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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 May 17, 2024
Pros and Cons of a HELOC
| Pros | Cons |
|---|---|
Lower interest rates compared to other loan types | You can expect variable interest rates that change over time, which may make it difficult to manage your payments |
If unexpected expenses pop up, HELOCs offer a credit line that you can tap into at any time | Defaulting on a HELOC can place your house at risk of foreclosure since your property serves as collateral, or insurance, for the lender |
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 | HELOCs can come with significant fees that range from at least 2% to 6% of your total loan costs fees |
Borrowers looking to consolidate their debt payments can use a HELOC to pay off debts and improve their credit score | You can end up with an upside-down loan, which means you owe more than your property 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 | 8.55% |
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 | 9.64% |
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 | 9.90% |
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 May 17, 2024
Pros and Cons of a Home Equity Loan
| Pros | Cons |
|---|---|
When you take out a home equity loan, your interest rate won’t increase, even if federal rates go up | Home equity lenders use your property as collateral for your loan, which means they can take it if you default |
Home equity loan funds are offered via one-time, lump-sum payments that are ideal for handling large expenses | Lenders impose strict credit score and debt-to-income ratio requirements that make it difficult to qualify for a home equity loan |
There are no limits on what you can use your home equity loan fund for | 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 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?
Two major ways you build home equity is when the value of your home goes up (appreciation) and the balance of your mortgage goes down. As you make ongoing, regular monthly payments to your mortgage, your home equity will increase and so will your wealth.
Borrowing against your home equity lets you use money for major financial needs, including:
- Home improvements, upgrades or repairs
- Consolidating debt
- Making large payments on high-interest debt
- Educational costs
What Is a HELOC?
A home equity line of credit, often referred to as a HELOC, lets homeowners convert the equity in a residential property into cash through a revolving line of credit that’s secured by your home.
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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