Which type of loan is specifically based on the value of a home?

A home equity loan is specifically designed to allow homeowners to borrow against the equity they have built up in their property. Equity is the difference between the market value of the home and the amount still owed on the mortgage. This type of loan typically provides a lump sum that is repaid over a fixed term and often has lower interest rates compared to unsecured loans, as the home itself acts as collateral. Borrowers can use these funds for a variety of purposes, such as home renovations, debt consolidation, or education expenses.

The other loan types mentioned do not focus on the value of a home. A personal loan is usually unsecured and based on the borrower’s creditworthiness rather than any specific asset. A business loan supports business-related expenses and is not directly linked to personal property like a home. A student loan is specifically designed to cover educational expenses and is not associated with property value. Thus, the specificity of a home equity loan's reliance on home value makes it the correct choice in this context.