HEI University

The single most important thing to understand: an HEI is not borrowing. When you borrow, you receive money and pay it back with interest over time. With an HEI, you sell a company the right to a share of your home's future value. There is no interest rate and no monthly payment, and the cost is settled once, later.

This flips how you evaluate cost. A loan's cost is set by its rate. An HEI's cost is set mostly by how much your home appreciates before you settle, and by the contract's multiplier and starting value. The same HEI can cost a few percent a year in a flat market and 20% a year or more in a hot one.

• Loan: predictable cost, monthly payments, you keep all appreciation.
• HEI: no monthly cost, uncertain total, you give up a slice of your home's value.

A few terms recur across every provider. Learn these and the contracts stop feeling opaque:

• Investment amount: the gross cash the company commits, before fees.
• Net proceeds: what actually reaches you after origination and closing costs.
• Share of gain vs share of value: whether the company takes a percentage of your home's appreciation or of its entire value at settlement.
• Multiplier (or exchange rate): how many times the invested percentage the company receives, for example 1.65× to 2× of value, or 2.4× to 4× of gain.
• Risk-adjusted (starting) value: a baseline home value, sometimes set below the real appraised value, from which gain is measured.
• Cost cap: a limit on the company's annualized return, if the contract has one.
• Settlement or triggering event: the sale, refinance, buyout, or term end that closes out the agreement.

Two levers do most of the work in setting your cost. The multiplier sets how big a slice you owe: take 10% of your home's value as cash and a share-of-value provider might claim 16.5% to 20% of its future value, while a share-of-gain provider might claim 24% to 40% of its appreciation.

The starting-value basis is subtler. Some contracts measure appreciation from a value set below your home's real appraisal, by 5% in one provider's published terms and 27% in another's example. The lower the basis, the more "gain" the company shares, so you owe extra even if your home never moves.

A cost cap limits how high the company's annualized return can go. If your home booms, a cap protects you; without one, your cost can keep climbing. Published caps we have seen range from about 13% to 20% a year, and some providers publish none, so it is a real point of comparison. Caps also matter if you settle early, when they often set the price.

The trouble with comparing HEIs is that fees, share structures, multipliers, starting values, and caps all differ. The fix is to collapse them into one number: the effective annual cost, the single yearly rate at which your net proceeds would have to grow to equal your settlement amount. Once every offer is expressed this way, you can rank them and compare them to a HELOC at a glance.

A HELOC or home equity loan charges interest and requires monthly payments, but you keep 100% of your home's appreciation and the cost is predictable. An HEI reverses that: no monthly payment, but you give up a share of your home's value and the total is uncertain until you settle.

For borrowers who qualify at a reasonable rate and can handle a payment, traditional borrowing is usually cheaper. In a typical scenario (4% appreciation, 7 years) HEIs model at roughly 14% to 16% a year against about 8.5% for a HELOC. The HEI wins when a monthly payment is not workable, when income or credit make a HELOC hard to secure, or when you genuinely prefer trading future upside for zero cost today.

A reverse mortgage also skips monthly payments, but it is limited to homeowners 62 and older and lets interest accrue against the home over time. A cash-out refinance replaces your whole mortgage with a bigger one, which is unattractive if you hold a low existing rate.

An HEI sits alongside these as an option that avoids monthly payments and leaves your existing mortgage rate untouched, at the price of sharing your home's value. The right pick depends on your age, your current rate, your cash-flow needs, and your appreciation outlook, not on any single product being "best."

A HELOC denial is common: lenders turned down 33% of HELOC applications in 2025, most often over debt-to-income (the first reason on 44% of denials), then credit history and collateral. Your denial letter lists your reasons.

What changes with an HEI depends on the reason. There is no monthly payment to qualify for, so a debt-to-income denial is less likely to stop you, and some providers publish credit minimums as low as 500. A collateral denial usually carries over, because HEI providers limit total borrowing against your home too.

What doesn't change is the price. When you can get a HELOC, it usually costs less than an HEI, so if the fix is simple, like a missing document, reapply first.

Before the appreciation math even starts, fees shrink your cash: an origination or processing fee, commonly about 3% to 5%, plus appraisal and closing costs. Always work from your net proceeds, not the headline offer.

Then check the exits. A triggering event is anything that forces settlement, typically a sale, a refinance, or the end of the term. Terms run 10 years with some providers and up to 30 with others. Many contracts also let you buy out the company early, sometimes in partial steps. Understand what triggers settlement, and whether you can settle on your own timeline, before you sign.

If your home loses value, many HEIs share that loss, so you may settle for less than you received. How much protection you actually get depends on the structure: a discounted starting value or a share-of-value multiplier can absorb much of the benefit. Confirm exactly how a decline is handled in your agreement.

The company also records a lien against your property, similar to a second mortgage. That affects refinancing and any other borrowing against the home while the agreement is in place.

Some states now treat HEIs as mortgages or regulate them directly.

Work through four questions honestly:

• Cash flow: can you realistically take on a monthly payment? If not, the HEI's zero-payment structure is a genuine advantage.
• Appreciation outlook: the faster you expect your home to grow, the more an HEI costs relative to a loan.
• Time horizon: settling within a few years is often expensive, and a 10-year term can force a sale or refinance. Do you have a realistic exit?
• Alternatives: would a HELOC or home equity loan be cheaper and available to you?

Model your specific numbers on the calculator under both a low-growth and a high-growth scenario. If the effective cost is acceptable across the range you consider likely, and cheaper options are not available to you, the HEI is worth a serious look.

Your written offer decides what an HEI really costs. These are the parts that matter most:

• Net cash: what you receive after the provider fee and closing costs, not the headline amount.
• Structure and multiplier: whether the provider takes a share of your home's gain or of its total value, and how many times your share it takes.
• Starting value: the appraised value your share is based on, and any discount below it.
• Cost cap: whether there is one, its level, and how it compounds.
• Exit: the deadline, what makes the full amount due early, and how a buyout is priced.

What only your contract can answer

The details that decide what you'd owe are in the contract itself: how the cost cap compounds, who orders the settlement appraisal, whether improvements are credited before or after the provider's share, and what charges apply if you can't pay at the end of the term. Our Offer Review reads every section and answers each one from your contract, with a written report and a call, for $399. Ask us about it.