Last updated: March 07, 2025

Using Your Equity

Using home equity for unexpected medical expenses

Woman evaluating and considering if she should use her home equity to pay for her unexpected medical expenses

Home equity loans aren’t just for home improvements and debt consolidation. They can also be used for unexpected expenses, including costly medical treatment. 

If you’re trying to find a way to cover medical expenses, consider a home equity loan.

How a home equity loan for medical expenses works

If you have a mortgage, you may be building equity in your home as you pay it off. 

Equity is the difference between the amount your home is worth and the amount you still owe on your mortgage(s). For example, if your home is worth $300,000, and you owe $100,000 on your mortgage, you may have $200,000 in equity.

Your equity is your money — it’s just tied up in your home. One potential way to access a portion of your equity is with a home equity loan. 

As with other loans, you need to meet certain requirements set by a lender to qualify for a home equity loan, which may include a good credit score and proof of a steady income.

How you spend the funds from a home equity loan is up to you. You may want to cover an unexpected expense, such as costly medical treatment.

Features of home equity loans for medical expenses

Several features of a home equity loan may make it a good choice if you need money for medical treatment:

  1. Lower interest rates: Secured loans like home equity loans may charge a lower interest rate than unsecured loans like credit cards or personal loans.
  2. Availability of funds: The amount you may be able to borrow depends on your equity and other factors. Discover® Home Loans offers home equity loans from $35,000 - $300,000 (2nd Lien).
  3. Payback period options: Loan term lengths may vary by lender, but with Discover Home Loans, you can get terms of 10, 15, 20 or 30 years. If you borrowed $60,000 for a 20 year term at 8.86% APR, your fixed monthly payments would be $534.45.*
  4. Fixed monthly payments: A home equity loan typically has a fixed interest rate and fixed payments over the life of the loan.
  5. Other Considerations: Taking out any loan requires serious thought and consideration about your financial future. Keep in mind that a home equity loan doesn’t replace your existing mortgage like a refinance would. Instead, it adds an additional mortgage to your property.

Consider whether you can afford both your existing monthly mortgage payment and the new home equity loan payment. Review your current budget and factor in your expected loan payment amount.

You may need to provide the following information when applying for a home equity loan:

  • Personal data, such as your name, address and Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN)
  • Employment history for the past two years
  • Proof of income for the past two years, with a copy of your most recent paycheck 
  • Any debt not reported to a credit bureau, such as alimony and child support payments
  • Information about your property

A home equity loan may help cover medical expenses while you focus on recovering your health. However, you should carefully consider the features of this loan type before deciding whether it's the right option for you.

*The payment information provided is solely a payment example and not an offer to lend. Loan approval is subject to confirmation that your income, debt-to-income ratio, credit history and application information meet all requirements. Many factors are used to determine your Interest Rate/APR/Payment, such as your credit history, application information and the term you select. 

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The information provided herein is for informational purposes only and is not intended to be construed as professional advice. Nothing contained in this article shall give rise to, or be construed to give rise to, any obligation or liability whatsoever on the part of Discover Bank or its affiliates.

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Discover Home Loans Restrictions and Details

We do not lend in IA or MD. You are not guaranteed approval. Once you apply and submit your credit and property information, we will confirm your eligibility. We don’t lend on cooperatives, condotels, investment properties, log homes, manufactured homes, mobile homes, or secondary homes. We will only originate one 1st lien mortgage per property per 12-month period. The maximum loan amount you qualify for will depend on additional factors, including type of loan, lien position, loan-to-value and your credit history. We may change rates, program terms, and conditions without notice. Discover Card accounts may not be paid off with this home loan. All loan programs are offered by Discover Bank, 2500 Lake Cook Road, Riverwoods, IL 60015. NMLS ID 684042.

 

Loan Payment Example Disclosure

For example, if you borrowed $60,000 for a 20 year term at 8.86% APR, your fixed monthly payments would be $534.45.