Using a HELOC for Debt Consolidation: What the Structure Means
A HELOC can be an effective debt consolidation tool — but the payment structure, initial draw requirement, and rate type affect how well it works for this purpose. Not every program is equally suited to debt payoff.
Initial Draw Requirements Matter for Debt Payoff
Aven and Figure require a 100% initial draw — meaning you draw the full line amount at closing. This is actually well-suited to debt consolidation because the funds are immediately available to pay off balances. NFTYDoor and HELIX require a 75% initial draw, and Deephaven requires 80% (minimum $50,000). If you need to pay off a specific amount of debt, the initial draw requirement determines whether you need to draw more than you intended.
Payment Structure and Debt Payoff Speed
Aven and Figure use fully amortizing payments — principal is being repaid from the first payment. This means the HELOC balance decreases over time even if you make only minimum payments. NFTYDoor, HELIX, and Deephaven use interest-only payments during the draw period — the balance does not decrease unless you voluntarily pay principal. For debt consolidation, an amortizing structure ensures the consolidated debt is actually being paid down. An interest-only structure requires discipline to make extra principal payments.
Figure's Automated Debt Payoff Feature
Figure has an automated debt payoff feature that can use HELOC proceeds to directly pay off credit card and other debt balances at closing. This can simplify the consolidation process and ensure funds are applied to the intended debts.
Fixed vs. Variable Rate for Debt Consolidation
Aven uses a fixed rate — the payment is predictable for the life of the loan. Figure also uses a fixed rate. NFTYDoor, HELIX, and Deephaven use variable rates (Prime + margin), which means the payment can change as the Prime Rate changes. For debt consolidation, a fixed rate provides more payment certainty.
See Which Programs Fit Your Situation
Morgan Hardy shops all five programs. Send him the basics once and he'll identify which are relevant for your property, income, and situation.
Shop My HELOC OptionsProgram information last reviewed: August 2026
HELOC guidelines change frequently. Program availability and qualification may change without notice. This information is educational and is not a loan approval, commitment or guarantee. Consult a financial advisor before consolidating debt.