Is a HELOC a good idea?

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.

Are HELOC rates fixed?

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.

Is 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 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. A good way to do this is by taking advantage of prequalification forms, which let you see your potential rates and eligibility with a lender without impacting your credit score.

Which is better: A HELOC or a home equity loan?

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.

Will a HELOC hurt my credit score?

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. Minimum requirements generally include a credit score of 620 or higher, a maximum loan-to-value ratio of 80 percent or 85 percent and a documented source of income.

Are HELOC interest rates higher than home equity or personal loans?

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.

Can you pay off a HELOC early?

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.

Current home equity line of credit (HELOC) rates for May 2026

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Updated on May 11, 2026

The national average HELOC interest rate is 7.26% as of May 6, 2026, according to Bankrate’s latest survey of the nation’s largest home equity lenders.

Table of contents

Today's average HELOC rates
Best HELOC rates
How to shop for a HELOC
Pros and cons of HELOCs
Alternatives to a HELOC
Next steps to getting a HELOC
FAQs about HELOCs

What are the current HELOC interest rates?

LOAN TYPE	AVERAGE RATE	AVERAGE RATE RANGE
HELOC	7.26%	3.99% - 11.90%

Average home equity line of credit (HELOC) rates

Bankrate’s National Average survey incorporates rate information from the 10 largest banks and thrifts in 10 large U.S. markets. Rates are calculated using a loan or credit line amount of $30,000, with a FICO score of 700 and a combined loan-to-value ratio of 80 percent for primary single-family detached homes.

Learn more: Understanding Bankrate’s rate averages

National HELOC interest rate trends - May 6, 2026

HELOC rates extend four-week surge

There was a big jump in HELOC rates, which notched their fourth straight weekly increase. The average rate for a $30,000 HELOC soared 16 basis points to 7.26%, according to Bankrate’s national survey of lenders.

HELOC rates are heavily influenced by the Federal Reserve’s policy decisions. At its latest meeting in May, the central bank left its benchmark rate unchanged for the third time this year, citing low job growth and persistently elevated inflation.

Ted Rossman, principal analyst at Bankrate, puts the recent rise in perspective. “Borrowers would obviously welcome lower rates, but current rates aren't so bad, all things considered and relative to history,” Rossman says. “Getting at least three rate quotes is a smart step that can help you avoid overpaying.”

Ask the Experts

Is now the right time to get a HELOC?

Stephen Kates, CFP

Bankrate Financial Analyst, Wealth

"Right now, a HELOC may be appropriate for borrowers who want flexible access to funds and can handle a variable rate. It is not the right move if you are using it to cover everyday budget gaps or discretionary spending, because that turns your home into collateral for short-term cash flow problems that can spiral out of control."

Tushar Kumar

Private Wealth Advisor, Twin Peaks Wealth Advisors

“I always tell my clients that the best time to get a loan is before you actually need it. With HELOCs, one of the reasons I don't have my clients time them is that they are floating-rate loans, meaning the loans will adjust as interest rates go up and down. With a mortgage, it’s different. If you're buying with a fixed-rate mortgage, there's a big difference between financing something at 6% versus 4.5%. But with a HELOC, because the interest rates will adjust down, the timing element is less important.”

Brandon Schneider, CFP

Founder and financial planner at Deliberate Wealth

“In general, I would say I favor the HELOC as a product if you're a disciplined financial person. It’s kind of like a Swiss army knife, where you can use the money when you want to, as opposed to the home equity loan. You can use it multiple times depending on where you're getting it from. You also can probably create a fixed structure inside of the actual variable rate product.”

Best home equity line of credit (HELOC) rates in May 2026

LOAN TYPE	CREDIT LINE AMOUNT	TERM PERIOD	CURRENT LOW APR
Achieve Loans	$15,000-$500,000	10-, 15-, 20- or 30-year repayment period	5.87%
Alliant Credit Union	$10,000+ ($25,001 in WI and Washington, D.C.	10-year draw period, 20-year repayment period	6.75% (3.99% intro rate)
Aven	$5,000-$400,000	5-, 10-, 15- or 30-year repayment period	6.49%
Fifth Third Bank	$10,000-$500,000	10-year draw period, 20-year repayment period	6.75% (4.99% intro rate)
FourLeaf Federal Credit Union	$10,000-$1,000,000	10-year draw period, 20-year repayment period	6.75% (5.99% intro rate)
Police and Fire Federal Credit Union	Up to $600,000	5-year draw period, 15-year repayment period	6.00% (4.99% intro rate)
Rate	$20,000–$400,000	Up to 30 years	6.60%
Splash Financial	Up to $500,000	10-year draw period, 10-20 year repayment period	6.50%
Third Federal Savings and Loan	$10,000-$300,000	10-year draw period, 30-year total repayment period	6.24%
Upstart	$26,000-$250,000	3-year draw period, 10- or 15-year repayment period	6.52%

Note: The above APRs are current as of April 28, 2026. 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.

To identify the home equity line of credit lenders with the best rates, Bankrate surveyed 50 home equity lenders nationwide and scored each based on its self-reported data and research by Bankrate staff. We assigned scores based on a lender’s affordability, availability and borrower experience, giving equal weight to each category.

The lenders that appear on this list have a Bankrate score of either a 4 or a 5 for affordability and publish sample rates on their websites. The lender’s lowest available sample rate for a home equity line of credit, including special or introductory rates (provided the standard rate is also lower than Bankrate’s average), is used to determine eligibility. This list includes up to the ten lowest rates within our survey that fall below Bankrate’s published average for home equity lines of credit. If a lender’s rate increases above Bankrate’s published average, the lender will be removed from the list.

To receive a top score from Bankrate, lenders must offer a standard rate lower than Bankrate’s tracked average, and if the lender offers HELOCs, they generally also offer a competitive introductory rate. In addition, lenders are usually licensed in more than 30 U.S. states, offer both HELOCs and home equity loans, provide at least one product for borrowers with credit scores of 640 or lower and have a loan minimum of $10,000 or less. If the lender offers HELOCs, they typically don’t require a minimum draw. Finally, our top-scoring lenders tend to make it easy for borrowers to compare rates and manage much of the loan process online, and they offer multiple options for customer support. For lenders that offer HELOCs, providing the option to lock the rate on some or all of a HELOC balance is a plus. Bankrate’s evaluations are independent and are not influenced by lender partnerships or advertising relationships. Read more about how Bankrate scores are determined here.

How to shop for a HELOC

Before you apply for a HELOC, prepare your finances and shop around. Rates and terms can vary more than you’d think.

Confirm your eligibility: Make sure you meet lenders’ basic requirements for a HELOC. That usually means a good credit score — 680 has historically been the standard, but some lenders accept lower scores nowadays — a solid and steady income, and at least a 15% to 20% equity stake in your home. Lenders may also review your DTI to make sure you can comfortably handle an additional loan payment.
Strengthen your financial profile: Qualifying is one thing, but you’ll get a better rate if you exceed the minimum requirements. Boost your credit score by paying down or paying off credit cards and other existing loans. Making extra mortgage payments allocated to your principal can also help build equity. Note that, if your home value has increased since you bought, you may have built equity without even knowing it.
Compare at least three lenders: Don’t focus just on the HELOC’s advertised interest rate. Apply with or get estimates from at least three different providers using your specific loan and financial details. You’ll also want to scrutinize the annual percentage rate, or APR, of each loan. This includes the interest rate and some fees, making it a better measure of the total loan cost of borrowing.
Time your application: Variable HELOC rates can fluctuate along with the economy. If possible, apply when rates are lower or stable, especially if you’re planning a large initial draw and you have the option to fix the rate on some of your balance. But keep in mind that waiting too long can also be risky, as rates can unexpectedly rise — and that rates can also rise at any point while you hold the HELOC.
Read the fine print: Check for hidden fees, prepayment penalties and confusing terms. Note the minimum and maximum rates you can be charged and under what circumstances, if any, the lender can freeze or lower your credit line.
Watch for promotional or introductory rates: Many lenders offer teaser or introductory rates that are lower than the standard variable rate for a set period, often six months to a year. After the promotional period ends, your rate may jump, which would increase your monthly payments.
Check out customer reviews: A HELOC is a long-term product, so you’ll want to read third-party and customer reviews before committing.

Getting the best HELOC rate may require patience. While rates are at three-year lows, there’s no guarantee they’ll continue to drop in the near term, explains Bankrate financial analyst Stephen Kates.

“Using a HELOC today requires the understanding that rates may not fall quickly, so borrowers should not rely on future rate declines to make payments more affordable,” he says. “If the payments fit comfortably within the budget, a HELOC can be a useful tool that preserves flexibility and allows other cash reserves to remain intact.”

Pros and cons of HELOCs

HELOCs combine relatively low interest rates with the flexibility to borrow what you need when you need it. If you need money over an unpredictable period of time, 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 pros and cons of a HELOC.

Pros

Lets you tap home equity without disturbing the primary mortgage (especially helpful if you’ve locked in a low rate)
Typically lower upfront costs than 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
May have an option for fixed-rate draws

Cons

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.
Flexible access to funds may encourage overspending and increase debt.

Alternatives to a HELOC

A HELOC is not the right choice for every borrower. Depending on why you need the money, one of these alternative options may be a better fit:

Home equity loan: Functions like a second mortgage. You get a lump sum upfront and repay it at a fixed interest rate over time. Best if you prefer predictable payments.
Cash-out refinance: Replaces your existing mortgage with a bigger one, giving you the difference in a cash payout. You may be able to borrow more than with a HELOC or a home equity loan.
Reverse mortgage: Designed for older homeowners, this lets you tap your home equity, either in installments or a lump sum, without monthly repayments. You repay the loan only when you move out, sell the home, or pass away.
Personal loan: Like a home equity loan, has a fixed interest rate and disburses money in a lump sum. Tends to have shorter terms and higher interest rates than home equity financing.
Credit cards: While convenient, credit cards usually carry much higher interest rates than HELOCs, and if you’re funding a larger expense, it’s easy to end up with more debt than you can afford. Useful for smaller, short-term expenses or emergencies.

Next steps to getting a HELOC

Before you start applying for a HELOC, here are some home equity resources to prepare you for the process:

Finding the best home equity lender

Consider different types of providers and compare rates to get the best deal.

How to calculate your home equity

Follow these steps to calculate how much equity you have in your home and how to tap into it via a home equity loan or line of credit (HELOC).

HELOC and home equity loan requirements

Everything you need to know about HELOC and home equity loan requirements: credit scores, DTI ratios and more.

How to shop for a HELOC: 10 ways to get the best HELOC rate

Tips that'll help you save money in the long-term by scoring the best possible rate on your home equity line of credit (HELOC).

FAQs about home equity lines of credit

A HELOC, or home equity line of credit, works like a big credit card. You get a revolving line of credit you can borrow from as needed, usually with a variable interest rate, for a set time period. After that, you repay the withdrawn funds, plus interest, over several more years. Your home serves as collateral for the HELOC, and you risk losing it if you miss payments.
The amount you can borrow depends on how much equity you have in your home. Typically, lenders allow you to borrow up to 80% of your home’s value, minus what you owe on your mortgage. Some lenders go as high as 85% to 90%.
When you’re shopping for a lender, you should consider a variety of factors. Do the lender’s requirements around loan-to-value and credit score fit your financial profile? Do you prefer doing business with a brick-and-mortar lender or an online company? What are the policies concerning prepayment, refinancing and adjusting the credit line limit? You should research the company’s consumer reviews, then compare its rates, terms and fees to find the best overall value.

Read our Reviews: Home Equity Lender Reviews
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 offer fixed-rate HELOCs or allow you to convert all or part of your HELOC from a variable rate into a fixed one, 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. However, you can deduct interest only on the first $750,000 of home loan debt (or $375,000 if you’re single or married, filing separately). That is, if you have a $600,000 mortgage and a $300,000 HELOC for home improvements, you could deduct only 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.

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