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Jeff Ostrowski covers mortgages and the housing market. Before joining Bankrate in 2020, he wrote about real estate and the economy for the Palm Beach Post and the South Florida Business Journal.
Suzanne De Vita is the mortgage editor for Bankrate, focusing on mortgage and real estate topics for homebuyers, homeowners, investors and renters.
Mark Hamrick is Washington Bureau Chief for Bankrate. He is a national award-winning business and financial news journalist.
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money.
A home equity line of credit, or HELOC, is a type of home equity loan that allows you to draw funds as you need them and repay the money at a variable interest rate. Because of this, HELOCs are generally best for people who need funds for ongoing home improvement projects or who need more time to pay down existing debt. HELOCs typically have lower interest rates than home equity loans and personal loans; to get the best rates, you'll have to have a high credit score, a low debt-to-income ratio and a lot of tappable equity in your home.
Bankrate's home equity line of credit (HELOC) rate offers help you compare interest rates, fees, terms and more as you start your search for a loan. The resources below also serve as a starting point for learning about how home equity works and when a HELOC is a good option.
The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where and in what order products appear. This table does not include all companies or all available products. Bankrate does not endorse or recommend any companies.
Answer some questions about your home equity needs to help us find the right lenders for you.
See competitive home equity rates from lenders that match your criteria and compare your offers side by side.
After selecting your top options, connect with lenders online or by phone. Next, choose a lender, finalize your details and lock your rate in.
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At Bankrate, our mission is to empower you to make smarter financial decisions. We’ve been comparing and surveying financial institutions for more than 40 years to help you find the right products for your situation. Our award-winning editorial team follows strict guidelines to ensure our content is not influenced by advertisers. Additionally, our content is thoroughly reported and vigorously edited to ensure accuracy.
When shopping for a HELOC, look for a competitive interest rate, repayment terms that meet your needs and minimal fees. Loan details presented here are current as of the publication date. Check the lenders’ websites for more current information. The top lenders listed below are selected based on factors such as APR, loan amounts, fees, credit requirements and broad availability.
LOAN TYPE | AVERAGE RATE | AVERAGE RATE RANGE |
---|---|---|
HELOC | 7.73% | 6.24% – 9.05% |
LOAN TYPE | LOAN AMOUNT | LOAN TERM | APR RANGE | BEST FOR |
---|---|---|---|---|
$10,000–$200,000 | 10-year draw, 30-year repay | 6.49% | Long repayment terms | |
Up to $500,000 | 10-year draw, 20-year repay | 6.99% | Fixed-rate options | |
$15,000–$1 million | 10-year draw, 20-year repay | Starting at 6.24% | Low fees | |
$10,000–$500,000 | 10-year draw, 20-year repay | Starting at 5.49% | Good credit | |
$15,000–$400,000 | 5–30 years | Not specified | Fast funding | |
Starting at $5,000 | 10-year draw, 15-year repay | Not specified | Low loan amounts | |
$25,000–$150,000 | 10-year draw, 20-year repay | Starting at 6.89% | Different loan options | |
$15,000–$350,000 | 10-year draw, unspecified repay | Not specified | Quick approval | |
$25,000–$500,000 | 10-year draw, 20-year repay | Starting at 8.00% | Flexible membership requirements | |
$10,000–$1 million | Not specified | Not specified | Borrowing options | |
Starting at $25,000 | Not specified | 7.34% | In-person service |
Bankrate Rating = 4.4/5
The Bankrate Score is based on availability, including minimum loan amounts and loan types; affordability, including introductory/minimum APRs and discounts; and customer experience, including auto-payment and online accessibility.
Bankrate Rating = 4.2/5
The Bankrate Score is based on availability, including minimum loan amounts and loan types; affordability, including introductory/minimum APRs and discounts; and customer experience, including auto-payment and online accessibility.
Bankrate Rating = 4.2/5
The Bankrate Score is based on availability, including minimum loan amounts and loan types; affordability, including introductory/minimum APRs and discounts; and customer experience, including auto-payment and online accessibility.
Bankrate Rating = 4.0/5
The Bankrate Score is based on availability, including minimum loan amounts and loan types; affordability, including introductory/minimum APRs and discounts; and customer experience, including auto-payment and online accessibility.
Bankrate Rating = 4.7/5
The Bankrate Score is based on availability, including minimum loan amounts and loan types; affordability, including introductory/minimum APRs and discounts; and customer experience, including auto-payment and online accessibility.
Bankrate Rating = 4.6/5
The Bankrate Score is based on availability, including minimum loan amounts and loan types; affordability, including introductory/minimum APRs and discounts; and customer experience, including auto-payment and online accessibility.
Bankrate Rating = 3.9/5
The Bankrate Score is based on availability, including minimum loan amounts and loan types; affordability, including introductory/minimum APRs and discounts; and customer experience, including auto-payment and online accessibility.
Bankrate Rating = 3.7/5
The Bankrate Score is based on availability, including minimum loan amounts and loan types; affordability, including introductory/minimum APRs and discounts; and customer experience, including auto-payment and online accessibility.
Bankrate Rating = 3.9/5
The Bankrate Score is based on availability, including minimum loan amounts and loan types; affordability, including introductory/minimum APRs and discounts; and customer experience, including auto-payment and online accessibility.
Bankrate Rating = 4.0/5
The Bankrate Score is based on availability, including minimum loan amounts and loan types; affordability, including introductory/minimum APRs and discounts; and customer experience, including auto-payment and online accessibility.
Bankrate Rating = 3.9/5
The Bankrate Score is based on availability, including minimum loan amounts and loan types; affordability, including introductory/minimum APRs and discounts; and customer experience, including auto-payment and online accessibility.
To select the top lenders that offer home equity lines of credit (HELOCs), Bankrate considered 15 factors that help consumers decide whether a lender is a good fit for them, such as minimum APR and minimum draw requirements. We sought lenders with low fees and a range of loan amounts for borrowers with varying budgets and credit profiles. We also looked for conveniences like online applications and fast funding.
Of the 34 lenders reviewed, 11 made Bankrate's list of best HELOCs. Each lender has a Bankrate rating, which consists of three categories. These categories include:
With a HELOC, you’re given a line of credit that’s available for a set time frame (known as the draw period), usually up to 10 years. While most HELOCs have an interest-only draw period, you can make both interest and principal payments to pay off the line of credit faster.
When the line of credit’s draw period expires, you enter the repayment period, which can last up to 20 years. You’ll pay back the outstanding balance that you borrowed, as well as any interest owed. A lender may allow you to renew the credit line.
Home equity line of credit rates are determined by your financial situation, your credit score and broader economic factors outside of your control. Generally speaking, any rate below the average would be considered a good HELOC rate.
Because you have the ability to draw only what you need from a HELOC over 10 to 20 years, it’s best for people who need access to funds over a number of years — for a series of home improvement projects, for example — and who are comfortable using their homes as collateral.
In addition to estimating your home equity, lenders look at your credit history, credit score, income and other debts. Most lenders require a combined loan-to-value ratio (CLTV) of 85 percent or less, a credit score of 620 or higher and a debt-to-income (DTI) ratio below 43 percent to approve you for a home equity line of credit.
The Federal Reserve has implemented historic rate hikes in 2022 to combat inflation, and it’s likely these increases will continue for the time being. This action from the Fed has driven HELOC rates higher.
Some of the most popular ways homeowners use HELOC funds include:
HELOCs offer a combination of relatively low interest rates and the flexibility to borrow what you need when you need it. If you need money over a staggered period, a line of credit is ideal. However, there are always risks when you take out a loan, especially one that's secured by your home. Here are some of the key considerations for getting a HELOC.
Typically lower upfront costs than with home equity loans.
Lower interest rates than with credit cards.
Usually low or no closing costs.
Interest charged only on the amount of money you use.
Lenders may require minimum draws.
Interest rates can adjust upward or downward.
Lenders may charge a variety of fees, including annual fees, application fees, cancellation fees or early closure fees.
Late or missed payments can damage your credit and put your home at risk.
A HELOC is not the right choice for every borrower. Depending on what you need the money for, one of these options may be a better fit:
While HELOCs and home equity loans are similar in some ways, they have a few distinct differences. These are some of the key factors you should consider when deciding between a HELOC and a home equity loan.
HELOCS | HOME EQUITY LOANS | |
---|---|---|
Interest Rates | Variable | Fixed |
APRs | Slightly lower | Slightly higher |
Funds disbursement | Line of credit | Lump sum |
Repayment terms | First 5-10 years: Interest-only payments Last 10-20 years: interest and principal | 10-30 years of fixed payments |
Best for | Ongoing home improvement projects, college tuition payments, medical expenses | Debt consolidation, large home improvement projects, major purchases |
A cash-out refinance replaces your current home mortgage with a larger home loan. The difference between the original mortgage and the new loan is disbursed to you in a lump sum. The main difference between a cash-out refinance and a HELOC is that a cash-out refinance requires you to replace your current mortgage, while a HELOC adds a loan to your current mortgage.
With most HELOC lenders, you can generally get the application process started in just a few minutes online. You’ll simply enter some personal and financial information, such as your name, address, salary, desired loan amount and estimated credit score.
To apply for a HELOC, start with these steps:
A HELOC can be a good idea if used for home improvement projects that increase the value of your home. Because a HELOC lets you take out what you need when you need it, it’s best for ongoing projects or expenses.
A HELOC is not a good idea if you don't have a steady income or a financial plan to pay off the loan. Since you use your home as collateral, if you fail to make the payments in full and on time, you risk losing your home.
Like credit cards, HELOCs typically have variable interest rates, meaning the rate you initially receive may rise or fall during your draw and repayment periods. However, some lenders have begun offering options to convert all or part of your variable-rate HELOC into a fixed-rate HELOC, sometimes for an additional fee.
Interest paid on a HELOC is tax deductible as long as it’s used to “buy, build or substantially improve the taxpayer’s home that secures the loan,” according to the IRS. Interest is capped at $750,000 on home loans (combined mortgage and HELOC or home equity loan). So if you had a $600,000 mortgage and a $300,000 HELOC for home improvements on a house worth $1.2 million, you could only deduct the interest on the first $750,000 of the $900,000 you borrowed.
If you are using a HELOC for any purpose other than home improvement (such as starting a business or consolidating high-interest debt), you cannot deduct interest under the tax law.
Choosing between a HELOC and a home equity loan comes down to your financial situation, needs and priorities.
A HELOC usually has a longer repayment period and allows you to take only the money you need, when you need it, so it's best for people who have ongoing expenses or those who prefer to pay back debt at their own pace.
A home equity loan, on the other hand, offers more predictability in terms of monthly payments, since you'll receive a large sum of money upfront and pay it back in monthly installments with a fixed interest rate. Home equity loans are usually best for people who need a lump sum right away and want a predictable monthly payment.
Due to the fact that HELOCs are revolving lines of credit, they can impact, and even hurt, your credit. When you apply, typically the lender will run a hard inquiry to assess your creditworthiness, and that can have a small impact on your credit score. While a hard inquiry may cause your credit score to drop a few points, you should be able to recover those points if you make timely payments on your HELOC balance.
That said, a HELOC will more significantly hurt your credit score if you fail to make on-time payments or if you miss payments altogether. You also run the risk of losing your home, since a HELOC uses it as collateral.
HELOC interest rates tend to be lower than interest rates for home equity loans and personal loans. However, HELOC rates also tend to be variable, meaning that rates could increase depending on decisions from the Federal Reserve. As rates continue to rise, a HELOC with a variable interest rate might be a riskier proposition for some.
Depending on your lender, you can pay off a HELOC early without being penalized. If you’d like to prepay, try to do it within the interest-only period so you avoid paying more during the repayment time frame. However, some lenders do charge prepayment penalties that could cost up to a few hundred dollars.