Home Equity Investments, Explained

Anthony Mannino
Apr 16
5 min read

A Niche Product Goes Mainstream

Part 1 of 3.

Homeowners today are sitting on enormous housing wealth, but that does not mean they can easily use it. For millions of borrowers, the traditional ways of tapping home equity have become far less attractive. Selling means giving up a low-rate mortgage. Refinancing often means replacing it with a much more expensive one. And for borrowers who do not fit clean underwriting boxes, even a HELOC may be out of reach. That mismatch has created an opening for a product that was once niche but is now moving toward the mainstream: the home equity investment, or HEI.

An old product in a new market

Home equity contracts have been around for years. Unison, originally launched as FirstREX, dates back to 2006, and for much of its life the category remained obscure, thinly distributed, and easy to dismiss as a financial curiosity. What changed? The housing boom of 2020 and 2021 created extraordinary gains in home values, leaving many homeowners with far more embedded equity than they had a few years earlier.

Once mortgage rates jumped, cash-out refinancing ceased to be an appealing option for millions of households locked into first mortgages written at pandemic-era lows. A product that had once lived at the edge of the market suddenly had a much clearer use case.

What an HEI is

A home equity investment is a transaction in which a company gives a homeowner cash

today in exchange for a contractual claim on a portion of the home’s future value. The homeowner keeps title, stays in the home, and generally makes no monthly payments. Settlement is usually triggered by a sale, a refinance, the expiration of the contract term, or another specified event.

In a market where traditional home-equity access often means either taking on new monthly

debt service or surrendering a very favorable first-mortgage rate, an HEI offers something different: liquidity without immediate payment pressure and, at least formally, without adding another conventional loan to the stack.

Across the major providers, the product category tends to share a recognizable set of

features:

Lump-sum cash advances rather than revolving credit lines
No required monthly payments
No conventional interest rate or amortization schedule
More flexible underwriting than many traditional home-equity products
Repayment tied to a future valuation event rather than monthly servicing

The broad market range looks roughly like this:

Advance amounts: about $15,000 to $600,000
Terms: generally 10 to 30 years
Credit flexibility: some providers accept scores down to around 500
Equity access: typically limited to a minority slice of current home value, often around 15% to 25%, depending on the provider and borrower profile

The national HEI market still centers on a relatively small group of recognizable players, including Point, Hometap, Unlock, Unison, Splitero, and AspireHEI. They differ in term length, geographic availability, maximum investment, and contract design, but the basic proposition is remarkably consistent: cash now, no monthly debt service, and a future claim on housing wealth.

The Mortgage Reports has an excellent rundown of industry providers and their related product features.

What an HEI is not

HEIs are easiest to understand by contrast, because they occupy a middle ground in housing finance: economically consequential, outside the normal regulatory constraints, and still not cleanly legible to many consumers.

An HEI is not a mortgage. It is typically structured as an equity-style contract rather than debt, which is one reason it often sits outside the familiar framework of mortgage disclosures and protections.

It is not a reverse mortgage. Reverse mortgages are age-limited and embedded in a much more established regulatory regime. HEIs are marketed across a broader set of homeowners.

It is not a HELOC. There is no revolving line, no draw period, no variable-rate exposure in the ordinary sense, and usually no monthly payment obligation.

It is not a sale-leaseback. The homeowner does not surrender title, does not become a tenant, and does not begin paying rent to remain in the property.

Those distinctions are the reason HEIs largely sit in a gap between familiar consumer products and existing legal regimes. It's what makes them attractive to some borrowers – and why they're also attracting the attention of state regulators and consumer advocates.

How the economics usually work

Most HEIs do not involve a clean one-for-one exchange of cash for a matching share of home value; the provider’s upside is usually enhanced. A homeowner may receive cash equal to 10% of the home’s present value but give up a larger share of future appreciation, or a defined share of future value measured against a starting point favorable to the investor. Some providers also use a risk-adjusted or discounted valuation at origination, which further shapes the economics in the company’s favor.

Broadly speaking, the market has developed around two structural models:

Share-of-future-value model: the provider receives a defined percentage of the home’s value at settlement
Share-of-appreciation model: the provider receives its original investment plus an agreed share of appreciation above a starting valuation

As with most financial products, the devil is in the details. What happens if the contract term ends before the homeowner sells or refinances? How is the property valued at settlement? Are homeowner-funded improvements carved out of appreciation, or swept into the investor’s return? What happens in a down market? Those terms vary, and they matter.

Who is using HEIs?

The typical HEI customer is likely to be in midlife, have a first mortgage already in place, possess significant paper wealth in the home, and to be using HEI proceeds for debt consolidation, home improvement, or another liquidity need.

Four borrower profiles stand out:

The equity-rich but credit-constrained homeowner. This is the borrower with meaningful housing wealth, but limited access to conventional products because of credit impairment, self-employment income, documentation problems, or debt-to-income constraints. For this borrower, the real comparison is often not “HEI versus HELOC,” but “HEI versus no workable option.” That is part of why critics have described these products in subprime terms.

The cash-flow avoider. Some borrowers may qualify for traditional products but do not want the burden of another monthly payment. That may include retirees, small-business owners, and other households with real assets but uneven cash flow. For them, the appeal isn't merely access, it's payment deferral.

The rate lock-in borrower. A homeowner sitting on a very low first-mortgage rate who needs liquidity but has no interest in refinancing into a much more expensive loan. In that case, preserving the existing mortgage becomes a core part of the product’s value proposition.

The distressed debt consolidator. A borrower who wants to use HEI proceeds to extinguish high-rate unsecured debt. The immediate appeal is obvious. The longer-term risk is that the homeowner may be exchanging visible monthly pressure for a contingent obligation that becomes far more expensive if the home appreciates over time.

What's Next?

HEIs sit where three pressures meet: a huge reservoir of home equity, increasing friction in traditional borrowing channels, and a financial industry that has become better at funding and distributing this particular kind of claim.

Part 2 of this series examines the capital markets infrastructure that made HEIs scalable — the institutional backing, warehouse lines, and securitization mechanics that turned a niche contract into an investable asset class.

Part 3 turns to the harder question: what happens when a fast-growing product no longer fits comfortably within legal categories meant to govern it. That's the more interesting story that's playing out in states across the country.