The best home equity loan rate isn’t a number you find on a billboard. It’s the rate a specific lender gives you after it looks at three things: your credit score, how much of your home you’d still own after borrowing, and whether you take a fixed loan or a variable line. Right now, a homeowner with strong credit and plenty of equity can expect offers near 7.5% on a fixed home equity loan. Someone with a 660 score borrowing up to 85% of their home’s value might be quoted 9% or more for the very same amount.
This guide shows where rates actually sit after the Federal Reserve’s late-October meeting, which lenders tend to price lowest and why, and how to pick between a fixed loan, a HELOC and a cash-out refinance when your first mortgage may carry a rate you’d be foolish to give up. You’ll also find a payment planner, a decision chart, a lender phone list and a map locator for credit unions and housing counselors near you.
Eight Straight Answers Before You Apply
These are the questions homeowners ask most when they’re weighing a home equity loan. Short answers first; the details are further down.
For a borrower with a 760+ score keeping at least 30% equity, anything near 7.5% fixed is competitive, and a quote under 7% is excellent. If you’re offered more than 9% with good credit, keep shopping.
Don’t count on it. The Fed raised rates in September for the first time since 2023 and held them on October 28, with two officials pushing for another increase. Borrow when you need the money, and choose a fixed rate if a rising rate would hurt you.
A fixed loan suits one big expense and a tight budget. A HELOC suits projects paid in stages or a just-in-case fund, but its rate floats with prime, and payments can jump when the draw period ends.
Only if your current mortgage rate is close to or above today’s 30-year average of 7.32%. If you locked in at 3% to 5%, a cash-out refi would reprice your whole balance higher.
Most lenders cap your total mortgage debt at 80% to 85% of the home’s value. A few credit unions go to 90% or more for members with strong credit, at a higher rate.
Many banks and credit unions want 680 or higher. Some lenders approve scores in the low 600s, but expect a lower borrowing limit and a noticeably higher rate.
Only if you spend the money to buy, build or substantially improve the home securing the loan, and only if you itemize. Interest on money used for debt payoff, tuition or a car isn’t deductible, and that rule is now permanent.
Yes, on your primary home. Federal law gives you three business days after closing to cancel a home equity loan or HELOC without penalty, which is why funds aren’t released until that window passes.
Today’s Home Equity Rates, and Why the Averages Disagree
Search for home equity rates and you’ll see averages from 7.36% to almost 8.5%. None of them is wrong. Each one assumes a different borrower, and knowing which assumption matches you saves a lot of confusion.
When we lined up the national averages published during the last full week of October, the pattern was easy to see. The surveys that assume a 780 credit score and a homeowner keeping more than 30% equity land around 7.5%. The surveys that assume a 620 score, 80% loan-to-value, or a 30-year repayment term land between 8.25% and 8.5%. Same market, same week, different borrowers. So before you judge a quote, ask which of those borrowers you look like.
The bigger story is direction. Home equity rates fell through late 2025 and the first half of this year, then turned. Freddie Mac’s 30-year mortgage average climbed from about 6.1% in January to 7.40% in mid-October before easing to 7.32% on October 22. HELOC averages rose for five straight weeks this fall. And the Fed raised its benchmark rate a quarter point in September, the first increase since July 2023, which pushed the prime rate from 6.75% to 7.00% on September 17.
On October 28 the Fed held its target range at 3.75% to 4.00% in a 10-2 vote. The two dissenters wanted another quarter-point increase, and futures markets were pricing in roughly one more hike before year-end. For HELOC borrowers that matters directly: most HELOCs are priced at prime plus a margin, so every Fed move shows up on your statement within a billing cycle or two. A fixed home equity loan locks the rate the day you close.
That climbing line is the reason home equity borrowing has become so popular. Roughly $11.7 trillion of equity sits in the hands of 47.5 million mortgage holders, about $212,000 each on average, according to mid-year data from ICE. Most of those owners have a first mortgage at a rate far below 7%. Swapping it for a bigger loan at 7.32% just to get cash makes little sense. Leaving it alone and adding a smaller second loan on top usually does.
What Rate Will You Actually Be Offered?
Lenders start from a base price for their best borrowers, then add to it for every risk they see. Three levers move your quote more than anything else, and you control two of them.
Combined loan-to-value (CLTV) is the lever most people overlook. It’s every mortgage dollar on the house divided by what the house is worth. If your home appraises at $400,000 and you owe $220,000, you’re at 55%. Borrow $60,000 more and you’re at 70%. Borrow $120,000 and you’re at 85%, which nudges you into a pricier tier and shuts out lenders that stop at 80%. Many borrowers ask for the maximum “just in case” and pay a higher rate on every dollar for it.
Credit score works in steps, not a smooth slope. Lenders commonly price in bands, so moving from 718 to 721 can matter more than moving from 745 to 755. If you’re a few points under a band edge, paying a credit card balance down before the lender pulls your credit can be worth more than any rate negotiation.
Product and term are the third lever. Variable HELOCs often start lower than fixed loans, and some come with teaser rates below prime for six to twelve months. Shorter fixed terms usually price a little lower than 20- or 30-year terms. Other factors move the price too: debt-to-income ratio (many lenders want 43% or lower), whether the home is your primary residence, condos versus single-family homes, and loan size, since very small loans often carry higher rates.
One more thing we found when we read lender disclosures side by side: the advertised rate almost always includes a discount you have to earn. Autopay from the lender’s checking account, an existing relationship, or a big first draw on a HELOC each shave off a slice. That’s fine, but compare quotes with the same discounts on or off, or you’re comparing different products.
Seven moves that lower the rate you’re quoted
Ask for only what you need
Run the math at 70%, 80% and 85% CLTV. If staying at or under 70% gets you into the top tier and still covers the project, borrow there and keep the rest of your equity as a cushion.
Pay down revolving balances first
Credit card utilization is the fastest part of a score to change. Paying balances down a month before you apply can lift you into a better pricing band.
Get quotes within a short window
Collect at least three offers, ideally including one credit union, one big bank and your current mortgage servicer. Many lenders prequalify with a soft credit check, so shopping doesn’t have to dent your score.
Compare APR and total cost, not the headline rate
A HELOC’s APR doesn’t include fees, and a fixed-rate line can carry an origination fee of several percent. Add fees to the interest over the time you expect to keep the loan, then compare.
Use relationship discounts on purpose
If one bank offers a quarter point off for autopay from its checking account, the account may be worth opening. Read whether the discount disappears if you later close the account.
Ask for a rate match
At least one savings and loan publicly guarantees to beat a competitor’s documented rate or pay $1,000. Others match quietly when asked. A written quote from a competitor is your strongest tool.
Challenge a low valuation
Many lenders now use automated valuations instead of a full appraisal. If the value comes back low and pushes you into a worse tier, ask whether you can supply recent comparable sales or pay for a full appraisal.
Home Equity Loan, HELOC or Cash-Out Refi: Which One Costs Less?
The “best rate” can be the wrong product. A slightly higher rate on the right structure often costs less than a lower rate on the wrong one.
| Option | Rate type | Where rates sit | Best for | Watch out for |
|---|---|---|---|---|
| Fixed home equity loan | Fixed | ~7.5%–8.5% | One lump sum, debt payoff, steady budget | Interest on the full amount from day one |
| HELOC | Variable, prime + margin | ~7.4%–8.1% average | Projects paid in stages, backup fund | Payment jump after draw period; rate rises |
| Fixed-rate HELOC (online) | Fixed per draw | Varies with fee | Speed, often funded in about 5 days | Origination fee up to 4.99%; full draw at closing |
| Cash-out refinance | Fixed or adjustable | ~7.32% 30-year average | When your current rate is already high | Replaces a low first-mortgage rate; full closing costs |
| Personal loan | Fixed | ~11%+ | Small amounts, no lien on your home | Higher rate, shorter terms |
| Reverse mortgage (HECM) | Fixed or adjustable | Varies | Owners 62+ who want no monthly payment | Upfront costs; balance grows over time |
| Home equity investment | No rate; share of value | Can be very costly | Rarely the best fit | Pay a share of future value; complex terms |
We ran that example because it describes millions of homeowners. Keeping the 3% loan and adding a $60,000 home equity loan creates a blended rate of about 3.9% on the combined debt. Refinancing the whole $304,000 at 7.32% would cost roughly $350 more every month and restart a 30-year clock. The refinance only wins when your existing rate is close to today’s market rate, or when you also need to remove someone from the mortgage, for example after a divorce.
The HELOC versus fixed loan question comes down to timing and nerves. A kitchen remodel paid in three contractor installments fits a HELOC, because you pay interest only on what you’ve drawn. Consolidating $45,000 of credit cards fits a fixed loan, because you need the whole amount on day one and a payment that never changes. With the Fed leaning toward higher rates, the fixed loan’s certainty carries extra value right now.
First, the payment change. During the draw period many HELOCs require only interest. When repayment starts, principal kicks in and the payment can rise sharply even if rates never move. Second, the freeze clause. Federal rules let a lender suspend new draws or cut your credit limit if your home’s value drops significantly or your finances change materially. A HELOC is a good backup fund, but it can shrink exactly when markets are weak, so don’t treat it as your only emergency money.
Lenders Worth Calling, and Where to Get Free Help
These six lenders stood out when we compared published terms, fee policies and rate transparency. They aren’t the only good options; a local credit union can beat all of them. Phone numbers come from each organization’s own website or published materials.
| Lender | Products | What stands out | Watch out for | Phone |
|---|---|---|---|---|
| Third Federal Savings & Loan | Fixed loan, 5/1 loan, HELOC | Beat-or-pay-$1,000 rate guarantee; no closing costs on equity products | Only in select states, including Florida and Ohio; doc stamps and taxes still apply | 1-800-844-7333 |
| Navy Federal Credit Union | Fixed loan, HELOC | Pays all closing costs on fixed-rate equity loans; high borrowing limits | Membership limited to military, veterans, DoD and their families | 1-877-573-2324 |
| PenFed Credit Union | HELOC only | $25K–$500K lines; closes in as few as 15 days; covers most closing costs | 680 minimum score; 85% CLTV cap (80% in Texas) | 1-800-970-7766 |
| Bank of America | HELOC with fixed-rate option | No closing costs up to $1M; up to 1.50% off for a large first draw | $450 fee plus costs repaid if closed within 36 months | 1-800-593-7306 |
| U.S. Bank | Fixed loan, HELOC | Fixed loan terms up to 30 years; relationship rate discount | Closing usually at a branch; not offered everywhere | 1-800-872-2657 |
| Figure | Fixed-rate HELOC (online) | Funding in as few as 5 days; fully digital | Origination fee up to 4.99%; full amount drawn at closing | figure.com |
Reading the fee disclosures was more revealing than reading the rates. Two lenders on this list pay closing costs outright. One charges nothing upfront but takes back what it paid if you close the line within three years. One charges an origination fee that can reach 4.99% of the loan, which on $50,000 is $2,495, but funds in about five days and lets you buy a lower rate with a bigger fee. PNC, one of the largest HELOC lenders, charges a $50 annual fee after the first year for most borrowers and told one national reviewer that funding can take up to 50 days. None of that shows up in a headline rate.
We also found a gap between products. PenFed offers only HELOCs, so if you want a fixed lump-sum loan you’ll need to look elsewhere. Third Federal offers fixed home equity loans in only a handful of states. Navy Federal’s best terms require membership. And Bank of America’s fixed-rate conversion lets you lock part of a HELOC balance later, which is a useful hedge when rates are rising, though converted rates usually run higher than the variable rate.
Credit unions frequently post home equity rates below national averages and cover more closing costs. Many have community-based membership, so living or working in a county can be enough to join. Search MyCreditUnion.gov or use the map locator below, then call two or three and ask for their current rate at your CLTV and score band.
Home Equity Payment Planner
Enter your home’s value, what you owe and what you want to borrow. The planner shows how much lenders may let you take, your monthly payment and the total interest, so you can test different amounts before you call anyone.
Planning estimates only. Your lender’s appraisal, fees and approval set the real numbers.
The planner multiplies your home value by the lender’s CLTV limit and subtracts what you owe to estimate your ceiling. For a fixed loan it uses a standard amortizing payment. For a HELOC it assumes you draw the full amount at once, pay interest only for 10 years, then repay over 20 years at the same rate, and it shows both payments. Real HELOC rates will move with prime, so treat the HELOC figures as a floor, not a promise.
With the defaults, a $400,000 home with $220,000 owed has room for about $120,000 at 85% CLTV. Borrowing $60,000 on a 15-year fixed loan at 7.5% costs about $556 a month and roughly $40,100 in interest over the full term. Try the 10-year term and the payment rises to about $712, but the interest drops to about $25,500. That trade-off, a higher payment now for far less interest overall, is worth checking before you default to the longest term a lender offers.
Bing Map Locator: Lenders and Free Counselors Near You
Pick what you’re looking for, then open Bing Maps centered on your location. If you share your location, it’s used only to build the map link and never leaves your browser otherwise.
A HUD-approved housing counselor is the most underused option on that list. Counseling is free or low-cost, the agencies don’t sell loans, and a counselor can review a lender’s quote, explain your options if you’re behind on payments, or walk an older homeowner through a reverse mortgage versus a HELOC. You can also reach the national referral line at 1-800-569-4287.
Which Situation Sounds Like Yours?
The right product and the right lender depend on why you’re borrowing and what your finances look like. Find the closest match below.
Moving card debt at about 22% to a fixed home equity loan near 7.5% can cut your interest dramatically, but it also turns unsecured debt into debt backed by your house. Miss enough payments on a card and your credit suffers; miss them on a home equity loan and you can lose the home. Choose a fixed loan, pick the shortest term you can afford, and close or lock away the cards you paid off so the balances don’t come back. And remember that interest on money used for debt payoff isn’t tax-deductible.
This is where home equity borrowing works best. A HELOC lets you pay contractors as the job moves forward, and interest on money used to substantially improve the home securing the loan can be deductible if you itemize. Keep invoices and bank records that show where every draw went; mixed-use funds are where deductions fall apart. Get two or three contractor bids before you set the line amount so you don’t borrow more than the project needs.
Lenders approve home equity loans based on income, so Social Security, pensions and retirement account withdrawals all count, but you’ll need to show the payment fits. If a monthly payment would strain your budget, compare a HECM reverse mortgage, which requires no monthly loan payment as long as you live in the home and keep up with taxes, insurance and upkeep. HUD’s lending limit for these loans is $1,249,125 this year. A reverse mortgage requires counseling first, and that session is a smart place to compare it with a HELOC side by side.
Florida adds state costs to every new mortgage, including home equity loans: documentary stamp tax on the note and intangible tax on the amount secured. Even “no closing cost” lenders often pass these through, so ask for them in dollars. Higher insurance premiums also raise your debt-to-income ratio, which can lower how much you qualify for. Third Federal has branches in Florida, and Navy Federal and many local credit unions serve large Florida memberships.
Texas has its own constitutional rules for home equity lending on a homestead. Total debt is capped at 80% of the home’s value, there’s a waiting period between application and closing, and fees are limited. That means fewer lenders, slower closings and less room to borrow than in other states. Plan ahead, and check that your lender is set up to handle Texas home equity loans.
You can still qualify, but expect a rate a couple of points above the top tier and a lower borrowing cap. Start with credit unions and your current mortgage servicer, which already knows your payment history. Paying down card balances before you apply is often worth more than any other step. If quotes come back above 11%, a personal loan for a smaller amount, with no lien on your home, may make more sense.
Most lenders want two years of tax returns and use your net income after deductions, which can be far lower than your gross receipts. If you wrote off a lot last year, your qualifying income may be thin. Bring returns, a year-to-date profit and loss statement and bank statements. Some lenders offer bank-statement programs at higher rates; compare them carefully against a smaller conventional loan.
Online lenders and a few credit unions can close in one to three weeks, and fully digital fixed-rate HELOCs can fund in about five days. Speed usually costs something, often an origination fee. Remember the three-business-day cancellation window on a primary home: funds aren’t released until it ends, so count it in your timeline. Have your ID, mortgage statement, homeowners insurance declaration page and income documents ready on day one.
Recent buyers with FHA or VA loans and small down payments often have little or no equity, especially in parts of Florida and Texas where prices have softened. ICE counted about 813,000 underwater borrowers at mid-year, up 44% from a year earlier. If your CLTV is already above 80%, most lenders will say no, and the ones that say yes charge more. Waiting a year while you pay down principal may be the cheapest move.
The Tax Deduction: Who Really Gets It
Ads love to say home equity interest is tax-deductible. For most borrowers, it isn’t, and the rules behind that are now permanent.
Since 2018, interest on a home equity loan or HELOC counts as deductible mortgage interest only when the money is used to buy, build or substantially improve the home that secures the loan. The 2025 tax law made that rule permanent, along with the $750,000 cap on total mortgage debt that qualifies ($375,000 if married filing separately). Use the money to pay off cards, cover tuition or buy a car, and none of the interest is deductible, no matter what the loan is called.
The second hurdle is itemizing. The standard deduction for this tax year is $32,200 for married couples filing jointly and $16,100 for single filers. Your mortgage interest, state and local taxes, charitable gifts and other itemized deductions have to beat that before the home equity interest saves you anything. A couple paying $4,500 a year in equity loan interest on a renovation, with little else to itemize, may get no tax benefit at all.
Older homeowners have a separate break to factor in. People 65 and older can claim a new deduction of up to $6,000 each through 2028, whether or not they itemize, phasing out at higher incomes. That doesn’t change the home equity rules, but it does mean many retirees will take the standard deduction anyway. Talk with a tax professional before you count a deduction into your loan math.
Keep the loan proceeds in a separate account, pay contractors and suppliers from it, and save every invoice and permit. Repairs that only maintain the home, like fixing a leak, generally don’t count as substantial improvements; adding a room, replacing a roof or remodeling a kitchen generally do. Your lender’s year-end Form 1098 shows interest paid, not how you spent the money, so your records are what back up the deduction.
Questions to Ask, and Red Flags to Walk Away From
A home equity loan puts a lien on the place you live. These questions turn a vague quote into something you can compare, and the red flags help you spot offers that aren’t what they seem.
What’s the rate and APR at my exact CLTV and credit score? Which discounts are built into that rate, and what happens if I lose them? What are the total closing costs in dollars, including state taxes? Is there an annual fee, an inactivity fee or an early-closure fee? For a HELOC, what’s the margin over prime, the rate cap and the draw period? Can I convert part of the balance to a fixed rate? Is there a prepayment penalty? How is the home valued? How many days to funding?
A lender that pushes you to borrow more than you asked for. A quote that changes sharply at closing. Pressure to sign before you’ve read the documents, or blank spaces left to “fill in later.” A loan with a balloon payment you didn’t expect. A broker who suggests overstating your income. An unsolicited caller offering to “free up equity” for a fee. Any of these is a reason to stop and call a HUD-approved counselor.
Some companies advertise cash for your equity with no monthly payment and no interest rate. In exchange, you agree to give them a share of your home’s future value, often settled when you sell or after a set number of years. If your home appreciates, the effective cost can far exceed a home equity loan, and federal regulators have flagged these contracts as complex and risky for consumers. If you can afford a monthly payment, a regular home equity loan or HELOC is almost always cheaper and easier to understand.
Federal law gives you protections worth knowing. On a home equity loan or HELOC secured by your primary home, you have three business days after closing to cancel for any reason, and the lender has to return fees you paid. Lenders must give you clear disclosures of rates, fees and payment terms before you commit. If a lender won’t answer your questions in writing, or you think you’ve been treated unfairly, you can file a complaint with the Consumer Financial Protection Bureau online or at 1-855-411-2372. Report scams to the FTC at ReportFraud.ftc.gov.
Our Verdict
Keep your low-rate first mortgage, borrow only what keeps you at or below 70% to 80% CLTV, and get at least three quotes, including a credit union and a lender that covers closing costs. Choose a fixed loan for a lump sum while the Fed leans toward higher rates; choose a HELOC only for staged spending you can repay on a budget that already includes the bigger repayment payment.
Skip it if the payment would only fit your budget in a good month, if you’re borrowing to cover everyday expenses, or if you’d need to move within a year or two. A HUD counselor, a smaller personal loan or simply waiting while you build equity can be the better choice.
Questions people still ask
Which bank has the lowest home equity loan rates?
No single bank is cheapest for everyone, because pricing depends on your score, CLTV and state. Credit unions and savings institutions often post the lowest rates, and some lenders match or beat a documented competing offer. Get three quotes on the same day for a fair comparison.
Are home equity loan rates fixed?
Usually, yes. Most home equity loans have a fixed rate for the whole term. HELOCs are usually variable and track the prime rate, although some lenders offer fixed-rate HELOCs or let you convert part of the balance to a fixed rate.
How is a HELOC rate calculated?
Most HELOCs charge the prime rate plus a margin set by the lender based on your credit and CLTV. With prime at 7.00%, a margin of 0.5 points means a 7.5% rate. If the Fed raises rates again, prime and your HELOC rate typically rise with it.
What are typical closing costs on a home equity loan?
They range from nothing, at lenders that cover them, to around 2% to 5% of the loan when you add appraisal, title, recording and origination fees. Some states add taxes on new mortgages. Always ask for the total in dollars.
Does applying for a home equity loan hurt my credit?
A full application triggers a hard inquiry, which can lower your score slightly for a short time. Many lenders prequalify with a soft check first. Keep your rate shopping within a couple of weeks to limit the effect.
Can I get a home equity loan on a rental or second home?
Some lenders offer them, but rates are higher and borrowing limits lower than on a primary residence. Several popular lenders only lend on owner-occupied homes, so ask before you apply.
Can I pay off a home equity loan early?
Most lenders don’t charge prepayment penalties, but some HELOCs charge an early-closure fee or claw back closing costs they paid if you close the line within the first few years. Read the fee section of your agreement.
Can I get a home equity loan if I’m retired?
Yes, if your retirement income covers the payment and your debt-to-income ratio fits the lender’s limits. Social Security, pensions and regular retirement withdrawals can all count as income.
What happens if I sell my home with a home equity loan?
The home equity loan or HELOC is paid off from the sale proceeds at closing, along with your first mortgage. You keep what’s left after both are paid and selling costs are covered.
Should I lock a fixed rate now or wait?
If you need the money within the next few months, waiting is a bet that rates will fall, and the Fed’s recent moves point the other way. Locking a fixed rate removes that risk. If you’re not sure you’ll need the money, an unused HELOC from a lender with no annual fee can serve as a standby option.
How this page was checked. Rate figures reflect national averages, Federal Reserve decisions and Freddie Mac survey results published through October 28. Lender features and phone numbers were checked against each lender’s own website and published disclosures. Tax figures follow IRS rules for this tax year. Pricing grids, payment examples and illustrations are our own calculations. Rates change daily; your lender’s written disclosures are the final word.
This page is independent and not affiliated with any lender listed. It is general information, not financial, tax or legal advice.
Key sources: Federal Reserve · Freddie Mac · CFPB · IRS · HUD · ICE Mortgage Technology