With the current mortgage and housing crisis there are many people who’ve seen all the equity in their homes disappear. If you’re in this boat, but are looking for a way to get a loan to make improvements you may still have an option once the smoke clears. Once credit eases up again a 125% home equity loan could be the answer to your home improvement loan problem.

125% home equity loans are second mortgages on your home and as you can probably tell they are meant to access up 125% of a homes’ value. So, even if you have little to no equity in your home you can get a loan to do home improvement projects. With a home valued at $200,000 even if you have no equity at all you could get a $50,000 loan.

If you’re considering this type of loan you should know that the main criteria for getting approved, now even more than ever, is a high credit score. Because it is an unsecured loan lenders are only interested in borrowers who are very well qualified with very little risk of default.

You can easily find specialized lenders online who deal primarily in 125 home equity loans and other types of unsecured loans. Each one has their own rules to determine qualification. While your credit score is important to all of them, some will also look at your income, your current debt levels and how long you’ve owned your home.

In most cases a home appraisal won’t be necessary when applying for a 125% home equity loan. Typically the lenders will use the current appraisal or if you’ve only been in the home a short time they will use the sale price of the home to determine how large a loan they can offer you. It’s possible they will also look at what other similar homes in your neighborhood have sold for recently.

While you may have to wait for the current credit crisis to settle down a bit, don’t give up on getting the money you need for home improvement. A 125% home equity loan could be just what you need if you’re looking to tap the value of your home. Take the next few months to improve your credit score and you’ll be in a much stronger position to get approved once you do go for that loan.