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Home equity loans and home equity lines of credit (HELOCs) allow homeowners to tap into the value of their homes.
A home equity loan is a fixed-rate, lump-sum loan that allows homeowners to borrow up to 85% of their home’s value and pay that amount back in monthly installments. A home equity line of credit s a variable-rate second mortgage that draws on your home’s value as a revolving line of credit.
Both options use your property as collateral for your payments, which means your lender can seize your property if you can’t repay what you borrow.
Related: Best Home Equity Loan Lenders
$100K HELOC Loan Rates
—Ideal for Medium-Sized Projects
| LOAN TERM | APR |
|---|---|
60.00% LTV | 9.15% |
80.00% LTV | 9.32% |
90.00% LTV | 10.11% |
A $100K HELOC is suitable for more extensive renovation projects or other significant financial needs. Compare the rates and terms to find the best fit for your situation.
$250K HELOC Loan Rates
—Access More Funds for Major Investments
| LOAN TERM | APR |
|---|---|
60.00% LTV | 9.15% |
80.00% LTV | 9.32% |
90.00% LTV | 10.14% |
For larger projects or investments, a $250K HELOC provides the necessary funds with various LTV options. Explore these rates to determine the right balance between borrowing capacity and risk.
$500K HELOC Loan Rates
—Maximize Your Borrowing Power
| LOAN TERM | APR |
|---|---|
60.00% LTV | 9.20% |
80.00% LTV | 9.39% |
90.00% LTV | 10.26% |
If you have substantial equity in your home and need significant financing, a $500K HELOC offers a great deal of borrowing power. Evaluate these options to find the optimal rate and term for your goals.
*Data accurate as of June 3, 2024
Pros and Cons of a HELOC
| PROS | CONS |
|---|---|
You can expect an average interest rate that’s lower than other loan types | HELOCs often come with variable interest rates that fluctuate over time, which could make it difficult to manage increasing monthly payments |
If unexpected expenses pop up, HELOCs offer a credit line that you can tap into at any time | Lenders use your property for collateral when you take out a HELOC, which jeopardizes your house if you default |
You may receive a tax deduction from your interest payments if you meet specific IRS guidelines and use the funds to cover home-related expenses | You may be required to pay several fees, including appraisal, application and closing fees |
HELOCs can be an excellent option to consolidate your other debt payments into one monthly payment and boost your credit score | If your home’s value drops while you have a HELOC, you could end up owing more than your home is worth |
5-Year Home Equity Loan Rates (60 Months)
| LOAN TERM | APR |
|---|---|
60.00% LTV, $50K | 8.12% |
80.00% LTV, $50K | 8.37% |
90.00% LTV, $50K | 9.10% |
A 5-year term offers a shorter repayment period with typically higher monthly payments. These products are suitable for borrowers looking for a quicker payoff.
10-Year Home Equity Loan Rates (120 Months)
| LOAN TERM | APR |
|---|---|
60.00% LTV, $150K | 8.29% |
80.00% LTV, $150K | 8.56% |
90.00% LTV, $150K | 9.25% |
With a 10-year term, borrowers can enjoy a balanced monthly payment while still building equity quickly. 10-year home equity loans are ideal for medium-sized projects or financial needs.
15-Year Home Equity Loan Rates (180 Months)
| LOAN TERM | APR |
|---|---|
60.00% LTV, $200K | 8.47% |
80.00% LTV, $200K | 8.75% |
90.00% LTV, $200K | 9.41% |
A 15-year term provides lower monthly payments compared to shorter terms, offering more affordability while still progressing toward your financial goals.
20-Year Home Equity Loan Rates (240 Months)
| LOAN TERM | APR |
|---|---|
60.00% LTV, $250K | 8.71% |
80.00% LTV, $250K | 9.06% |
90.00% LTV, $250K | 9.63% |
Offering longer repayment and lower monthly payments, 20-year home equity loans are suitable for larger investments and long-term financial planning.
30-Year Home Equity Loan Rates (360 Months)
| LOAN TERM | APR |
|---|---|
60.00% LTV, $500K | 9.28% |
80.00% LTV, $500K | 9.89% |
90.00% LTV, $500K | 10.05% |
The 30-year term maximizes affordability with the lowest monthly payments. These options are best for substantial borrowing needs and long-term investments.
*Data accurate as of June 3, 2024
Pros and Cons of a Home Equity Loan
| PROS | CONS |
|---|---|
Home equity loans offer fixed interest rates and monthly payments that stay the same over your loan term | Home equity lenders use your home as collateral for the loan, which could result in foreclosure should you default on your monthly payments |
If you have a big one-off expense or an investment opportunity, home equity loans distribute funds in lump-sum payments, unlike a credit card or a HELOC | Home equity borrowers must typically have a higher-than-average credit score and an excellent debt-to-income ratio to qualify for most loan rates |
Home equity loans are unrestricted, meaning you can use them for almost any expense, including home renovations or auto repairs | Home equity loans come with several costs and fees that can add up and offset the benefits of a lower interest rate |
If you use the loan to buy, build or improve your home, you can potentially deduct your interest payments from your tax return | You could end up with an “underwater” loan, which occurs when you end up owing more than your home is worth |
Why Is Home Equity Important?
The more home equity you have, the higher your net worth rises. Building wealth is vital to having long-term financial health, and home equity is one way to build wealth.
Every time you make a mortgage payment, you increase your home equity, or how much you own of your home. The more equity you have, the more wealth you amass.
What Is A HELOC?
Home equity lines of credit, or HELOCs, are loans that allow you to borrow against your home’s equity—the current market value of your home minus your remaining mortgage balance. When you get a HELOC, you can take the money available in installments as you need it, and pay interest only on what you use.
How Does a Home Equity Loan Work?
Your equity in your home comes from how much you’ve paid on your mortgage. The longer you’ve been paying off your mortgage, the more equity you have. You can tap into that equity through a home equity loan.
A home equity loan is paid out in a lump sum that you can use for home improvements, home repairs, debt consolidation or another major expense. The amount you’re approved for is based on how much equity you have in your home, your credit score and history, and how much you need.
Different home equity lenders offer different repayment terms, but longer repayment terms usually mean lower monthly payments. This might be helpful for you if you’re paying both your original mortgage and a home equity loan at the same time.
Find the Best HELOC Rates of 2024
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