Should you use home equity to pay for a wedding? Here's what experts say

Weddings are meant to be fun, joyous occasions, but the financial aspects of getting married can be stressful. Planning for the big day is also getting more difficult as inflation continues to put pressure on Americans' budgets. For example, the average cost of a wedding in the US was $35,000 in 2023, an increase of $5,000 from the year prior, according to The Knot. And, finding room in the budget to cover this amount isn't easy for many people. 

While about half save up for a wedding in advance, nearly a third say they're optimizing credit cards to pay for a wedding in 2024, according to a survey from Zola. In some cases that means using credit card points to cover costs, but it can also mean other things like opening new credit cards, which can be an expensive way to pay for a wedding. After all, the average credit card interest rate is over 21%, according to the Federal Reserve.

But ne possible way to finance a wedding at a lower interest rate is to use your home equity. While credit card rates average in the double digits, the average home equity loan and home equity line of credit (HELOC) interest rates are between about 8% and 9% currently. But even at that comparatively low rate, does it make sense to borrow against your home's equity to pay for a wedding? 

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Should you use home equity to pay for a wedding? Here's what experts say

Experts generally caution against using your home equity to cover wedding expenses, as you're not only taking on debt but are putting your home up as collateral for the financing.

"In doing so, you would basically be putting your house — the largest asset most people have — on the line, which is not smart," says Michael Micheletti, chief communications officer at Unlock Technologies.

That said, there are times when it could make sense to use your home equity to pay for a wedding — and times when you shouldn't. Here's what you should know.

When it could be worth using home equity to pay for a wedding

If you're determined to borrow money to pay for a wedding, there can be situations where using home equity might make sense above other options, like using multiple credit cards.

For example, "a HELOC offers the advantage of paying from one source vs. taking out different loans or borrowing from family. But be mindful of the new monthly payment, as going into a marriage with additional debt might cause some stressors," says Rose Krieger, senior home loan specialist at Churchill Mortgage.

Also, borrowing from multiple sources — like using several credit cards and taking out a personal loan — could hurt your credit more than if you just opened one new account by borrowing from your home equity, says Krieger.

Borrowing against your home equity to pay for a wedding could also make sense in situations where you're able to quickly pay off the loan without hurting your finances.

"It could potentially work if the borrower has a tremendous amount of equity in their home, and they plan on selling the home for a profit. They may intend to buy another home for a much lower price. If that's the case, the equity in the home could pay for the wedding without a decade of payments to follow," says Don Grant, a CFP Board ambassador.

Similarly, there could be circumstances where you don't lose any money by borrowing if you can earn more on your cash elsewhere.

If the home equity interest rate is lower than the risk-free rate of return — often considered to be the 10-year Treasury rate — and the loan can be paid off in under 12 months, it could make sense, says Nicky Amore, a CFP Board ambassador.

However, this is rare, and Amore generally does not think using home equity to pay for a wedding is in your best interest.

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When it might not be worth using home equity to pay for a wedding

While using your home equity to pay for wedding costs sometimes works out, in many cases, it's unnecessary to put yourself in debt like this.

"This is one of those situations whereby I need to tell my client what they need to hear, not what they may want to hear," says Grant.

While some debt enables you to potentially improve your finances, such as taking out a mortgage for a house that might appreciate in value, one-time events, like weddings, generally don't provide the same benefit.

"When a home is leveraged to raise money for a use that does not grow in value or create future revenue, it places the borrower at risk of potentially losing their home if there were a job loss or other financial emergency. That is not the way a couple should position themselves at the beginning of a lifetime relationship," says Grant.

You might be digging yourself a hole, even if you get lots of monetary wedding gifts to help offset the borrowing costs — especially when accounting for the fees and initial interest costs of taking out a home equity loan or HELOC.

Plus, you could face additional costs due to tapping into your home equity, such as if a market downturn then causes your equity to fall below 20%, which could require you to add private mortgage insurance (PMI), notes Grant.

The bottom line 

Using your home equity to pay for a wedding can be risky and expensive, even if there are interest rate cuts that bring down financing costs in the future. However, there are occasionally situations in which it makes sense or is at least better than alternatives, like racking up wedding expenses on your credit card without paying the card off each month.