Home equity line of credit (HELOC) rates for November 2022

Written by
Jeff Ostrowski
Edited by
Suzanne De Vita
Reviewed by
Mark Hamrick
As of November 26, 2022

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.

Filter results
Loan type

Here's how it works:

Enter your details

Answer some questions about your home equity needs to help us find the right lenders for you.

Compare top rates

See competitive home equity rates from lenders that match your criteria and compare your offers side by side.

Choose a lender

After selecting your top options, connect with lenders online or by phone. Next, choose a lender, finalize your details and lock your rate in.

Bankrate guide to home equity lines of credit (HELOCs)

Why trust Bankrate?

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.

What are today's current HELOC rates?

LOAN TYPE AVERAGE RATE AVERAGE RATE RANGE
HELOC 7.93% 6.76% – 10.64%
To conduct the National Average survey, Bankrate obtains rate information from the 10 largest banks and thrifts in 10 large U.S. markets. The rates shown above are calculated using a loan or line amount of $30,000, with a FICO score of 700 and a combined loan-to-value ratio of 80 percent.

Best home equity line of credit (HELOC) rates in November 2022

LOAN TYPE LOAN AMOUNT LOAN TERM APR RANGE BEST FOR
Third Federal Savings and Loan $10,000–$200,000 10-year draw, 30-year repay 5.49% - 5.99% Long repayment terms
Bethpage Federal Credit Union Up to $500,000 10-year draw, 20-year repay Starting at 5.74% Fixed-rate options
Bank of America $15,000–$1 million 10-year draw, 20-year repay 7.40% Low fees
Flagstar Bank $10,000–$500,000 10-year draw, 20-year repay 7.24%-21% Good credit
Figure $15,000–$400,000 5–30 years Starting at 5.56% Fast funding
Citizens Starting at $5,000 10-year draw, 15-year repay Starting at 6.00% Low loan amounts
BMO Harris Bank $25,000–$150,000 10-year draw, 20-year repay Starting at 3.99% Different loan options
Lower $15,000–$350,000 10-year draw, unspecified repay Not specified Quick approval
PenFed Credit Union $25,000–$500,000 10-year draw, 20-year repay Starting at 9.50% Flexible membership requirements
PNC $10,000–$1 million Not specified Starting at 3.74% Borrowing options
TD Bank Starting at $25,000 Not specified Starting at 6.24% In-person service
Note: The above APRs are current as of October 2022. The exact APR you might qualify for depends on your credit score and other factors, such as whether you're an existing customer or enroll in auto-payments.

Third Federal Savings and Loan: Best home equity line of credit with a long repayment term

Overview: Third Federal offers home equity loans and HELOCs featuring long repayment terms, potentially low interest rates and few fees.

Why Third Federal Savings and Loan is the best home equity line of credit with a long repayment term: Third Federal's HELOC offers one of the longest repayment terms of its competitors, which make payments more affordable for borrowers.

Perks: If you find a lower interest rate with another lender, you could qualify for an interest-rate match or a $1,000 check from Third Federal. Additionally, Third Federal has no closing costs or minimum draw requirements.

What to watch out for: Third Federal charges a $65 annual fee, which is waived for the first year. Additionally, there is a minimum monthly payment of $100.

LENDER:
Third Federal Savings and Loan
INTEREST RATES:
5.49% - 5.99% APR
QUALIFICATIONS:
Borrow up to 80% of your home's value
AVAILABLE TERM LENGTHS:
10-year draw period with a 30-year repayment period
LINE OF CREDIT AMOUNT:
$10,000 to $200,000
FEES:
A $65 annual fee applies (waived in the first year). Some borrowers may be responsible for taxes and flood insurance.
Read Bankrate's Expert Third Federal Savings and Loan Review

Bethpage Federal Credit Union: Best home equity line of credit with a fixed-rate option

Overview: Bethpage is a credit union that serves over 400,000 members. The credit union offers mortgage loans, refinance loans and HELOCs. Its HELOCs have zero fees.

Why Bethpage Federal Credit Union is the best home equity line of credit with a fixed-rate option: Bethpage offers the unique option to convert some or all of a variable-rate HELOC to a fixed-rate loan without a fee. With this option, you can choose between five-, 10- and 20- year repayment terms.

Perks: Unlike many competitors, Bethpage does not charge closing costs or annual fees, and its HELOCs have incredibly low introductory rates for the first year.

What to watch out for: In order to sign up for a Bethpage HELOC, you must become a member of the credit union by opening a minimum $5 share savings account. Additionally, Bethpage HELOCs are not available to borrowers who live in Texas.

LENDER:
Bethpage Federal Credit Union
INTEREST RATES:
Starting at 5.74% APR
QUALIFICATIONS:
Must be a member of the credit union by opening a savings account with a minimum balance of $5
AVAILABLE TERM LENGTHS:
10-year draw period with a 20-year repayment period
LINE OF CREDIT AMOUNT:
Up to $1,000,000
FEES:
If you close your HELOC within 36 months, you'll need to repay the closing costs you would've paid. Hazard insurance and flood insurance may be required.
Read Bankrate's Expert Bethpage Federal Credit Union Review

Bank of America: Best home equity line of credit for low fees

Overview: Bank of America offers HELOCs in all 50 states and Washington, D.C., and nixes a lot of fees that other banks charge. You can also shave 0.25 percent off your rate when you set up automatic payments from a Bank of America checking or savings account, up to 0.75 percent off for making an initial withdrawal and up to 0.375 percent off for being a Preferred Rewards client.

Why Bank of America is the best home equity line of credit for low fees: There are no application fees, no annual fees and no closing costs on lines of up to $1 million.

Perks: If you qualify for the entire 1.375 percent discount on your interest rate, you’ll save a lot over the life of your loan. Rates vary depending on creditworthiness, loan amount and other factors, APR varies by state. As with some other lenders, you can convert some or all of your balance to a fixed-rate loan.

What to watch out for: The best rate discounts are reserved for Preferred Rewards members and those who make large draws from their HELOCs.

LENDER:
Bank of America
INTEREST RATES:
7.4% APR
QUALIFICATIONS:
Not specified
AVAILABLE TERM LENGTHS:
10-year draw period with a 20-year repayment period
LINE OF CREDIT AMOUNT:
Starting at $15,000 to $1,000,000
FEES:
Early closure fee of $450, plus taxes and fees, apply to accounts closed within 36 months
Read Bankrate's Expert Bank of America Review

Flagstar Bank: Best home equity line of credit for good credit

Overview: Flagstar Bank offers HELOCs that feature flexible withdrawal methods and affordable rates for those who can qualify. If you’re looking for a HELOC that offers attractive terms and you have a solid credit rating, you should check it out.

Why Flagstar Bank is the best home equity line of credit for people with good credit: If you have strong credit, Flagstar may offer you some of the lowest rates in the business.

Perks: Flagstar has flexible loan amounts that range from as little as $10,000 to as much as $500,000.

What to watch out for: There’s an annual fee of $75, though it’s waived in the first year. And while most banks let you convert some or all of your balance to a fixed-rate loan, Flagstar’s APR remains variable for the life of the loan. That means you may pay more in interest. Flagstar's loan offerings also vary by ZIP code; the details here are presented for the 49546 ZIP code.

LENDER:
Flagstar Bank
INTEREST RATES:
7.24%-21% APR
QUALIFICATIONS:
Borrow up to 89.99% of your home's value; not valid in Texas
AVAILABLE TERM LENGTHS:
10-year draw period with a 20-year repayment period
LINE OF CREDIT AMOUNT:
$10,000 to $500,000
FEES:
The annual fee is $75 (waived the first year), and borrowers may have to pay back closing fees if the account is closed within 36 months. Some loans require title insurance, government taxes and fees at closing.
Read Bankrate's Expert Flagstar Bank Review

Figure: Best home equity line of credit for fast funding

Overview: Figure is an online lender that offers HELOCs in 41 states and Washington, D.C. Its rates are as low as 3.24 percent APR, which includes an origination fee of up to 4.99 percent and discounts for enrolling in autopay and joining one of its partner credit unions. Its HELOC works a bit like a home equity loan in the beginning: You get the full loan amount (minus the origination fee) with a fixed rate. As you pay off the line of credit, you can borrow funds again up to the limit. These draws will get a different interest rate.

Why Figure is the best home equity line of credit for fast funding: Figure promises an easy online application process with approval in five minutes and funding in as few as five business days. Figure could be a good option for borrowers who need fast cash.

Perks: There’s a fixed interest rate, which means the payments won’t change over the life of the loan unless you make additional draws.

What to watch out for: While some lenders offer a wide range of loan amounts, Figure caps its loans at $400,000 — though you may qualify for less, depending on your loan-to-value ratio and credit score. That might not be enough for some borrowers. There’s also an origination fee of as much as 4.99 percent.

LENDER:
Figure Lending LLC
INTEREST RATES:
Starting at 5.56% APR
QUALIFICATIONS:
Borrow up to 95% of your home’s value, depending on lien position and credit score. The minimum credit score is 620 in most states and 720 in Oklahoma.
AVAILABLE TERM LENGTHS:
5 to 30 years
LINE OF CREDIT AMOUNT:
$15,000 to $400,000
FEES:
Pay an origination fee of up to 4.99% of your initial draw
Read Bankrate's Expert Figure Review

Citizens: Best home equity line of credit for low amounts

Overview: Established in 1828, Citizens now has 1,000 branches spread across 11 states in the New England, Mid-Atlantic and Midwest regions. If you’re looking to borrow a small amount and you prefer banking in person, Citizens is a solid choice.

Why Citizens is the best home equity line of credit for low loan amounts: Citizens’ lines of credit begin at $5,000 with its GoalBuilder HELOC and $17,500 with its standard HELOC.

Perks: With Citizens, you pay no setup or appraisal fees. Rates are also low, with APRs starting at 3.25 percent.

What to watch out for: For the standard HELOC, there’s a $350 prepayment penalty if you pay off your HELOC and close it within 36 months, along with a $50 annual fee during the draw period (waived in the first year). It also may take up to 45 days to get your funding, which could be a deal breaker for some. Additionally, Citizens' offerings may vary by ZIP code; loan details presented here are based on the 10019 ZIP code, but your available terms and interest rates may vary.

LENDER:
Citizens
INTEREST RATES:
Starting at 6% APR
QUALIFICATIONS:
Not specified
AVAILABLE TERM LENGTHS:
10-year draw period with 15-year repayment period
LINE OF CREDIT AMOUNT:
Minimum $5,000, but lines over $200,000 are available and have the lowest rates
FEES:
There’s a $50 annual fee during the draw period (waived in the first year) and a $350 prepayment fee if you close your HELOC within 36 months
Read Bankrate's Expert Citizens Review

BMO Harris Bank: Best home equity line of credit for different loan options

Overview: BMO Harris Bank has more than 500 branches spread across eight states. However, customers nationwide can bank with BMO online. Its HELOCs start at $25,000, come with flexible repayment terms and have no setup fees.

Why BMO Harris Bank is the best home equity line of credit for different loan options: BMO Harris has a standard variable-rate HELOC, but you can also lock in all or part of your line at a fixed rate for a five- to 20-year term.

Perks: There are no application fees or closing costs, and you get a 0.5 percent discount when you set up autopay with a BMO Harris checking account.

What to watch out for: Borrowers may have to repay setup costs if the line of credit is closed within 36 months. Depending on the state in which you live, you may also have to pay mortgage taxes and an annual fee.

LENDER:
BMO Harris Bank
INTEREST RATES:
Starting at 3.99% APR
QUALIFICATIONS:
Typically, the minimum credit score for borrowers is 650 to 680
AVAILABLE TERM LENGTHS:
10-year draw period with 20-year repayment period
LINE OF CREDIT AMOUNT:
$5,000 to $1,000,000
FEES:
BMO Harris covers the setup costs, but the borrower may have to repay those costs if the line of credit is closed within 36 months. Depending on the state, borrowers may also have to pay mortgage taxes. In some states, there is a $75 annual fee during the draw period.
Read Bankrate's Expert BMO Harris Bank Review

Lower: Best home equity line of credit for quick approval

Overview: Lower, a fintech company that was founded in 2018, analyzes data to recommend the best loan for each borrower's financial situation. Lower offers mortgages, refinance loans, home equity loans and HELOCs.

Why Lower is the best home equity line of credit for quick approval: Lower gets its name from offering "lower" rates and promises a quick approval and closing process. The application process is completely online, and the application is streamlined and full of easy-to-understand language.

Perks: Lower lets you borrow up to 95 percent of your home's value, while most other lenders cap LTV at 80 or 85 percent. Additionally, Lower does not charge an annual fee.

What to watch out for: Lower charges a 1 percent origination fee on all HELOC transactions, so you may want to limit your spending. Lower also has a relatively low line of credit limit at $350,000.

LENDER:
Lower
INTEREST RATES:
Not specified
QUALIFICATIONS:
Borrow up to 95% of your home’s equity
AVAILABLE TERM LENGTHS:
10-year draw period, unspecified repayment period
LINE OF CREDIT AMOUNT:
$15,000 to $350,000
FEES:
There's an origination fee of 1% on each HELOC transaction
Read Bankrate's Expert Lower Review

PenFed Credit Union: Best home equity line of credit with flexible membership requirements

Overview: Pentagon Federal Credit Union, or PenFed, serves 2 million members in all 50 states, Washington, D.C., and military bases in Guam, Puerto Rico and Okinawa. This credit union offers competitive rates on its HELOCs, along with other financial services, including credit cards, checking accounts, savings accounts, mortgages and auto loans.

Why PenFed Credit Union is the best home equity line of credit for flexible membership requirements: While PenFed has a history of serving service members, you may also qualify for membership by being a member of other select organizations.

Perks: PenFed's interest rates start at 3.75 percent, which is low compared to the starting rates of some other lenders. You’ll also get a break on certain fees, as PenFed pays most of the closing costs associated with its HELOCs.

What to watch out for: While this credit union has flexible membership requirements, you still have to join to get a HELOC. This adds a step to the process and could be a deal breaker for some. Additionally, if you close your account within 36 months, you’ll be on the hook for the closing costs PenFed paid on your behalf. There’s also a $99 annual fee (waived if you paid $99 in interest in the previous year), and you may have to pay taxes in certain states and appraisal fees if an appraisal is required.

LENDER:
PenFed Credit Union
INTEREST RATES:
Starting at 9.5% APR
QUALIFICATIONS:
Minimum credit score of 660. Maximum debt-to-income ratio of 50 percent. Borrow up to 90% of your home’s value for owner-occupied properties and 80% for non-owner-occupied properties depending on state, home type and credit score.
AVAILABLE TERM LENGTHS:
10-year draw period with a 20-year repayment period
LINE OF CREDIT AMOUNT:
$25,000 to $500,000
FEES:
$99 annual fee, waived if $99 in interest was paid during the preceding 12-month period; $30 returned loan payment, check or ACH fee; $20 lien processing fee; late fee of 5% of past due amount, with $20 minimum
Read Bankrate's Expert PenFed Credit Union Review

PNC : Best home equity line of credit for flexible borrowing options

Overview: PNC offers HELOCs, mortgage refinancing products and mortgage products. Its products and services vary by location, so you'll need to input your ZIP code on the website to see the rates and terms available to you.

Why PNC is the best home equity line of credit for flexible borrowing options: With PNC, you can switch back and forth between a fixed and variable rate for a portion of your HELOC throughout the draw period.

Perks: PNC's HELOC lets you borrow up to 84.9 percent of your home's value, and you can get a discount on your rate if you set up automatic payments from a PNC checking account.

What to watch out for: PNC's website is not upfront about information like interest rates and term lengths unless you input details about your home, which could make it harder to compare broadly across lenders. Additionally, the fixed-rate option requires a $100 fee each time you lock or unlock a rate.

LENDER:
PNC
INTEREST RATES:
Starting at 3.74% APR
QUALIFICATIONS:
Borrow up to 89.99% of your home's value
AVAILABLE TERM LENGTHS:
Not specified
LINE OF CREDIT AMOUNT:
Not specified
FEES:
Not specified
TERM LENGTHS:
7 to 20 years
FEES:
PNC does not specify any typical fees on its website, but it does charge $100 every time you convert some of your HELOC into a fixed-rate option.
ADDITIONAL REQUIREMENTS:
PNC does not offer details about additional requirements.
Read Bankrate's Expert PNC Review

TD Bank : Best home equity line of credit for in-person service

Overview: TD Bank is a great option if you live along the East Coast and prefer to bank in person. With that said, you can also bank by phone, online or via mobile app.

Why TD Bank is the best home equity line of credit for in-person service: TD Bank customers can visit its more than 1,200 branches even on a few federal holidays and, in some locations, weekends.

Perks: TD Bank typically ranks high in customer satisfaction and offers low rates on its HELOCs (starting at 3.99 percent in some areas). Borrowers may also get a 0.25 percent rate discount for having a TD Bank checking account.

What to watch out for: TD Bank charges a few fees, though they’re mostly avoidable. The $50 annual fee applies to draws over $50,000, and if you pay off and close the account within 24 months, you may have to pay a 2 percent termination fee (max $450). There’s a $99 origination fee, and you may have to pay closing costs on certain accounts.

LENDER:
TD Bank
INTEREST RATES:
Starting at 6.24% APR
QUALIFICATIONS:
Not specified
AVAILABLE TERM LENGTHS:
Not specified
LINE OF CREDIT AMOUNT:
Starting at $25,000
FEES:
There’s a $50 annual fee on loans over $50,000 and a $99 origination fee. The 2% termination fee (max $450) applies if you pay the line of credit off and close it within 24 months. You will also have to pay closing costs on lines over $500,000.
Read Bankrate's Expert TD Bank Review

Methodology

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:

  • Availability: The minimum loan amount, time to approval, days to close, minimum draw requirement, minimum credit score and loan types offered
  • Affordability: The minimum APR, intro APR, discounts for auto-payers and fees
  • Customer experience: Online application availability, online account access, customer support options, auto-payment and app availability

What is a home equity line of credit, or HELOC?

A HELOC is a variable-rate home equity product that works like a credit card — you have access to a credit line that you can draw from and pay back as needed. HELOC rates are tied to a benchmark interest rate. As the prime rate moves up or down, so does your HELOC rate. Payments vary depending on the interest rate and how much money you have used.
 
 

How does a HELOC work?

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.

What is a good HELOC rate?

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.

Who is HELOC best for?

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.

How do I qualify for HELOC?

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.

How do rising mortgage rates affect HELOCs?

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.

Common uses of a HELOC

Some of the most popular ways homeowners use HELOC funds include:

  • Home improvements - Using your home equity to pay for home improvement projects that increase the value of your home can be a smart move.
  • Medical expenses - A HELOC may be a good option if you have large or ongoing medical expenses and want to take advantage of lower interest rates.
  • Large purchases - Because HELOCs have longer repayment periods than many loans, they may be an attractive choice for making large purchases.
  • Tuition or education costs - HELOCs often have lower interest rates than student loans, though some lenders may place restrictions on how you can use the funds.
  • Debt consolidation - A HELOC may be a good choice for consolidating credit card debt. However, be careful not to rack up even more debt during the HELOC's draw period.

Pros and cons of HELOCs

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.

PROS

  • Checkmark

    Typically lower upfront costs than with home equity loans.

  • Checkmark

    Lower interest rates than with credit cards.

  • Checkmark

    Usually low or no closing costs.

  • Checkmark

    Interest charged only on the amount of money you use.

CONS

  • Close X

    Lenders may require minimum draws.

  • Close X

    Interest rates can adjust upward or downward.

  • Close X

    Lenders may charge a variety of fees, including annual fees, application fees, cancellation fees or early closure fees.

  • Close X

    Late or missed payments can damage your credit and put your home at risk.

Alternatives to a HELOC

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:

  • Home equity loan - A home equity loan is a second mortgage with a fixed interest rate that provides a lump sum to use for any purpose. Unlike a HELOC with an interest-only period, you’ll be responsible for both interest and principal payments when the loan closes.
  • Cash-out refinance - If you can qualify for a lower interest rate than what you're currently paying on your mortgage, you may want to refinance your mortgage. If you refinance for an amount that's more than your current mortgage balance, you can pocket the difference in cash.
  • Reverse mortgage - With a reverse mortgage, you receive an advance on your home equity that you don't have to repay until you leave the home. However, these often come with many fees, and variable interest accrues continuously on the money you receive. These are also only available to older homeowners (62 or older for a Home Equity Conversion Mortgage, the most popular reverse mortgage product, or 55 and older for some proprietary reverse mortgages).
  • Personal loan - Personal loans may have higher interest rates than home equity loans, but they don't use your home as collateral. Like home equity loans, they have fixed interest rates and disburse money in a lump sum.

HELOC vs. home equity loan

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

HELOC vs. cash-out refinance

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.

A HELOC may be a better option for you if:

  • You want more flexibility.
  • You already have a good mortgage rate.
  • You plan to use your HELOC only for tax-deductible home improvement projects.

A cash-out refinance may be a better option for you if:

  • You prefer a fixed monthly payment.
  • You want a lower mortgage rate.
  • You want to withdraw more home equity.

How to apply for a HELOC

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:

    1. Check your credit score. The higher your credit score, the better your rates and the more likely you are to be approved. If you have a credit score in the mid-600s or below, work to pay off existing debt and make timely payments on your credit cards to improve your score.
    2. Shop around. To make sure you're getting the best rate and terms possible, research a few lenders and take advantage of any prequalification offers available
    3. Gather your application materials. Many lenders will ask for your Social Security number or other identification, salary, employment information and estimated home value. Now is also a good time to collect details about your home's outstanding mortgage balance. After you apply, lenders should reach out within a few days, although some online lenders offer same-day approval.
    4. Complete the verification process. Once you've accepted a line of credit offer, you'll have to provide verification documents, which may include pay stubs, W-2s or tax returns. You may also have to get an appraisal on your home. At this time, lenders will perform a hard credit check, which will temporarily ding your credit score.
    5. Receive funds. The time between offer acceptance and funds disbursement varies by lender, but some may make HELOC funds available in as little as one week. From there, you can use your funds as needed and begin making payments.

How to find the best HELOC rates

To find the best HELOC rate, it's critical to compare multiple lenders — a rule of thumb is to get quotes from at least three so you can compare rates, fees and terms. You’ll also want to try improving your credit score, clearing out existing debt and making additional mortgage payments to increase your home equity.

FAQs about home equity lines of credit