Can I Open a HELOC and Not Use It?

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Quick Answer

Most of the time, you can open a HELOC and use the funds only as needed, even if that means you never use the HELOC. Some banks do require you to make a minimum draw after opening your account. Be aware of the fees and penalties lenders charge.

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You can open a home equity line of credit (HELOC) without using it, though a few lenders require you to make a minimum draw after you open your credit line. You can also avoid interest charges if you don't use your HELOC, since there's no balance to repay.

But before you proceed, make sure you understand how using—or more specifically not using—a HELOC works so you can decide if it's a smart move for your situation.

Can I Open a HELOC and Not Use It?

You usually can open a HELOC and never use it, but not always. Some banks and lenders have minimum draw requirements, so check their terms to make sure they work for your needs.

Keep in mind, HELOCs are a type of revolving credit that work like a credit card. You can borrow as needed and only pay interest on the amount you draw on the credit line. So if you don't withdraw any funds during the HELOC's initial withdrawal period (typically 10 years) you won't carry a balance or owe interest.

That's not to say HELOCs are without expenses. You may still have to pay upfront closing costs, which generally average 2% to 5% of the credit line amount. If you open a $100,000 line of credit, for example, you'd likely owe $2,000 to $5,000 in closing costs, in addition to other potential fees.

What Happens if I Don't Use My HELOC?

Even if you plan on opening a HELOC as a backup, it's good to understand how it might affect you.

  • No interest payments: If you don't borrow from your HELOC, you won't pay any interest. By contrast, interest on installment loans typically starts accruing the day the funds are issued.
  • Potential fees: Before opening a HELOC, make sure you understand the fees you might face, even if you don't use the credit line. These could include an annual fee up to $400, a prepayment penalty of around 2% of balance or an inactivity fee of up to $50, on top of the upfront closing costs.
  • Continuous access: HELOCs come with an initial draw period that typically runs for five to 10 years, giving you plenty of opportunity to access money when you need it. Once this period ends, you'll enter the repayment period, usually 20 years, and no longer be able to withdraw funds.
  • Credit report impact: Opening the account will create a new account on your report, which could lower your average account age. On the other hand, a new HELOC account may help your credit mix by adding another revolving account, and your payment history may improve if you consistently make on-time payments.

Learn more: Pros and Cons of a HELOC

How Long Will My HELOC Stay Open if I Don't Use It?

Generally speaking, your HELOC will stay open for the full draw period even if you don't use it. Under Regulation Z of the Truth in Lending Act, lenders generally can't close your HELOC solely because you're not using it. They can, however, reduce or freeze the line in some cases, such as if your home's value drops or your financial situation changes.

When the draw period ends, the repayment phase begins, and you'll owe payments on any balance you borrowed. But if your balance is zero, you can close the account, though you may have to pay a prepayment penalty. In many cases the bank will close the account for you without a penalty, but check your HELOC terms for confirmation.

Tip: According to ICE Mortgage Technology's August 2025 Mortgage Monitor report, about 48 million U.S. homeowners have accessible equity, with the average homeowner holding around $213,000. If you have sufficient equity in your home, you may want a HELOC to renovate your kitchen, pay down debt or cover a financial emergency. Remember, however, that home equity loans and HELOCs are secured by your home, which means the lender could foreclose on it if you fall behind on your payments.

Should I Get a HELOC Just in Case?

There may be some benefit to getting approved for a HELOC, even if you have no immediate plans for the funds. HELOC rates as of August 2025 were averaging around 8.27%, according to Curinos. That's substantially lower than average personal loan and credit card rates, which sit at 11.57% and 22.25%, respectively, per Federal Reserve data from May 2025.

Whether you should get a HELOC depends on your financial situation and needs.

A HELOC as a Backup Might Make Sense if You Want:

  • To accelerate the funding timeline: The approval process for HELOCs can take from two to six weeks. If you were suddenly hit with an expensive car repair, medical bill or another unexpected expense, you may not have time to wait for that credit line to be approved.
  • Larger borrowing amounts: Depending on how much home equity you have, a HELOC may give you more funds than a personal loan or credit card.
  • To address multiple needs: Your financial needs may change over time. Even if you open a HELOC strictly as an emergency fund, you might decide later to use some of it to pay for home improvements, wipe out high interest credit card debt or even both.

A HELOC as a Backup Might Not Make Sense if You Don't Want:

  • Risk to your home: A HELOC is a second mortgage that uses your home as collateral on the credit line. Be aware you could lose your home if you default on the HELOC.
  • Fees and penalties: HELOCs come with closing costs and could charge annual, prepayment and other fees.
  • Minimum draws: If you don't intend to use your HELOC for a while, make sure that's an option with any lender you're considering. Some require a minimum draw of up to 100% of the approved amount.
  • Variable annual percentage rate (APR). Most HELOCs have variable rates, which means your rate could fluctuate. Look for fixed-rate HELOCs if you want more predictable payments.

How to Get a HELOC

If you decide getting a HELOC would benefit your situation, here are the steps to get one.

1. Understand the Requirements

Before filling out a HELOC application, take a moment to review the requirements for HELOCs to gauge your eligibility. You'll want to have at least 15% to 20% equity in your home, a FICO® ScoreΘ over 680 and a debt-to-income ratio (DTI) below 43% to have the best chances of qualifying.

2. Check Your Credit Score

If your credit score falls below 700, it's a good idea to improve it ahead of time. Many banks accept credit scores as low as 680, but a higher score could improve your odds of approval and potentially offer more favorable terms. One way to score a quick credit win is to pay down credit card debts a few months before seriously pursuing a HELOC.

3. Compare Several Lenders

Since interest rates vary from one lender to another, compare rates from multiple banks, credit unions and mortgage lenders to find the best offers. Prequalifying with at least a few lenders can help you see what rates and terms you're eligible for without affecting your credit. Most HELOCs have variable rates, so make sure you understand each lender's rate caps and how often they adjust rates.

4. Apply for the HELOC

Once you've identified the lender with the best balance of rates, fees and terms, fill out the application online or in person with a loan representative. Your lender may order an appraisal, but the fee, typically $350 to $500, is part of your closing costs. You can help keep the process moving by promptly submitting any supporting documents your lender requests as they review your application.

5. Close the HELOC

If your application is approved, don't rush to sign. Review the credit terms carefully to make sure you understand the loan amount, interest rate and repayment terms. If everything is in order and you agree with the terms, sign the documents to get access to your credit line.

Tip: The Truth in Lending Act generally allows for a brief cooling off period for certain types of home loans, including HELOCs that use your primary residence as collateral. If you change your mind, this right of rescission gives you three days to cancel the agreement without penalties. The lender must also return any fees you've paid within 20 days.

Shore Up Your Credit Before Applying for a HELOC

Before you apply for a HELOC, home equity loan, refinance or any type of loan, it's important to make sure your credit is solid. A good credit score may help you land a lower interest rate and save thousands of dollars over the life of the loan.

You can check out your Experian credit report and FICO® Score for free, which can give you a clearer picture of your credit profile. You'll get a breakdown of the main factors affecting your credit score so you can take strategic steps to improve your score.

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About the author

Tim Maxwell is a former television news journalist turned personal finance writer and credit card expert with over two decades of media experience. His work has been published in Bankrate, Fox Business, Washington Post, USA Today, The Balance, MarketWatch and others. He is also the founder of the personal finance website Incomist.

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