Prequalify Online
Your initial step is to find out if you can prequalify for one. Visit the Discover website and fill out the prequalification form. There is no hard credit check at this stage.Â
Step 2: Submit a Full Application
When you submit a full application, you need to provide information about your mortgage, income and debts. You will need to upload the following documents:
- Your W-2s
- Pay stubs
- Mortgage statements
Step 3: Home Appraisal
As you move through the process, your home will be appraised to confirm your property value. The appraisal will determine the amount of the loan.Â
Step 4: Review and Sign Loan Terms
When you finally review your loan, pay attention to the interest rate, loan amount and repayment schedule. You can sign the documents electronically or in person.Â
Step 5: Receive Funds
You should receive funds within a few days after closing.Â
Discover Home Equity Loan vs. HELOC: Differences To Know
Although you cannot get a home equity line of credit with Discover, you may want to be aware of the differences between the two.Â
| Feature | Discovery Home Equity Loan | HELOC |
|---|---|---|
| Loan Type | One lump sum payment | Revolving credit line |
| Interest Rate | Fixed | Variable |
| Use of Funds | One-time disbursement | Withdraw funds as needed |
| Repayment Term | 10 to 30 years | 5 to 10 year draw period; 10 to 20 year repayment |
| Monthly Payments | Fixed payments | Vary based on balance and interest rate |
| Fees | No origination fees, appraisal fees, application fees or closing costs | May include closing costs, annual or inactivity fees |
| Best For | One-time expenses | Ongoing or unpredictable costs |
Discover Home Equity Loan: Pros and Cons
Discover’s Home Equity Loans come with several potential benefits, but it’s important to understand the trade-offs as well. Here’s a look at the key advantages and drawbacks to consider.
Pros
- No application fee or closing costs: You pay $0 for the application fee, origination fee, appraisal fee and closing costs.Â
- Fixed interest rate: The monthly payment amount is the same so there are no unexpected surprises.Â
- Flexible use of funds: You can use the funds for debt consolidation or home improvements.Â
- Large loan amounts: You can get a home equity loan ranging from $35,000 to $500,000.Â
Cons
- Application process takes up to seven weeks: The process can be long and you might wait a while to find out if you’re approved.Â
- Requires good credit: You need a score of 680 or more to qualify.Â
- No HELOC option: Discover Home Equity Loan doesn’t offer a HELOC option.Â
- Foreclosure risk: Your home is used as collateral, so missed payments can lead to foreclosure.
4 Tips for Getting Approved
What are tips that will help you get a Discover Home Equity Loan? Here are a few actions you can take:Â
Tip 1: Check Your Credit Score and Improve It if Needed
You can check your credit score via AnnualCreditReport.com.
You need a credit score of 680 or more to qualify for a home equity loan at Discover. If your score falls below 680, you may want to improve your score first before applying.Â
Tip 2: Pay Down Debts to Lower Your Debt-To-Income Ratio
You want to minimize credit card balances and pay down existing loans. You should aim for a debt-to-income ratio below 43%.
Lower ratios will improve your likelihood of securing a home equity loan.
Tip 3: Make Sure Your Home Has Enough Equity
Having substantial equity in your home improves your chances of getting better loan terms. You should aim to have at least 20% equity in your home.Â
Tip 4: Have All Documents Ready and Organized
If you have all your documents ready, this improves your chances of getting your loan approved quickly.
Have your W2s, tax returns, home insurance and mortgage information documents ready.Â
Final Take: Is a Discover Home Equity Loan Right for You?
If you’re a homeowner who qualifies for this loan, you will benefit from predictable payments and a fixed rate. The funds can be used for debt consolidation and bigger projects.Â
If you want to find out if the Discover Home Equity Loan is right for you, compare it with other lenders and loan types before applying. Also, you may want to talk to your financial advisor to determine if this loan is a good fit for your overall financial strategy.Â
FAQs About Getting a Discover Home Equity Loan
Here are the answers to some of the most frequently asked questions about Discover Home Equity Loans.- How long does it take to get approved for a Discover Home Equity Loan?
- It can take up to seven to eight weeks from the application date to get approved.
- Is there a fee to apply?
- There is no fee to apply.
- Can I use the loan for anything I want?
- Yes, funds from a Discover Home Equity Loan can be used for various purposes, including home improvements, debt consolidation, major purchases or other financial needs.
- Does Discover offer HELOCs too?
- Discover does not offer HELOCs.
- What happens if my home doesn't appraise high enough?
- Loan amounts are based on your appraisal. If your appraisal comes in low, it may affect the amount you can borrow.
Karen Doyle contributed to the reporting for this article.
Data is accurate as of April 8, 2025, and is subject to change.
Editorial Note: This content is not provided by any entity covered in this article. Any opinions, analyses, reviews, ratings or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by any entity named in this article.
