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American families collectively have a jaw-dropping $34.1 trillion in home equity as of the fourth quarter of 2025, according to the Federal Reserve (1). Unfortunately, much of that immense wealth is relatively illiquid and difficult to access.
Perhaps the most popular way to tap into your home equity — besides selling the house — is a home equity line of credit (HELOC). However, there’s been a surge in demand for a new financial instrument that promises to give you access to your home equity without “interest rates” or “monthly payments.”
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Home equity agreements (HEA) contracts have been gaining traction as an alternative to traditional HELOCs. But the finer print on these complex agreements reveals why their growing popularity could be putting many vulnerable homeowners at risk.
Here’s a closer look at how exactly HEAs work, as well as some of the potential risks that can come with them.
As the name suggests, a HEA is a financial agreement that offers homeowners up-front cash in exchange for some of their home equity. The agreement usually involves a fixed term (such as 15 years), after which the homeowner must repay the up-front cash along with a multiple of their home’s value at the time of settlement.
Since it isn’t a typical loan, many homeowners are tempted by the appeal of receiving cash without a monthly interest payment or credit check.
This could be why these contracts have become more popular in recent years, according to the Consumer Financial Protection Bureau (CFPB). In the first 10 months of 2024, 11,000 home equity contracts collectively worth an estimated $1.1 billion were signed, while the total market is estimated to be somewhere between $2 and $3 billion (2).
And HEAs are just one part of a bigger trend in which Americans are taking out loans against their equity. In 2025, U.S. homeowners took out a total of $205 billion in HEAs, HELOCs and similar loans, a record high for the past three years, according to Intercontinental Exchange (3).
Although the niche market for HEAs is still considerably smaller than that for HELOCs, the CFPB expects it to continue growing for the foreseeable future. But the underlying complexity of these agreements could expose homeowners to more risk than they realize.
Although HEAs seem like simple equity-sharing agreements on the surface, digging deeper reveals just how favorable the terms can be for the company issuing these contracts.
For starters, the up-front cash payment often involves a fee for the homeowner, typically between 3% and 5% of the initial payment, according to the CFPB (2). That already reduces the amount of cash you actually receive.
Meanwhile, the contract also often involves several features to protect the issuer from downside risks. For instance, the multiplier used to calculate settlement is often higher than the ratio of home equity the homeowner gets paid for.
In one such scenario, notes the CFPB, a homeowner could sign an agreement to receive cash for 10% of their home’s value, but the contract applies a 2x multiplier, which means they must pay 20% of the home’s long-term appreciation. Not only is such an arrangement unfavorable for the homeowner, but it also means the home would have to lose significant value before the issuer faces any losses.
Some HEA contracts can underestimate the value of the home during the up-front payment. For instance, the contract could estimate your home’s value at $450,000 — even though you’re likely to get $500,000 on the market — which effectively locks in a sizable payout for the issuer.
What’s worse, the complexity of these contracts can make it easier to miss these features. Unsuspecting homeowners who do not carefully review and negotiate the terms of these agreements could end up paying far more for a HEA than a traditional HELOC.
Put together, all of these factors are enough to make you think twice about choosing an HEA without serious deliberation.
Though an HEA might not be the right route for you, many Americans may still be eyeing a home equity loan to help consolidate their debt, as the Intercontinental Exchange report suggests (3).
After all, things like credit card debt are growing in America: As of the last quarter of 2025, people in the U.S. owed $1.28 trillion in credit card debt, a 5.5% increase from one year previous, according to a report from the Federal Reserve Bank of New York (4).
With a HELOC from AmeriSave, you can access up to $350K in funds to pay off your debts, and even negotiate a draw period that works for you.
That’s because it offers a revolving line of credit that leverages the equity in your home as collateral, so that you can borrow and repay funds as needed — similar to a credit card — making it useful for renovations or debt consolidation.
In this way, it’s a good fit for borrowers who want convenience and flexibility rather than one large lump-sum loan.
Plus, interest is charged only on what you use, and you repay the balance over time. It’s essentially a flexible credit line secured by your home, delivered through a mostly online application process and available in most states.
The market for home equity agreements is rapidly expanding, as more homeowners are drawn to the appeal of easy cash without interest rates or monthly payments.
At first glance, these agreements might sound like a better deal than borrowing against the value of your property. However, the structure of these agreements can put homeowners at a disadvantage.
In fact, when you run the numbers, you could discover that a HEA is more expensive over the long run than a traditional HELOC.
“Under many contracts,” notes the CFPB (2), “the settlement amount grows at a rate of 19.5% to 22% per year in the early years, which is substantially higher than interest rates on most home-secured credit.”
That’s why platforms like Figure allow homeowners to explore home equity loans that can provide access to cash without replacing an existing mortgage.
Figure is also an option for those looking to access larger amounts of up-front cash, instead of borrowing gradually. This can be helpful if you want to do those upgrades to your home that you always wanted, for example.
Offering lines of credit up to $750K, as well as a 100% online process for amounts under $400K, Figure blends the best of a quick home equity loan with HELOC-style flexibility.
The approval process takes just five minutes, and you can get your funding in as few as five days.
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Federal Reserve Bank of St. Louis (1); Consumer Financial Protection Bureau (2); Intercontinental Exchange (3); Federal Reserve Bank of New York (4)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.