Bankrate's guide to home equity lines of credit

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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 publish date. Check the lenders’ websites for more current information. The top lenders listed below are selected based on factors such as APY, loan amounts, fees, credit requirements and broad availability.

Current HELOC rates

The best HELOC lenders offer lines of credit with competitive interest rates, low fees and an easy online application process. Current HELOC rates range between 2.87% and 21%, depending on the borrower’s creditworthiness and other factors.

As of Feb 22, 2020, the average HELOC rate is 6.10%.

Best HELOC lenders of 2020

If you’ve built home equity and need to fund an upcoming expense, a home equity line of credit can be a good way to access money using your home as collateral. Homeowners can use these funds for a range of expenses, including home improvement projects and debt consolidation.

The best HELOC lenders offer lines of credit with competitive interest rates, low fees and an easy online application process. We analyzed HELOC offers from a wide range of banks, credit unions and online lenders to come up with this list of top lenders in this space:

  • Best introductory APR: Fifth Third Bank - Current APR Range: 3.49 - 11.70%
  • Best for customer discounts: Chase Bank - Current APR range: 5.0% - 7.64%
  • Best for low fees: Bank of America - Current APR range: 2.87% - 10.48%
  • Best for good credit: Flagstar Bank - Current APR range: 3.49% - 21.0%
  • Best for fast funding: Figure - Current APR range: 4.99% - 13.74%
  • Best for low loan amounts: Citizens Bank - Current APR Range: 4.25% - 21.0%
  • Best for loan options: BMO Harris Bank - Current APR Range: As low as 4.24%
  • Best overall for service members: Navy Federal Credit Union - Current APR range: 5.0% - 18.0%
  • Best introductory APR for service members: PenFed Credit Union - Current APR range: 3.49% - 18.0%
  • Best for flexible loan amounts: Citibank - Current APR range: 3.24% - 18.0%
  • Best for in-person service: TD Bank - Current APR Range: Current APR range: 3.74% - 18.0%

Best introductory APR: Fifth Third Bank

Overview: Fifth Third Bank offers checking and savings accounts, personal loans, home loans and more. The bank’s HELOC product, the Fifth Third Equity Flexline, has low fees and a low introductory APR. While other banks may offer a lower APR, we think this one may be more accessible to borrowers.

Perks: You may qualify for an introductory APR of 3.49 percent for 12 months on lines of credit of at least $25,000 and six months on lines below that threshold. You can also earn Real Life Reward points when you use your loan funds for purchases using a credit card tied to your line of credit and get a 0.25 percent discount for autopay with a Fifth Third deposit account.

What to watch out for: The variable APRs range from 4.9 percent to 11.95 percent after the introductory offer ends, depending on your creditworthiness. Also, Fifth Third offers HELOCs in only 10 states.

Lender Fifth Third Bank
Interest Rates Qualified borrowers may pay 3.49% APR for 12 months on lines of credit of at least $25,000 and six months on lines less than that, followed by a variable APR of 4.90% to 11.95% (max 25%).
Qualifications Borrow up to 85 percent of your home’s value in a first and second mortgage; regional availability
Available Term Lengths 10-year draw period with a 20-year repayment period
Line of Credit Amount $10,000 to $500,000
Fees There are no closing costs, but a $65 annual fee applies (waived in the first year). Additional fees can apply to condominiums and investment properties.

Best for customer discounts: Chase Bank

Overview: Chase is a national bank with branches and ATMs in 47 states and D.C. For its HELOCs, Chase customers may qualify for a rate discount up to 0.62 percent, and the lender waives certain fees for its customers. Other banks also offer relationship discounts, but Chase’s are more easily attainable.

Perks: You can get 0.25 percent off your interest rate just for owning a qualified Chase account; another 0.12 percent off when you set up automatic payments from a Chase checking account; and an extra 0.25 percent discount when you’re planning a $30,000 home improvement project or you withdraw $30,000 from your home equity line at closing. Plus, Chase pays for closing costs in most cases, and you can convert some or all of your balance to a fixed-rate loan during the life of the account.

What to watch out for: There’s a $50 origination fee and $50 annual fee, though these are waived for qualified existing Chase home equity customers. Chase also has stricter credit requirements than some; its minimum credit score is 680. And although Chase has hundreds of locations across the country, HELOCs aren't available in Alaska, Hawaii and South Carolina.

Lender Chase Bank
Interest Rates 5% to 7.64% (max 21%)
Qualifications Not specified
Available Term Lengths 10-year draw period with a 20-year repayment period
Line of Credit Amount $50,000 and $500,000
Fees There’s a $50 origination fee (waived for existing customers) and a $50 annual fee after the first year. Some borrowers may have to pay property insurance, flood insurance and a mortgage recording tax.

Best for low fees: Bank of America

Overview: Bank of America offers HELOCs in all 50 states and 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 1.5 percent off for withdrawing up to $150,000; and up to 0.375 percent for Preferred Rewards clients.

Perks: If you qualify for the entire 2.125 percent discount on your interest rate, you’ll save a lot over the life of your loan. There are no application fees, no closing costs and no annual fees for qualified accounts. Rates vary depending on creditworthiness, loan amount and other factors, but they may go as low as 2.87 percent, Bank of America said. Like 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. Additionally, there’s a high bar to qualify for the application fee discount.

Lender Bank of America
Interest Rates 2.87% to 10.48% (inclusive of all potential rate adjustments and discounts)
Qualifications Can borrow up to 85% of your home’s value
Available Term Lengths 10-year draw period with a 20-year repayment
Line of Credit Amount $25,000 to $1 million
Fees There are no application fees, no closing costs and no annual fees for qualified accounts.

Best for good credit: Flagstar Bank

Overview: Flagstar Bank offers HELOCs that are geared to consumers with credit scores around 660 and above. These lines of credit 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 them out.

Perks: There’s a low introductory APR, at 3.49 percent, and flexible loan amounts that range from as little as $10,000 up to $1 million. If you have strong credit, you could qualify for the best rates.

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. Borrowers may also have to pay back closing fees if the account is closed within 36 months, and some loans require title insurance, government taxes and other fees.

Lender Flagstar Bank
Interest Rates 3.49% APR for six billing cycles followed by variable APR of 4.99 5.49% to 21% APR
Qualifications Borrow up to 80% of your home’s value; not valid in Texas
Available Term Lengths 10-year draw period with a 20-year repayment
Line of Credit Amount $10,000 to $1 million
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.

Best for fast funding: Figure

Overview: Figure is an online lender that currently offers HELOCs in 39 states with rates as low as 4.99 percent. They promise an easy online application process and fast funding, which is why they made our list. 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.

Perks: This could be a good option for borrowers who need fast cash. You could get approved online in five minutes and access your funds in as little as five days. There’s also a fixed interest rate, which means this cost won’t change over the life of the loan. Additionally, the minimum credit score of 600 is low compared to some others on this list.

What to watch out for: While some lenders offer a wide range of loan amounts, Figure caps its loans at $15,000 to $150,000. That could be a good option if you don’t need to borrow much, but it might not be enough for some borrowers. There’s also an origination fee of as much as 4.99 percent.

Lender Figure
Interest Rates Average APRs range from 4.99% to 13.74%
Qualifications Borrow up to 95% of your home’s value
Available Term Lengths Loans terms offered in 5-, 10-, 15- and 30-year increments
Line of Credit Amount $15,000–$150,000
Fees Pay an origination fee of up to 4.99% of your initial draw

Best for low loan amounts: Citizens Bank

Overview: Established in 1828, Citizens Bank now has 1,100 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 Bank is a solid choice. Lines of credit typically range from $17,500 to $100,000, and there are ways to save on fees and your monthly rate

Perks: You can borrow as little as $17,500 and pay no setup or appraisal fees. Plus, there’s a discount of 0.25 percent if you set up automatic monthly payments.

What to watch out for: There’s a $350 prepayment penalty if you pay off your HELOC before 36 months, along with a $50 annual fee (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.

Lender Citizens Bank
Interest Rates Variable rate of 4.25% to 21%
Qualifications Borrow up to 80% of your home’s value in a first and second mortgage
Available Term Lengths 10-year draw period with 15-year repayment period
Line of Credit Amount Depends on home equity and other factors, but lines over $100,000 are available and have the lowest rates.
Fees There’s a $50 annual fee (waived in the first year) and a $350 prepayment fee if you close your HELOC within 36 months.

Best for loan options: BMO Harris Bank

Overview: Founded in 1847 and chartered under its current name in 2011, BMO Harris Bank has more than 500 branches spread across eight states. However, customers nationwide can bank with BMO online. Its HELOCs start at $10,000, come with flexible repayment terms and have no setup fees.

Perks: Borrowers can borrow from their line of credit for 10 years and then choose from four repayment periods, during which they can lock a fixed interest rate. Loan amounts start at $10,000 and there are no application fees, no closing costs and a 0.25 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. And depending on the state in which you live, you may also have to pay mortgage taxes.

Lender BMO Harris Bank
Interest Rates Variable rates start as low as 4.6% but vary based on state, loan amount, creditworthiness and LTV
Qualifications There’s no set LTV, but it decreases for each loan as the loan amount increases. The minimum credit score for borrowers is 650.
Available Term Lengths 10-year draw period; repayment period from 5 to 20 years
Line of Credit Amount $10,000 and up
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.

Overview: Established in 1933 and now with nearly 9 million members, Navy Federal Credit Union is a popular credit union for service members, veterans and their families. It has a presence on four continents, earns top ratings for customer service and offers solid pricing on its financial products, including checking accounts, mortgages, auto loans and credit cards.

Perks: You may borrow up to 95 percent of your home's equity with an APR starting at 5 percent, with loans ranging from $10,000 to $500,000. There are no application, origination, annual or inactivity fees. If you set up recurring payments from a Navy Federal checking account, you can qualify for a 0.25 percent rate discount. Plus, Navy Federal will cover most of your closing costs.

What to watch out for: To apply for a HELOC, you must join the credit union, which limits membership to service members, veterans and their families. You may be responsible for certain fees and taxes, though Navy Federal doesn’t specify which ones. And if you pay off your loan within three years of closing, you'll have to reimburse Navy Federal for any closing costs they paid.

Lender Navy Federal Credit Union
Interest Rates 5.0% to 18.0%
Qualifications Borrow up to 95% of your home’s value
Available Term Lengths 20-year draw period, followed by 20-year repayment period
Line of Credit Amount $10,000 to $500,000
Fees There are no application, origination, annual or inactivity fees. If you close the account within 36 months, you will have to repay closing costs. You'll need to pay certain government fees and recording charges, credit report fees, taxes, and when required, appraisal fees, title insurance and any fees associated with condominium properties

Best introductory APR for service members: PenFed Credit Union

Overview: Pentagon Federal Credit Union, or PenFed, serves more than 1.75 million members in all 50 states, the District of Columbia, and military bases in Guam, Puerto Rico and Okinawa. While PenFed has a history of serving service members, you may also qualify for membership through other select organizations. This credit union offers competitive rates on its HELOCs along with other financial services, including credit cards, checking and savings accounts, and mortgage and auto loans.

Perks: If you apply for a HELOC before March 31, 2020, and draw from the account at closing, you may qualify for a 3.49 percent fixed APR until March 31, 2021. Otherwise, interest rates start at 5 percent and range to 18 percent. It’s a low rate cap, compared to some of the other institutions on this list. 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 apply for 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 more than $99 in interest in the previous year), and you also may have to pay taxes in certain states and appraisal fees if an appraisal is required.

Lender PenFed Credit Union
Interest Rates Rates start at 5% and range to 18%. If you apply before March 31, 2020, and take an advance at closing, you may qualify for a 3.49% fixed APR until March 31, 2021.
Qualifications Borrow up to 90% of your home’s value
Available Term Lengths 10-year draw period, followed by 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.

Best for flexible loan amounts: Citibank

Overview: Citibank is one of the largest financial institutions in the world and offers HELOCs in every state in the U.S. except Alaska. Its loan amounts are some of the most flexible we’ve seen, starting at $10,000 and going as high as $1 million. With a presence in nearly every state, just about any borrower can find a loan amount they need. The HELOCs also come with little to no fees.

Perks: You can borrow as little as $10,000 and as much as $1 million, giving you flexible options. If you apply between January 7, 2020, and February 28, 2020, then you may qualify for a rate as low as 3.24 percent for the first 12 months. After that, the variable APR resets to at least 5.59 percent. There are no application fees, and Citi pays for most third-party closing costs. Customers who set up autopay may get a rate discount, although Citi doesn’t specify how much.

What to watch out for: While you can start a HELOC application online, you may need to visit a branch at closing.

Lender Citibank
Interest Rates Interest rates start between 5.59% and 8.49% (max 18%). For a limited time, you may qualify for a 3.24% interest rate for the first 12 months.
Qualifications Can borrow up to 80% of the home’s value
Available Term Lengths There’s no specified draw period, but these HELOCs come with a 20-year repayment period.
Line of Credit Amount $10,000 to $1 million
Fees There’s a $50 annual fee during the draw period for most customers, and you can choose to either pay closing costs or receive a rate discount. If you close the account within 36 months, you may have to repay closing costs that were paid on your behalf. Borrowers may also have to pay for property insurance and any fees to release an existing mortgage.

Best for flexible loan amounts: TD Bank

Overview: TD Bank customers can visit its nearly 1,300 branches, spread along the East Coast, seven days a week and even during a few federal holidays. Its long hours and weekend policy is one reason this bank made our list. It’s a great option if you prefer to bank in person and have a question on a Sunday morning, for example. Of course, you can also bank by phone, online or via mobile app.

Perks: Aside from its ultra-flexible hours, TD Bank also excels in other ways, too. It typically ranks high in customer satisfaction and offers low rates on its HELOCs (starting at 3.74 percent). Borrowers may also get a 0.25 percent rate discount by setting up payments from a TD Bank checking account.

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

Lender TD Bank
Interest Rates 3.74% to 18.0%
Qualifications Not specified
Available Term Lengths Not specified
Line of Credit Amount $25,000+
Fees There’s a $50 annual fee on loans over $50,000 and a $99 origination fee. The 2 percent prepayment penalty (max $450) applies if you pay off the loan within 24 months.

Recap of best HELOCs of 2020

Lender
Best lender for
Max LTV
Current HELOC rates
National/Regional
Fifth Third Bank
Best introductory APR
85%
3.49% - 11.95%
Regional
Chase Bank
Best customer discounts
Unspecified
5.0% - 7.64%
National
Bank of America
Best for low fees
85%
2.87% - 5.16%
National
Flagstar Bank
Best for good credit
80%
3.49% - 21.0%
National (excludes Texas)
Figure
Best for fast funding
95%
4.99% - 13.74%
National
Citizens Bank
Best for low loan amounts
80%
4.25% - 21.0%
Regional
BMO Harris Bank
Best for loan options
Varies
As low as 4.6%
National
Navy Federal Credit Union
Best overakk fir service members
95%
5.0% - 18.0%
National
PenFed Credit Union
Best for introductory APR for service members
90%
3.49% - 18.0%
National
Citibank
Best for flexible loan amounts
80%
3.24% - 18.0%
National
TD Bank
Best for in-person service
Not specified
3.74% - 18.0%
Regional

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

A HELOC is a variable-rate home equity loan that works something like a credit card. It’s different from a home equity loan.

With a home equity loan, you get a lump sum all at once. With a HELOC, you’re given a line of credit that’s available for a set time frame, usually up to 10 years. This is called the draw period — during this time, you can withdraw money as you need it.

You can typically choose between a HELOC with an interest-only draw period and one that allows you to pay both interest and principal, helping you pay the line of credit off 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.

HELOC rates are variable and 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. However, some lenders will allow you to convert an adjustable rate into a fixed rate.

Reasons to use a HELOC

HELOCs are often used for home improvement projects like kitchen remodels or additions. Some homeowners use a HELOC for debt consolidation, paying off high-interest credit card bills. Tapping the equity on your house to pay off debt does come with the risk of potentially losing your home, if you find yourself unable to make the payments. Homeowners use HELOCs to fund all sorts of needs. Popular ways homeowners use HELOC funds include:

  • Medical expenses.
  • Large purchases.
  • Tuition or education costs.

What are the pros and cons of HELOCs?

HELOCs offer a combination of relatively low interest rates and a lot of flexibility.

If you need money over a staggered period — for example, at the beginning of each semester for the next four years to pay for a child’s college tuition or for a remodeling project that will take three years to finish — a line of credit is ideal. It gives you the flexibility to borrow only the amount you need, when you need it.

And if you borrow relatively small amounts and pay back the principal quickly, a line of credit can cost less than a home equity loan.

However, there are always risks when you take out a loan, especially one that is secured on your home. Here’s a table with some of the key considerations of getting a HELOC.

Pros of HELOCs

  • Typically lower upfront costs than home equity loans
  • Interest rates generally lower than credit cards
  • Usually low or no closing costs
  • Interest charged only on the amount of money you use

Cons of HELOCs

  • Lenders may require minimum drawdowns
  • Interest rates can adjust upward or downward
  • Lenders may charge a variety of fees, including annual fees, application fees, cancellation or early closure fees
  • Late or missed payments can damage your credit

Alternatives to a HELOC

There are other options for using the value of your home equity besides a HELOC. These include home equity loans and cash-out refinancing. You could also turn to personal loans or decide to delay spending until you can save up the cash. Consider all options carefully before making your decision.

How to apply for a HELOC

With most HELOC lenders, you can generally get the application process started in just a few minutes on most lenders’ websites. You’ll simply enter some personal and financial information such as your name, address, salary, desired amount and estimated credit score.

During the approval process, you’ll be asked to provide supporting documentation and may need to schedule an appraisal of your home.

HELOC FAQs

What is a HELOC?

HELOC stands for home equity line of credit. It is a loan based on the equity of the borrower’s home. Similar to how a credit card works, it allows you to take out money and pay it back down at your own pace up to a certain amount during the draw period.

Where can I get a HELOC?

A variety of banks and lenders offer HELOCs. Our storefront can help you target the best opportunities and rates in your area. It’s always a good idea to shop around with a few lenders to compare rates, fees and loan terms.

Why should I take out a HELOC?

A HELOC can be a good idea for a number of reasons. Maybe you need to fund a home improvement project or finance your education. It is also flexible, especially if you don’t need all the money upfront. However, a HELOC is not a good idea when you aren’t in a position to pay it back or deal with the interest.

How do you calculate your home equity?

To get a HELOC, you must have a substantial amount of equity in your home. Equity is the market value of your home less the amounts you owe on your mortgage or mortgages.

Lenders calculate the size of a HELOC they’ll approve based your loan-to-value ratio, along with other factors, like credit history. Use the Bankrate HELOC calculator to estimate the amount of money you might qualify to borrow.

What are the minimum requirements?

In addition to estimating your home equity, lenders look at credit history, credit score, income and other debts. Most lenders require a total loan-to-value ratio of 85 percent or less, a credit score of 620 or higher and an adequate debt-to-income ratio to approve you for a home equity line of credit.

What is a HELOC draw period expiration?

The draw period expiration of a HELOC refers to a time when you can no longer draw any remaining loan amounts. This draw period expiration will vary based on the lender and the payment period you have signed on for. Some can last as long as 20 years. At the end of the draw period, the facility converts to a fixed repayment schedule, like a mortgage, where you make equal monthly payments.

Is the interest paid on a HELOC tax-deductible?

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 $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 new tax law.

Home equity lenders reviewed by Bankrate

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Home equity tips

A home equity line of credit, or HELOC, has an adjustable rate of interest attached to paying it off, which means that your payments can fluctuate based on the federal funds rate. Think about a home loan if the idea of an adjustable rate unnerves you.

Know your loan-to-value, or LTV, ratio. This is how much you owe versus how much the home is worth. Many people are in trouble now because their homes dropped in value. You don't want to be stuck owing more than your house is worth.

Figure out what the loan is for and how long you'll need the money to help decide which kind of loan you need. Home equity loans are better for single lump sum expenses while home equity lines of credit, or HELOCs, are best for prolonged expenses, like college tuition.