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Answer some questions about your home equity needs to help us find the right lenders for you.
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.
Many lenders have fixed loan-to-value (LTV) ratio requirements for their home equity loans, meaning you'll need to have a certain amount of equity in your home to qualify. Lenders will also factor in your credit score and income when determining your rate and eligibility. 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.
When shopping for a home equity loan, 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, but definitely check the lenders’ websites to see if there is more recent information. The top lenders listed below are selected based on factors such as APR, loan amounts, fees, credit requirements and broad availability.
How to choose the best home equity loan for you:
LOAN TYPE | AVERAGE RATE | AVERAGE RATE RANGE |
---|---|---|
Home equity loan | 8.22% | 7.43% – 9.81% |
10-year fixed home equity loan | 8.33% | 6.56% – 9.62% |
15-year fixed home equity loan | 8.26% | 6.72% – 10.43% |
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.
Note: The above APRs are current as of May 31 , 2023. 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.
The 15-year fixed-rate home equity loan averaged 8.26 percent as of May 31, according to Bankrate’s national survey of large lenders. The 10-year home equity loan, meanwhile, averaged 8.33 percent.
The Fed continues to move aggressively to control inflation, raising interest rates to their highest level since 2007 at its May meeting. The central bank’s moves don’t have as deep an impact on fixed-rate home equity loans as they do on home equity lines of credit (HELOCs), however, which mostly have variable rates.
Along with home equity loan rates, HELOC rates climbed to 8.3 percent, according to Bankrate’s survey.
The best home equity loan lenders offer a variety of repayment terms, low interest rates and few fees. Each lender will evaluate your eligibility differently, so shopping around can help you find the best offer. Your rate will depend on your credit score, income, home equity and more, with the lowest rates going to the most creditworthy borrowers.
LOAN TYPE | LOAN AMOUNT | LOAN TERM | APR RANGE | BEST FOR |
---|---|---|---|---|
$35,000–$300,000 | 10 to 30 years | 7.49% - 13.99% | Competitive Rates | |
$25,000–$150,000 | 5 to 20 years | Starting at 8.04% | Different loan options | |
$25,000–$250,000 | 1 to 30 years | 8.53% - 10.93% | Homeowners with limited equity | |
Up to $500,000 | Not specified | Not Specified | Fast funding | |
$10,000–$1,000,000 | 10 to 20 years | Starting at 8.04% | Flexible loan terms | |
$15,000–$750,000 | Up to 30 years | Starting at 7.45% | Low fees at a national bank | |
$10,000–$200,000 | 5 to 20 years | Starting at 6.99% | Customer service | |
Starting at $2,000 | 7 to 20 years | 5.74% - 6.38% | Low fees at a regional bank | |
Starting at $5,000 | 5 to 20 years | Starting at 9.25% | Branch network | |
$10,000–$250,000 | 7 to 20 years | Starting at 6.375% | Customer experience |
Bankrate Rating = 4.3/5
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 = 4.2/5
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 = 4.3/5
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 = 4.0/5
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 = 4.4/5
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 = 4.5/5
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 = 4.1/5
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 = 4.1/5
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’s experts regularly research, review and rate home equity lenders to help you objectively compare and choose a lender that fits your needs. To determine a home equity lender’s Bankrate Score, Bankrate rates lenders on a scale of one to five stars — with five the highest rating — based on a variety of factors relating to the lender’s products and services. To assign our ratings, we assessed each home equity lender across three core areas-
A home equity loan is a lump sum that you borrow against the equity you’ve built in your home. Like other installment loans, you receive all of the money upfront and then make equal monthly payments of principal and interest for the life of the loan (similar to a mortgage). Most lenders will let you borrow up to 80 percent to 85 percent of your home’s equity; that is, the value of your home minus the amount you still owe on the mortgage.
These loans have fixed interest rates and typical repayment periods between five and 30 years. Because your home serves as the collateral for a home equity loan, a lender can foreclose on it if you fail to make the payments.
Home equity loans are available at many banks, credit unions and online lenders. You can use these funds for a range of purposes, including debt consolidation, home improvement projects or higher education costs. The amount you can borrow depends on how much equity you have, your financial situation and other factors.
After reviewing your application and checking your credit, the lender will tell you how much you can borrow, your interest rate, your monthly payment, your loan term and any fees involved. Once you agree to the loan terms, the financial institution will disburse funds as one lump sum. You then repay the loan over time in fixed monthly payments.
Home equity is the stake you have in your property – the percentage of the home you own outright. Over time, you build up equity in your home as you make payments on your mortgage or your home’s value rises. To calculate your home equity (and how much you may be able to borrow), subtract your current mortgage balance from the appraised value of your home.
For (a simplified) example, say you owe $200,000 on a home worth $400,000. This means that you have 50 percent equity in your home. If your lender lets you take out up to 85 percent of your home’s value ($340,000), you could borrow $140,000 through a home equity loan. A home equity calculator (like Bankrate’s) can estimate how much you can borrow.
Because the proceeds from a home equity loan come in one lump sum, home equity loans are best suited for homeowners who have a set budget. They’re a good option for those who want to use the funds for home renovations – the interest can be tax deductible if the money is used for certain repairs, expansions or improvements. Conversely, if you use home equity loan funds for any reason aside from substantial home improvements, such as paying off student debt or consolidating credit card bills, the mortgage interest is not deductible.
Another benefit of home equity loans is that they have competitive interest rates, which are usually much lower than those of personal loans and cash-out refinances. Compare lenders’ rates for the best deal available.
However, if you need money quickly, a home equity loan may not be the way to go. It can take longer to receive the funds from a home equity loan than a personal loan. Additionally, you may be subject to expensive closing costs and a more drawn-out application process.
Lower interest rates than those of unsecured debt such as credit cards or personal loans.
High borrowing limits.
Fixed monthly payments.
Interest may be tax deductible.
Potentially expensive closing costs.
Risk of losing your home if you are unable to make the payment or end up underwater on your mortgage if the home value drops.
Longer application/funding timeline than that of personal loans.
A home equity loan may be a good option if you've been planning a large home renovation or if you need to consolidate debt and you spot a good rate. If you’ve been considering a home equity loan, now might be a good time to lock in your rate before they rise further.
Because mortgage rates have risen sharply since early 2022, home equity loans have grown more attractive as an alternative to a cash-out refinance.
Some of the best uses to make the most of your loan include:
A home equity loan 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 loans and home equity lines of credit (HELOCs) are both loans backed by the equity in your home. However, while a home equity loan has a fixed interest rate and disburses funds in a lump sum, a HELOC allows you to make draws with variable interest rates, like a credit card.
Generally speaking, if you're planning on doing multiple home improvement projects over an extended period of time, a HELOC may be the better option for you. If you're thinking about consolidating high-interest credit card debt or doing a larger home improvement project that would require all of the funds upfront, a home equity loan may be the best option.
HOME EQUITY LOANS | HELOCS | |
---|---|---|
Interest Rates | Fixed | Variable |
APRs | Slightly higher | Slightly lower |
Funds disbursement | Lump sum | Line of credit |
Repayment terms | 10-30 years of fixed payments | First 5-10 years: Interest-only payments Last 10-20 years: interest and principal |
Best for | Debt consolidation, large home improvement projects, major purchases | Ongoing home improvement projects, college tuition payments, medical expenses |
When mortgage rates were at historic lows, cash-out refinances were a no-brainer. A homeowner could tap equity in their home while locking in a rock-bottom mortgage rate. But now that mortgage rates have risen, a cash-out refi no longer seems like the best answer. Getting a home equity loan instead — a simpler, if slightly more expensive type of financing — might be the better choice.
Say you have a $200,000 mortgage at 3 percent and you want to tap $50,000 of your home equity. A cash-out refi would require you to pay off the old loan and take a new loan for $250,000 at a much higher rate. But a home equity loan lets you keep the low-rate mortgage. And while it’ll probably be at a higher interest rate, it’ll be charged on only $50,000.
HOME EQUITY LOANS | CASH-OUT REFIS | |
---|---|---|
Interest Rates | Fixed | Fixed |
APRs | Slightly higher | Slightly lower |
Funds disbursement | Lump sum | Lump sum |
Repayment terms | 10-30 years of fixed payments | 30 years of fixed payments |
Best for | Debt consolidation, large home improvement projects, major purchases | Ongoing/long-term home improvement projects, college tuition payments, medical expenses |
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.
Bankrate analyzes loans to compare interest rates, fees, accessibility, online tools, repayment terms and funding speed to help readers feel confident in their financial decisions. Our meticulous research done by loan experts identifies both advantages and disadvantages to the best lenders.
When shopping for a home equity loan, 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 to see if there is more recent information. The top lenders listed below are selected based on factors such as APR, loan amounts, fees, credit requirements and broad availability.