You don't know the total yet
For example, a renovation whose scope depends on what the contractor finds. You draw what you need, when you need it.
HELOC — Washington DC
HELOCs in Washington DC
A HELOC is a line of credit behind your first mortgage that you draw on as you need it.
When to choose a HELOC
When a HELOC fits better than a home equity loan
If you know the exact amount you need, a fixed home equity loan gives you one lump sum and a level payment. A HELOC fits when you don't know the amount yet.
You will spend in stages
For example, phase one this year and phase two next year. A lump-sum loan charges interest on the whole amount from the start. A line charges interest only on what you have drawn.
You want a reserve
The line is approved and available, and you draw on it only if you need to.
Draw period and repayment
How HELOC payments change
On a variable-rate HELOC, the payment changes with the rate and with your balance. Every HELOC has a draw period. When the draw period ends, new draws stop and the balance moves into repayment, and the repayment-period payment can be larger than the payment during the draw period.
Read the draw and repayment terms of any HELOC before you sign. Your loan officer will go through them with you first. If a fixed payment matters more to you than drawing in stages, the fixed home equity loan is the better fit.
Compare options
HELOC, home equity loan, and cash-out refinance
The right one depends on your current rate and how you will spend the money.
HELOC
A revolving credit line behind your first mortgage. You draw as needed and pay interest only on what you use.
Best for · Staged or uncertain costs.
Home equity loan
A fixed-rate second loan behind the mortgage you keep. You get one lump sum and make level payments.
Best for · A known, one-time expense.
Cash-Out Refinance
One new loan replaces your mortgage, and you receive the rest in cash at closing. Your whole balance moves to the new rate.
Best for · Your rate is at or above today's rates.
DC costs
DC taxes on a HELOC
Recordation tax: $0
DC exempts security instruments on residential property of five units or fewer, in any lien position (§ 42-1102(21)). The deed of trust securing a HELOC qualifies.
Your first mortgage stays in place
A HELOC is a second lien. The rate, balance, and remaining term on your current mortgage do not change.
Homestead deduction unaffected
Borrowing against your home does not trigger a reassessment or remove your homestead deduction.
The exemption is claimed with a notarized affidavit at recording. Read how DC recordation tax works.
FAQ
HELOC questions
What is a HELOC?
A home equity line of credit (HELOC) is a revolving credit line secured by your home. You are approved for a limit, you draw against it as needed during the draw period, and you pay interest only on the amount you have drawn. When the draw period ends, the balance moves to a repayment schedule.
How is a HELOC different from a home equity loan?
A home equity loan pays you the whole amount at closing at a fixed rate, with the same payment every month for a set term. A HELOC gives you access to a credit limit and lets you decide when and whether to draw on it, usually at a variable rate, so the payment changes with the market and with your balance. A HELOC fits spending that is staged or uncertain; a home equity loan fits a known amount.
Is a HELOC rate fixed or variable?
HELOC rates are generally variable, tied to an index that moves with the market, so the payment can rise or fall over the life of the line. If a payment that stays the same matters more to you than drawing in stages, a fixed-rate home equity loan fits better.
Does a HELOC touch my first mortgage?
No. A HELOC is a second lien behind your existing mortgage. The rate, balance, term and payment on your first mortgage stay the same, so a homeowner with a low first-mortgage rate keeps it.
Does a DC HELOC trigger recordation tax?
No. D.C. Code § 42-1102(21) exempts security instruments on residential property of five units or fewer and makes no distinction by lien position, so the deed of trust securing a HELOC qualifies on the same terms as a first mortgage. The condition is the notarized ROD Form 21 affidavit attached at recording, which your settlement agent files.
How much can I draw against my DC home?
The limit is set by combined loan-to-value (your first mortgage plus the new line, divided by the appraised value), along with your credit profile and the property type. Because your first mortgage balance is the biggest factor, your loan officer runs the figures for your address and balance.
Should I take a HELOC, a home equity loan, or a cash-out refinance?
Answer two questions: how your current mortgage rate compares with today's rates, and whether you know the amount you need. With a low current rate and a known one-time cost, a fixed home equity loan fits. With a low current rate and staged or uncertain spending, a HELOC fits. With a current rate at or above today's rates, price a cash-out refinance too, because it can lower the rate and give you cash in one loan. Your loan officer prices all three for your home.
What happens when the draw period ends?
You can no longer draw on the line, and the balance moves into a repayment period. The payment then covers principal as well as interest, so it is generally larger than the interest-only payment during the draw period. Read the draw and repayment terms of any HELOC before you sign; your loan officer goes through them with you.
What does District Mortgage do?
District Mortgage arranges home purchase, refinance, and cash-out loans on property in Washington, DC. One licensed loan officer handles your loan from application to closing, and our current rates are published on our rates page with the APR and effective date. NMLS #2819502 — verify us at nmlsconsumeraccess.org.
Can District Mortgage do a loan on a property outside Washington, DC?
No. We are licensed in the District of Columbia only, so the property has to be in DC. We cannot accept an application or a pre-qualification request for a property in Maryland, Virginia, or any other state. If your property is elsewhere, nmlsconsumeraccess.org will show you licensed originators in that state.
Who will I work with at District Mortgage?
Alan Trombley, Principal Mortgage Loan Originator, NMLS #2805044, is your loan officer. He is licensed in the District of Columbia and handles every file from pre-qualification through closing.
Where do the rates on this site come from?
Our rates page is the source for our pricing. It shows an effective date, the APR next to every rate, and the borrower assumptions each example is priced on. Rates shown anywhere on this site are current rate examples priced for the borrower assumptions published with them. They are not offers of credit or commitments to lend, and pricing changes daily. Anyone quoting a rate from us should cite the effective date it was published with.
Ask a question
A licensed DC loan officer will answer your question by email within one business day.
Get pre-qualified for a HELOC
Pre-qualification takes two minutes and does not pull your credit.