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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 | 9.14% |
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 10, 2024
Pros and Cons of a HELOC
| PROS | CONS |
|---|---|
Lower interest rates compared to other loan types | HELOCs often come with variable interest rates that fluctuate over time, which could make it difficult to manage increasing monthly payments |
You only owe interest on your balance and not the full credit line amount | Your home serves as collateral, putting your home at risk of foreclosure if you default |
You may be able to deduct interest payments from your taxes, depending on how you use your HELOC | You may be required to pay several fees, including appraisal, application and closing fees |
If you use a HELOC to repay other debt, you can reduce your credit utilization and improve 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 | 8.11% |
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 | 8.48% |
80.00% LTV, $200K | 8.76% |
90.00% LTV, $200K | 9.42% |
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 | 9.64% |
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 10, 2024
Pros and Cons of a Home Equity Loan
| PROS | CONS |
|---|---|
Your interest rate will remain static over the life of your loan, giving you a consistent monthly payment amount | Home equity lenders use your home as collateral for the loan, which could result in foreclosure should you default on your monthly payments |
Home equity loan funds are offered via one-time, lump-sum payments that are ideal for handling large expenses | Many lenders have strict qualification requirements such as high credit score minimums and a low debt-to-income ratio |
You can use home equity loan funds for almost any reason you see fit | Home equity loans come with several costs and fees that can add up and offset the benefits of a lower interest rate |
If your home equity loan meets IRS guidelines such as buying, building or improving a home, you can deduct your interest payments from your taxes | You can have negative equity in your home if your property loses value and you end up with loan debt that exceeds its value |
What Is Home Equity?
Your home equity is the appraised value of your home minus your remaining mortgage balance, usually expressed as a percentage. You’ll continue to build your home equity as long as you make on-time monthly payments and your home doesn’t vastly depreciate over time. Once you’ve paid your loan in full, you own all the equity in your home.
Why Is Home Equity Important?
Home equity is important because it signifies how much wealth you have based on how much of your home you own. The more equity you have, the more wealth you’ve accumulated.
If you ever need to utilize your home equity, you can tap into it with a home equity loan or home equity line of credit. You might also want to explore a cash-out refinance as an option to use your home’s equity.
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.
Find the Best HELOC Rates of 2024
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