Home equity loan rates for January 2023

Written by
Jeff Ostrowski
Edited by
Suzanne De Vita
Reviewed by
Mark Hamrick
As of January 26, 2023

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.

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Bankrate guide to choosing the best home equity loan

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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.

What are today's average interest rates for home equity loans?

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%
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 Jan. 25, 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.

Best home equity loan rates in January 2023

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
Note: The above APRs are current as of Jan. 18, 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.

Discover: Best home equity loan for low rates

Discover logo
4.3
Bankrate Score

Overview

Discover is well known for its rewards credit cards, but this national bank also offers a full lineup of banking services, such as checking and savings accounts, personal loans and student loans. We chose this bank as the best for low rates because of its national reach (Discover is available in all 50 states and Washington, D.C.) and low rates.
 
 
Lender:
Discover
Max LTV Ratio:
90%
Max Debt-to-income ratio:
43%
Min. Credit Score:
620
Interest Rates:
7.49%-13.99% APR
Loan Amount:
$35,000 to $300,000
Term Lengths:
10 to 30 years
Fees:
None
Additional Requirements:
Plan to share your personal details, Social Security number, proof of income, employment information, tax returns and pay stubs when you apply.

BMO Harris Bank: Best home equity loan for different loan options

3.9
Bankrate Score

Overview

BMO Harris Bank has more than 600 branches spread across Arizona, Florida, Illinois, Indiana, Kansas, Minnesota, Missouri and Wisconsin, but customers nationwide can access BMO’s online banking resources. Its home equity loans come with low loan minimums, few fees and a variety of term options.
 
 
Lender:
BMO Harris Bank
Max LTV Ratio:
Not Specified
Max Debt-to-income ratio:
Not Specified
Min. Credit Score:
700
Interest Rates:
Starting at 7.39% APR
Loan Amount:
$25,000 to $150,000
Term Lengths:
5 to 20 years
Fees:
None
Additional Requirements:
Need a Social Security number, proof of income and information about debts and other financial obligations

KeyBank: Best home equity loan for homeowners with limited equity

4.2
Bankrate Score

Overview

You can borrow up to 90 percent of your home’s value with rates as low as 2.32 percent APR in some states. KeyBank’s terms are also flexible — lasting up to 30 years — making this bank a solid choice.
 
 
Lender:
Keybank
Max LTV Ratio:
90% Combined LTV
Max Debt-to-income ratio:
Not Specified
Min. Credit Score:
Not Specified
Interest Rates:
8.03%-12.93% APR
Loan Amount:
$25,000–$250,000
Term Lengths::
1 to 30 years
Fees:
There’s a $295 origination fee, and you may have to pay costs of appraisal, title, flood insurance and mortgage tax if you repay and terminate the loan within 36 months.
Additional Requirements:
Borrowers must be 18, provide proof of income and live in one of the states KeyBank serves.

Spring EQ: Best home equity loan for fast funding

Spring EQ logo
4.3
Bankrate Score

Overview

If you have an average credit score and you’ve built equity in your home, Spring EQ can help you tap into that equity with flexible loan terms to fit most borrower profiles.
 
 
Lender:
Spring EQ
Max LTV Ratio:
90%
Max Debt-to-income ratio:
50%
Min. Credit Score:
680
Interest Rates:
Not Specified
Loan Amount:
Up to $500,000
Term Lengths:
Not Specified
Fees:
Spring EQ does not disclose its fees, but you may be on the hook for an administration fee, credit report and flood certification fees, document prep fees, title report fees, notary or title fees, recording fees and an appraisal fee.
Additional Requirements:
Plan to share your name, verification of credit profile and debt-to-income ratio and the home’s current value.

Flagstar Bank: Best home equity loan for flexible loan terms

Flagstar Bank logo
4
Bankrate Score

Overview

Established in 1987 and with 150 branches spread across California, Indiana, Michigan, Ohio and Wisconsin, Flagstar Bank consistently gets high marks for customer satisfaction and offers a full lineup of banking services. APRs start at 7.79 percent in some states.
 
 
Lender:
Flagstar
Max LTV Ratio:
Not Specified
Max Debt-to-income ratio:
Not Specified
Min. Credit Score:
Not Specified
Interest Rates:
Starting at 7.79% APR
Loan Amount:
$10,000 to $500,000
Term Lengths:
10 to 20 years
Fees:
There’s no prepayment penalty and no bank-imposed closing costs. However, borrowers are responsible for prepaid interest, all state- and government-specific charges and taxes and lender’s title insurance.
Additional Requirements:
Property insurance is required, as is flood insurance in some cases. Borrowers must provide proof of income.

U.S. Bank: Best home equity loan for low fees at a national bank

U.S. Bank logo
4
Bankrate Score

Overview

With roots that trace back to 1863, U.S. Bank is now the fifth-largest bank by assets in the country, with about 3,000 branch locations in 27 states. It’s a solid option for low fees at a nationwide lender.
 
 
Lender:
U.S. Bank
Max LTV Ratio:
Not Specified
Max Debt-to-income ratio:
Not Specified
Min. Credit Score:
Not Specified
Interest Rates:
Starting at 7.95% APR
Loan Amount:
$15,000 to $750,000 (Up to $1 million for California properties)
Term Lengths:
Up to 30 years
Fees:
None
Additional Requirements:
Loan approvals are subject to credit approval.

Third Federal Savings and Loan: Best home equity loan for customer service

4.4
Bankrate Score

Overview

Third Federal (ThirdFed) offers a wide array of banking and financial products, including home equity loans and lines of credit, mortgages and deposit accounts. The bank is known for its dedication to helping customers achieve their financial goals through offering low rates and little fees.
 
 
Lender:
Third Federal Savings and Loan
Max LTV Ratio:
80%
Max Debt-to-income ratio:
Not Specified
Min. Credit Score:
Not Specified
Interest Rates:
Starting at 6.49%-6.99% APR
Loan Amount:
$10,000 to $200,000
Term Lengths:
5 to 30 years
Fees:
The only fee charged is an annual fee of $65, which is waived the first year.
Additional Requirements:
ThirdFed doesn't disclose eligibility requirements on its website, but you will need to provide two months of pay stubs and last year's W-2 forms.

Frost Bank: Best home equity loan for low fees at a regional bank

4.5
Bankrate Score

Overview

Established in 1868 and with 130 branches spread across Texas, Frost is a full-service bank that offers checking and saving accounts, personal loans, insurance, investment products and more. Frost’s customer service is also consistently highly rated.
 
 
Lender:
Frost
Max LTV Ratio:
80%
Max Debt-to-income ratio:
Not Specified
Min. Credit Score:
Not Specified
Interest Rates:
Starting at 5.34%-5.64% APR
Loan Amount:
Starting at $2,000
Term Lengths:
7 to 20 years
Fees:
There are no prepayment penalties, no application fees and no annual fees. There are also no closing costs on loans from $2,000 to $500,000.
Additional Requirements:
You’ll need to show proof of homeowners insurance, bring your government-issued photo ID and provide your Social Security number.

Connexus Credit Union: Best home equity loan for branch network

Connexus Credit Union logo
4.1
Bankrate Score

Overview

Established in 1935, Connexus offers auto loans, personal loans, student loans, credit cards, banking products and more. Connexus’ home equity loan rates are on par with those of other financial institutions on this list, starting as low as 3.49 percent APR.
 
 
Lender:
Connexus
Max LTV Ratio:
90%
Max Debt-to-income ratio:
Not Specified
Min. Credit Score:
Not Specified
Interest Rates:
Starting at 7.96% APR
Loan Amount:
Starting at $5,000
Term Lengths:
5 to 20 years
Fees:
Borrowers won’t pay an annual fee, but they will be responsible for closing costs that can range from $175 to $2,000, depending on the property location and loan terms. The credit union also charges a returned loan payment fee of $15, a convenience fee of $9.95 for paying by debit or credit card online ($14.95 by phone) and a forced place insurance processing fee of $12.
Additional Requirements:
You must join the credit union to apply for a home equity loan.

Regions Bank: Best home equity loan for customer experience

4.1
Bankrate Score

Overview

Established in 1971 and with a presence in 15 states, Regions offers a full lineup of personal banking services, including checking and savings accounts, credit cards, mortgages, student loans, personal loans, auto loans and home equity loans and lines of credit.
 
 
Lender:
Regions Bank
Max LTV Ratio:
89%
Max Debt-to-income ratio:
Not Specified
Min. Credit Score:
Not Specified
Interest Rates:
Starting at 6.38% APR
Loan Amount:
$10,000 to $250,000
Term Lengths:
7 to 20 years
Fees:
Regions Bank will pay all closing costs, but borrowers may be responsible for over-limit fees of $29, a late fee of 5% of the payment amount (limits apply) and a returned check fee of $15. There’s no annual fee.
Additional Requirements:
Regions Bank may ask for additional documentation or information, such as income verification and proof of property, wind or flood insurance if necessary.

Methodology

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:

  • 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 loan and how does it work?

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.

Calculating your home's equity

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.

How rising mortgage rates affect home equity loans

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.

Best uses for a home equity loan

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 improvements: Because these can often add value over time, using your home's value to increase the value can be helpful.
  • Education: Home equity loans generally have a lower interest rate than private student loans.
  • Debt consolidation: Using home equity to help with debt consolidation may give you better interest rates so you can get your finances on track.
  • Emergency expenses: If you don't have the funds for an immediate need, home equity loans can give you money with much more favorable interest rates than something like a payday loan.
  • Investments: Using home equity on investments may benefit your financial portfolio over time.

Pros and cons of home equity loans

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.

PROS

  • Checkmark

    Lower interest rates than those of unsecured debt such as credit cards or personal loans.

  • Checkmark

    High borrowing limits.

  • Checkmark

    Fixed monthly payments.

  • Checkmark

    Interest may be tax deductible.

CONS

  • Close X

    Potentially expensive closing costs.

  • Close X

    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.

  • Close X

    Longer funding timeline than that of personal loans.

Alternatives to a home equity loan

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 line of credit (HELOC): Like a home equity loan, a HELOC allows you to borrow from your home's equity. However, you'll borrow from a credit line. Additionally, HELOCs have variable rates.
  • 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 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.

Home equity loan vs. HELOC

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

Requirements of getting a home equity loan

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.

 

Costs of a home equity loan

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:

  • Origination fee to set up the loan
  • Closing costs
  • Late fees for a delayed monthly payment
  • Prepayment penalty for paying the loan off before the term ends

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.

Getting a home equity loan with bad credit

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:

  • At least 15 percent to 20 percent equity in your home
  • A minimum credit score of 620
  • A maximum debt-to-income ratio of 43 percent
  • On-time bill payment history
  • Stable employment or income history

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.

FAQs about home equity loans