Home equity loans are not income. For schools that count home equity a loan will reduce the equity in your home, and reduce your home based assets.
If you do not spend the proceeds of the loan and let them sit in your bank account they will count as an asset on the day you complete your FAFSA. That is why financial planners recommend getting a home equity line of credit instead of a loan if you are not going to be using the money all at once as soon as you get it.