Deephaven Mortgage is expanding its push into home equity lending, rolling out enhancements to its Equity Advantage HELOC as originators increasingly pivot toward second-lien products in a high-rate environment.
The updates include a maximum loan amount of $1 million, expanded borrower eligibility, and 2.5% lender-paid compensation, positioning the product for higher-balance borrowers, investors, and self-employed clients.
But the bigger story is what’s driving it.
“We think it’s a generational opportunity,” said Tom Davis, chief sales officer at Deephaven Mortgage during an exclusive interview with NMP.
A Growing Slice Of The Market
Equity lending is no longer a niche.
Davis said the segment is expected to reach $150 billion in volume this year, accounting for roughly 15% of the overall origination market.
“It’s one of the areas seeing the most growth, not just in non-agency, but across the entire mortgage space,” he said.
Borrowers are turning to equity for a wide range of uses, including renovations, debt consolidation, business funding, and real estate investment.
Deephaven’s approach leans heavily into Non-QM flexibility.
The company has built what Davis described as a “full suite of equity products,” including:
- Closed-end seconds up to $1 million
- Bank statement, P&L, and alternative documentation options
On the HELOC side, Deephaven is positioning its offering as a hybrid between digital speed and manual underwriting flexibility.
“We built a proprietary digital HELOC,” Davis said. “And we’re the first investor in the non-agency space to go to $1 million on a jumbo HELOC, including alternative income documentation like bank statements.”
To address limitations in digital underwriting, the company added a manual fallback.
“A lot of digital HELOCs don’t work well with bank statements, so we added a manual off-ramp — human underwriters reviewing those files,” he said.
That includes the ability to use full appraisals when needed, particularly for higher-balance loans.
Early response has been strong.
Davis said the rollout generated record submissions in both equity loans and HELOCs on its first day, calling it “definitely a needle-mover.”
While he declined to share specific volume, he noted interest from top independent mortgage banks and large brokers, particularly those looking to avoid tying up warehouse lines on high-balance second liens.
“Some of them can bank it, but don’t want to tie up warehouse lines on a $1 million HELOC,” he said.
Economics Shifting
The economics of home equity lending are also evolving.
Years after many originators questioned profitability in the space, Deephaven increased compensation on the product to 2.5%, up from 2%.
“That’s a meaningful boost for originators,” Davis said.
The macro backdrop continues to support growth.
“There are 24 million millionaires in the U.S., and 75% of them are millionaires because of home equity,” Davis said.
He also pointed to:
- 40% of Americans owning their homes outright
- Consumer debt at all-time highs
“People have real financial needs, and equity is often the lowest-cost option versus credit cards at 24%,” he said.
Usage trends reflect that demand, with more than 50% of home equity loans used for renovation, and over $600 billion in renovation projects expected in 2026.
The opportunity extends beyond owner-occupied borrowers.
“There are over 19 million investment properties,” Davis said, noting that investors are increasingly tapping equity to expand portfolios, renovate assets, or fund new projects.
Retention Risk
For brokers and lenders, the shift toward equity also raises a competitive issue.
“If loan officers don’t offer these products, servicers will, and they’ll lose the borrower,” Davis said. “This is about retention and recapture.”
With refinance activity still constrained, equity products are becoming a more central part of borrower engagement strategies.
“Cash-out refis aren’t the game anymore — equity is,” Davis said.
Housing fundamentals are also playing a role.
“During the financial crisis, we had an oversupply of 8–10 million homes. Today, we have an undersupply — 5 to 10 million depending on the estimate,” Davis said.
“That supply-demand imbalance is keeping home values strong.”
The Takeaway
Deephaven’s latest HELOC enhancements reflect a broader shift already underway across the industry.
As borrowers stay locked into low first-lien rates, the next wave of production is increasingly tied to equity — and the lenders building infrastructure around it are moving first.
