Every few weeks someone reaches out after seeing an ad for a “home equity investment” or “home equity agreement.” The pitch is simple and attractive: get a big check against your equity, and make no monthly payments. No interest. Not a loan.
I want to be upfront: Ignite Loan Partners does not sell these products, and I have no financial stake in whether you sign one. I’m writing this because I think most people who ask about them haven’t been shown the math, and I’d rather you see it before you sign than after. Everything below is sourced, and the biggest numbers come from the companies’ own websites.
What a home equity agreement actually is
A home equity agreement (HEA), also marketed as a home equity investment (HEI) or shared appreciation agreement, is a contract where a company gives you a lump sum today, and in exchange you owe them a percentage of your home’s value at some point in the future. The Consumer Financial Protection Bureau (CFPB) describes it this way: homeowners “get an upfront payment from a company and, in exchange, must repay a single lump sum repayment in the future that is based, in part, on the home’s value” (CFPB Issue Spotlight, January 15, 2025).
The key mechanics, per the CFPB and the providers themselves:
- You keep the house and all the bills. You still pay the mortgage, taxes, insurance, and maintenance. The company just holds a claim on a slice of the value.
- The clock runs 10 to 30 years. Unlock’s term is 10 years (Unlock, “What It Costs”); Point’s is 30 (Point, “How the HEI Works”).
- It’s paid in one lump sum. Repayment is due at the end of the term or when you sell, refinance, or otherwise settle. There’s no amortization. It all comes due at once.
- It’s secured by your home. Unlock states it “will place a lien on your property in the form of either a ‘performance deed of trust’ or a ‘performance mortgage’” (Unlock, “How It Works”). If you can’t settle, the provider can foreclose or force a sale, as California’s Department of Financial Protection and Innovation warns (DFPI).
So it’s not “free money” and it’s not “no cost.” It’s deferred cost, secured by your house, with the bill arriving later.
The math, using the companies’ own examples
This is where I’d ask any lead to slow down. Here’s Unlock’s published example, verbatim from its pricing page (Unlock, “What It Costs”):
- Home worth $600,000; you receive $60,000 (10% of the value).
- Unlock applies an “exchange rate” of 1.8, so its share becomes 17% of the home’s future value, not 10%.
- At 3% annual appreciation, the home is worth $806,000 in 10 years. Unlock’s share: $161,200.
That’s $161,200 owed on $60,000 received. Before the money even hits your account, Unlock charges an origination fee of “up to 4.9% of the lump sum you receive,” plus appraisal, title, escrow, and recording costs.
Point’s example works the same way with a different structure. In Point’s own illustration, a homeowner receives $80,000 on an $800,000 home, and Point sets a “protected” starting value of $584,000 and takes 24% of appreciation above that. Ten years later, at a $975,000 home value, the repayment is about $175,000 (Point, “Share of Value vs. Share of Appreciation,” June 19, 2024).
Three things make these numbers grow fast:
- The multiplier. You give up roughly two dollars of future value for every dollar you receive. Unlock’s exchange rate ranges from about 1.7 to 2.05 (LendEDU Unlock review).
- The “risk adjustment.” Many contracts discount your home’s starting value before calculating their share. The CFPB found some firms discount the starting value by 25%, which “ensures profitability unless prices drop beyond that threshold” (CFPB Issue Spotlight). California’s DFPI flags the same thing: some contracts “allow the provider to reduce the starting value of your home when calculating how much equity you owe.”
- The cap tells you the real rate. Providers advertise an annual cost cap as a homeowner protection. Unlock’s “Annualized Cost Limit” is 19.9% per year on its investment. Read that again: the ceiling is 19.9% a year. The CFPB’s review found settlement amounts under many contracts grow at 19.5% to 22% per year in the early years, which it called “substantially higher than interest rates on most home-secured credit,” and it noted typical HELOC rates were around 9% at the time of its review.
“No payments” is the feature. It’s also the trap.
I understand why “no monthly payment” sells. If you’re stretched, it feels like relief. But the payment didn’t go away. It compounded, quietly, and it comes due as a single bill that can run into six figures.
When that bill arrives, you have three ways to pay it: sell the house, refinance the house, or write a check. The CFPB reviewed consumer complaints and found homeowners reporting “surprise at the size of the repayment amounts,” difficulty refinancing their first mortgage with the HEA lien in place, disputes over the appraisal that sets the payoff, and “frustration that they saw their only option was to sell their property” (CFPB Issue Spotlight).
The CFPB also noted these contracts “carry features that echo some of the risky loan structures” from before 2008: balloon payments, loose underwriting, and the potential for forced sales. That’s the part I find most concerning as a broker. A conventional lender has to verify you can actually repay. An HEA provider doesn’t need to, because the house is the repayment plan.
What regulators and courts are saying
This isn’t just my opinion. Over the last 18 months, the “it’s not a loan” framing has been losing in court and in state legislatures.
- The CFPB weighed in on January 15, 2025. Alongside the issue spotlight, it filed a brief in a New Jersey case arguing these contracts are “credit” under the Truth in Lending Act. The facts in that case: the homeowner received a payment equal to 44% of the home’s value and owed 70% of it back, with the provider recovering its money unless the home lost more than 39% of its value (Mayer Brown summary).
- The Ninth Circuit called one a reverse mortgage. On August 7, 2025, in Olson v. Unison, a federal appeals court held that Unison’s agreement, which advanced $64,750 in exchange for an option on 70% of a $370,000 home, “effectively creates the substance of a shared-appreciation reverse mortgage” under Washington law (Bradley, September 2025; HousingWire).
- Massachusetts sued Hometap. Attorney General Andrea Joy Campbell filed suit in February 2025, alleging Hometap “deliberately preyed upon financially vulnerable homeowners for profit, stripping them of their hard-earned home equity and putting them at unreasonably high risk of foreclosure” (Consumer Finance Monitor, February 24, 2025). In August 2025 a Superior Court judge refused to dismiss the case, writing that the allegations make the product “in substance, more akin to a loan” (National Mortgage News, August 26, 2025). Hometap denies the claims and says it stands behind its product’s transparency; the case is ongoing, and these remain allegations.
- Homeowner class actions followed in 2026. In one, a New Jersey couple says they received about $98,000 for 13% of an $802,000 home and would now owe roughly $177,000 (National Mortgage News, July 1, 2026). Again, allegations, not findings.
- States are moving to regulate. Connecticut, Maryland, and Illinois already require licensing or counseling. Maine went furthest: on April 13, 2026 it began treating these agreements as credit transactions, requiring HUD-approved counseling, banning mandatory arbitration and prepayment penalties, and requiring an annual percentage rate disclosure (Mayer Brown, April 30, 2026).
Notice what every one of those actions has in common: the fight is over whether this product should have to follow the same disclosure and ability-to-repay rules a mortgage does. Ask yourself why a product would be designed to avoid those.
Who these are actually built for
I’ll be fair. There’s a real population these products are aimed at: homeowners with lots of equity who’ve been told they can’t qualify for a loan because of credit, income documentation, or debt load. The Urban Institute’s February 2026 study of roughly 54,000 agreements found users are largely people “with low credit scores or income challenges unable to qualify for mortgages,” and the money mostly went to paying down other debt (Urban Institute, February 26, 2026).
That’s exactly the person I don’t want handing over 17% to 20% of their home’s future value without a second opinion. Because in my experience, “you can’t qualify” usually means “you can’t qualify for the one product that one lender offers.”
What I’d look at before signing one
If a lead comes to me holding an HEA offer, here’s the conversation we have:
- A HELOC. You keep your first mortgage as-is, borrow only what you need, and pay interest only on what you use. It has a payment, but that payment is the price of not owing a six-figure balloon.
- A cash-out refinance. Right when you’d benefit from restructuring the whole loan anyway.
- For self-employed borrowers, a bank statement loan or asset depletion program that qualifies you on how you actually earn, not on a tax return that doesn’t show it.
- For investors, a DSCR loan that qualifies on the property’s rent, not your personal income.
- For homeowners 62 and up, a federally insured reverse mortgage comes with required independent counseling and standardized disclosures, the very protections the HEA structure is designed around. Whether it fits is a separate conversation, but at least you’d be comparing regulated products.
None of these is free either. Every one of them has a cost, and the right answer depends on your credit, your equity, and what you’re trying to do. But every one of them shows you the rate and the payment on page one. That’s the standard I’d hold any product to before signing away a piece of my house.
The bottom line
A home equity agreement isn’t a scam, but it isn’t “no cost” either. It’s an expensive, lien-secured, balloon-payment product with a marketing message built around the one thing it doesn’t have: a monthly payment. Regulators, at least one federal appeals court, and a growing list of states have concluded it walks and talks like a mortgage, without a mortgage’s protections.
If you’ve been offered one, send me the offer. I’ll run the same 10-year math the companies publish, side by side with what you’d actually qualify for across the lenders we work with in 22 states. No pressure either way. I’d just rather you decide with the numbers in front of you.
Sources: CFPB, “Issue Spotlight: Home Equity Contracts: Market Overview,” January 15, 2025; Mayer Brown, “CFPB Takes a Stance on Home Equity Contracts,” January 2025; Unlock, “What Unlock’s Home Equity Agreements Cost”; Unlock, “How It Works”; Point, “How the HEI Works”; Point, “Share of Value vs. Share of Appreciation,” June 19, 2024; LendEDU, Unlock review; California DFPI, “Understanding Home Equity ‘Investments’”; Bradley, “Home Equity Investment and Shared Appreciation Agreements as Reverse Mortgages in Washington,” September 2025; HousingWire, “Appeals court rules HEIs are reverse mortgages”; Consumer Finance Monitor, “Massachusetts AG sues Hometap,” February 24, 2025; National Mortgage News, “HEI provider Hometap sees setback in Massachusetts lawsuit,” August 26, 2025; National Mortgage News, “Customers slam Hometap with a wave of class action lawsuits,” July 1, 2026; Mayer Brown, “Maine Passes Law to Regulate Home Equity Investment Contracts,” April 30, 2026; Urban Institute, “How Shared Equity Products Work, Who Is Using Them, and Regulatory Recommendations,” February 26, 2026; NCLC, “Courts Expose Deception of Home Equity ‘Investments,’” updated January 16, 2026
About the author: Michael Kerby is the Founder & President at Ignite Loan Partners, NMLS #1163561. Read Michael's bio →
This article is for general education and isn't financial advice or a commitment to lend. Loan programs, terms, and availability depend on your qualifications and are subject to credit approval. Ignite Loan Partners, NMLS #2381991. Equal Housing Opportunity.