Last reviewed: 7 October 2026
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HELOC rules under Regulation Z: freezes, limits and fee refunds
A home equity line of credit comes with its own set of federal rules. This page sets out what Regulation Z says about application-stage disclosures and fees and about what a lender may do after the line is open.
What this term means: A home equity line of credit (HELOC) is, in the CFPB’s words, “an ‘open-end’ line of credit that allows you to borrow repeatedly against your home equity.”[1] Regulation Z’s § 1026.40 applies to open-end credit plans secured by the consumer’s dwelling.[2]
Disclosures and fees at application
| Topic | What § 1026.40 says |
|---|---|
| Timing of disclosures and brochure | Provided at the time an application is provided to the consumer. They may be delivered or mailed not later than three business days after receipt of the application when the application is in a magazine or other publication, or received by telephone or through an intermediary agent or broker.[2] |
| Brochure | The home equity brochure “What You Should Know About Home Equity Lines of Credit,” or a substitute the regulation accepts, must be provided.[2] |
| Nonrefundable fees | Neither a creditor nor any other person may impose a nonrefundable fee in connection with an application until three business days after the consumer receives the disclosures and brochure. If they are mailed, receipt is treated as three business days after mailing.[2] |
| Refund of fees | A creditor must refund all fees paid to anyone in connection with an application if a term required to be disclosed changes before the plan is opened (other than a change due to fluctuations in the index of a variable-rate plan) and, as a result, the consumer elects not to open the plan.[2] |
Limits on what a creditor can do after the plan opens
Paragraph (f) says that no creditor may, by contract or otherwise, do the following except as stated.[2]
| Limit | What it says |
|---|---|
| Changing the rate | A creditor may not change the annual percentage rate unless the change is based on an index that is not under the creditor’s control and that is available to the general public.[2] |
| Ending the plan early | A creditor may not terminate a plan and demand repayment of the entire balance before the original term unless there is fraud or material misrepresentation by the consumer; the consumer fails to meet repayment terms for any outstanding balance; an action or inaction by the consumer adversely affects the creditor’s security; or federal law on credit to a depository institution’s executive officers requires a payable-on-demand condition and the initial agreement includes it. Reverse mortgage plans are covered by a separate paragraph.[2] |
| Changing other terms | A creditor may not change any term, with listed exceptions, including changes the consumer agrees to in writing at that time, changes that unequivocally benefit the consumer, and insignificant changes. Paragraph (f)(3)(ii) permits a replacement index and margin in two stated circumstances, including an unavailable original index.[2] |
| Stopping advances or reducing the limit | A creditor may prohibit additional extensions of credit or reduce the credit limit during any period in which: the dwelling’s value declines significantly below its appraised value for the plan; the creditor reasonably believes the consumer cannot meet repayment obligations because of a material change in financial circumstances; the consumer is in default of any material obligation; the creditor is precluded by government action from imposing the agreed rate; the creditor’s security interest priority is adversely affected by government action so that its value is less than 120 percent of the credit line; or the creditor’s regulator notifies it that continued advances would be an unsafe and unsound practice. The initial agreement may also allow this during any period in which the maximum annual percentage rate is reached.[2] |
What the CFPB says in plain language
- “If the value of your home decreases significantly, your lender might decide not to allow you to take out additional credit under your HELOC plan, which may result in you not having access to as much money as you thought you would.” The CFPB also says the lender might freeze your ability to take out additional funds if your financial circumstances change and it does not believe you will be able to make payments.[1]
- The CFPB says that if you fall behind or cannot repay on schedule, you could lose your home, and that HELOCs usually have a variable interest rate, so payments may change from month to month.[1]
For how a HELOC differs from other ways to borrow against a home, see our guide to HECM, HELOC and home equity loans.
How to verify this yourself
Read § 1026.40 in the eCFR (reference 2) and the CFPB page (reference 1). Your plan agreement and the notices the lender sends are the documents that show which terms apply to you. To check the person you are working with, use our guide to verifying a loan officer’s NMLS license. Our published standard covers how we check loan originators, and the Register shows that method; neither reviews a lender’s or servicer’s handling of your loan.
What this page does not cover
This page does not cover the content of the required HELOC disclosures in paragraph (d), how a particular plan’s fees or rates compare, or state-law limits. It does not tell you whether to open or keep a line of credit. The CFPB page was last reviewed in August 2026. This page is general information, not legal advice, and it does not compare lenders, loan products or rates. It was last reviewed 7 October 2026.
Your next step
A written explanation from the lender would show which provision it relies on. Then return to the Mortgage help library for related guides.