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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.
Bankrate's home equity loan offers help you compare interest rates, fees, terms and more to help 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 home equity loan 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.
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.
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.
LOAN TYPE | AVERAGE RATE | AVERAGE RATE RANGE |
---|---|---|
Home equity loan | 7.77% | 6.93% – 9.44% |
10-year fixed home equity loan | 7.93% | 6.29% – 9.37% |
15-year fixed home equity loan | 7.86% | 6.47% – 10.11% |
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% | Low rates | |
$25,000–$150,000 | 5 to 20 years | Starting at 7.39% | Different loan options | |
$25,000–$250,000 | 1 to 30 years | 8.03% - 12.93% | Homeowners with limited equity | |
Up to $500,000 | Not specified | Not Specified | Fast funding | |
$10,000–$500,000 | 10 to 20 years | Starting at 7.79% | Flexible loan terms | |
$15,000–$750,000 | Up to 30 years | Starting at 7.95% | Low fees at a national bank | |
$10,000–$200,000 | 5 to 20 years | 6.49% - 6.99% | Customer service | |
Starting at $2,000 | 7 to 20 years | 5.34% - 5.64% | Low fees at a regional bank | |
Starting at $5,000 | 5 to 20 years | Starting at 7.96% | Branch network | |
$10,000–$250,000 | 7 to 20 years | Starting at 6.38% | Customer experiences |
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.
To select the top lenders that offer home equity loans, Bankrate considered 15 factors that help consumers decide whether a lender is a good fit for them, such as minimum APR and maximum combined loan-to-value ratio. 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, 10 made Bankrate's list of best home equity loans. Each lender has a Bankrate rating, which consists of three categories. These categories include:
A home equity loan is a lump sum that you borrow against the equity you’ve built in your home. 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. 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.
Over time, you build up equity in your home as you make payments on your mortgage or your home’s value rises. If you have built a substantial amount of equity in your home, you can take out a home equity loan.
Home equity loans are installment loans that allow you to borrow a percentage of your home equity, typically up to 85 percent. 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).
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. Say your house is worth $400,000 and you owe $200,000 on your mortgage. 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) to estimate how much you can borrow.
The Federal Reserve raised interest rates seven times in 2022 to fight inflation. This action from the Fed has led to rising home equity rates. For fixed-rate home equity loans, the average rate was 7.86 percent for 15-year loans and 7.93 percent for 10-year loans as of Jan. 18, 2023 according to Bankrate’s national survey of lenders. Senior Vice President, Chief Financial Analyst, for Bankrate Greg McBride expects rates on home equity loans to reach 8.75 percent by the end of the year.
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:
Home equity loans are best suited for people who know how much they need for a given project, as the funds are distributed in one lump sum. Additionally, they’re a good option for those who want to use the funds for home improvements because the interest borrowers pay is tax deductible if the money is used for certain renovations. 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 no longer deductible under the tax law.
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.
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 ending up underwater on your mortgage if the home value drops.
Longer funding timeline than that of personal loans.
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 |
Many lenders have fixed 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.
Depending on the lender, borrowers may pay various fees either at closing or throughout the life of the loan. These add to your overall costs, so understand what you’ll pay before signing for a home equity loan. Some common costs include:
Additionally, you may have to pay for title insurance, property insurance, flood insurance or certain taxes depending on the lender, the home’s location, your state laws or other factors.
If you have poor credit, you may have a harder time getting approved for a loan, but it is still possible. If you're interested in applying for a bad-credit home equity loan, the first step is to shop around with a few lenders. Since each lender has its own requirements, it's possible one lender will be more accepting of a poorer credit score and offer better rates than a similar lender.
Generally, you'll have to meet the following criteria to qualify for a home equity loan:
If you don't meet the requirements, you may want to consider getting a co-signer to increase your chances of approval.
Because home equity loans and HELOCs both use your home as collateral, they are both viable options if you have poor credit — it will likely be easier to qualify for a home equity product than, say, an unsecured personal loan.
However, it's still important to consider which option is right for your financial situation, especially if your low credit score is a result of missed or late payments. If you know that you would benefit from a structured monthly budget, a home equity loan is the right option. If you would rather focus on keeping your debt low, a HELOC will allow you to take out only as much as you need and pay it back on a more flexible timeline.
If you've shopped around at different lenders, have considered getting a co-signer and still aren't sure if you'll get approved due to your credit score, you still have options. Consider why you're interested in taking out a loan. Do you need the funds immediately? Will this help you or hurt you in the long run by racking up more debt?
If you're having trouble getting approved, take some time to improve your credit score. It's also important to decide how a loan could impact your credit score in the future because you'll be taking on more debt with both a home equity loan or a HELOC.
A home equity loan is an installment loan based on the equity of the borrower's home. Most home equity lenders allow you to borrow a certain percentage of your home equity, typically up to 85 percent. Unlike with a HELOC, 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).
Banks, credit unions and other types of lenders offer home equity loans. Here’s an overview:
If you have an existing relationship with a bank, it may be best to start your search there, but it’s always a good idea to shop around with a few lenders to compare rates, fees and loan terms.
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. Be sure to confirm this with your lender, however; some prequalifications do in fact involve a hard credit pull, which affects your score slightly.
Home equity loan rates are typically higher than first mortgage rates because home equity loans are considered second mortgages. In the event of a foreclosure, the lender of a second mortgage will be paid only after the lender of the first mortgage has been paid in full. To make up for this risk, lenders offering second mortgages will charge higher interest rates. Since home equity loan rates are higher than first mortgage rates as a baseline, as of January 2023, you can expect to find home equity loan rates averaging 7.7 percent, within a range of 6.93 - 9.44 percent.
Unlike other loans, such as personal loans, home equity loans must go through a closing period. During this period, all home equity loans are legally subject to a three-day cancellation rule, which states that you have the right to cancel your home equity loan until midnight of the third business day after you sign your contract. Changes to the contract, as well as funds disbursement, cannot occur during this time.
Home equity loans and cash-out mortgage refinances are both potential ways to get money for home renovations or unexpected expenses. While a home equity loan is a "second mortgage" that allows you to borrow additional funds for nearly any purpose, a cash-out refinance replaces your existing mortgage.
You'll take out a new mortgage for more than your outstanding loan balance, and then withdraw the difference in cash. Because of this, a home equity loan is typically best if you already have a good rate and terms on your current mortgage. A cash-out refinance only makes sense if you can qualify for a better interest rate on your mortgage and you don't mind resetting your repayment term.
Because home equity loans typically require appraisals, it can take longer to get a home equity loan than a personal loan. From application to funds disbursement, the process typically takes two to four weeks — although some new online lenders are trying to shorten that process.
The exact amount you can borrow varies depending on the lender, but you can generally borrow up to 80 or 85 percent of your home’s appraised value.