Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations.
Home equity loans and home equity lines of credit (HELOCs) allow homeowners to tap into the value of their homes.
A home equity loan is a fixed-rate, lump-sum loan that allows homeowners to borrow up to 85% of their home’s value and pay that amount back in monthly installments. A home equity line of credit s a variable-rate second mortgage that draws on your home’s value as a revolving line of credit.
Both options use your property as collateral for your payments, which means your lender can seize your property if you can’t repay what you borrow.
Related: Best Home Equity Loan Lenders
$100K HELOC Loan Rates
—Ideal for Medium-Sized Projects
| Loan term | APR |
|---|---|
60.00% LTV | 9.15% |
80.00% LTV | 9.32% |
90.00% LTV | 10.11% |
A $100K HELOC is suitable for more extensive renovation projects or other significant financial needs. Compare the rates and terms to find the best fit for your situation.
$250K HELOC Loan Rates
—Access More Funds for Major Investments
| Loan term | APR |
|---|---|
60.00% LTV | 9.14% |
80.00% LTV | 9.32% |
90.00% LTV | 10.14% |
For larger projects or investments, a $250K HELOC provides the necessary funds with various LTV options. Explore these rates to determine the right balance between borrowing capacity and risk.
$500K HELOC Loan Rates
—Maximize Your Borrowing Power
| Loan term | APR |
|---|---|
60.00% LTV | 9.20% |
80.00% LTV | 9.39% |
90.00% LTV | 10.26% |
If you have substantial equity in your home and need significant financing, a $500K HELOC offers a great deal of borrowing power. Evaluate these options to find the optimal rate and term for your goals.
*Data accurate as of May 31, 2024
Pros and Cons of a HELOC
| Pros | Cons |
|---|---|
Lower interest rates compared to other loan types | HELOCs typically offer variable interest rates, which can make monthly payments hard to manage and budget over time |
You only owe interest on your balance and not the full credit line amount | Your home serves as collateral, putting your home at risk of foreclosure if you default |
Interest payments may be tax deductible if you meet IRS guidelines and prove that you will use the funds to buy, improve or build a home | You may be on the hook for several fees and expenses, including appraisal fees, application fees and closing costs fees |
HELOCs can be an excellent option to consolidate your other debt payments into one monthly payment and boost your credit score | You can end up with an upside-down loan, which means you owe more than your property is worth |
5-Year Home Equity Loan Rates (60 Months)
| Loan term | APR |
|---|---|
60.00% LTV, $50K | 8.12% |
80.00% LTV, $50K | 8.37% |
90.00% LTV, $50K | 9.10% |
A 5-year term offers a shorter repayment period with typically higher monthly payments. These products are suitable for borrowers looking for a quicker payoff.
10-Year Home Equity Loan Rates (120 Months)
| Loan term | APR |
|---|---|
60.00% LTV, $150K | 8.29% |
80.00% LTV, $150K | 8.56% |
90.00% LTV, $150K | 9.25% |
With a 10-year term, borrowers can enjoy a balanced monthly payment while still building equity quickly. 10-year home equity loans are ideal for medium-sized projects or financial needs.
15-Year Home Equity Loan Rates (180 Months)
| Loan term | APR |
|---|---|
60.00% LTV, $200K | 8.47% |
80.00% LTV, $200K | 8.75% |
90.00% LTV, $200K | 9.41% |
A 15-year term provides lower monthly payments compared to shorter terms, offering more affordability while still progressing toward your financial goals.
20-Year Home Equity Loan Rates (240 Months)
| Loan term | APR |
|---|---|
60.00% LTV, $250K | 8.71% |
80.00% LTV, $250K | 9.06% |
90.00% LTV, $250K | 9.63% |
Offering longer repayment and lower monthly payments, 20-year home equity loans are suitable for larger investments and long-term financial planning.
30-Year Home Equity Loan Rates (360 Months)
| Loan term | APR |
|---|---|
60.00% LTV, $500K | 9.28% |
80.00% LTV, $500K | 9.89% |
90.00% LTV, $500K | 10.05% |
The 30-year term maximizes affordability with the lowest monthly payments. These options are best for substantial borrowing needs and long-term investments.
*Data accurate as of May 31, 2024
Pros and Cons of a Home Equity Loan
| Pros | Cons |
|---|---|
Your interest rate will remain static over the life of your loan, giving you a consistent monthly payment amount | You put your property at risk of foreclosure since your home secures your loan against defaulted payments |
Home equity loans offer lump-sum funds that are ideal for tackling large expenses like home repairs, down payments and more | Strict qualification requirements such as high credit score minimums and low debt-to-income ratios can make it difficult to secure a home equity loan |
You can use home equity loan funds for almost any reason you see fit | You may have to pay expensive closing costs, including origination and appraisal fees |
If you use the loan to buy, build or improve your home, you can potentially deduct your interest payments from your tax return | If your home’s value decreases over time, you could end up with a loan balance that’s higher than your property’s value |
What Is Home Equity?
When you buy your home with a mortgage, your lender pays for that home in full and you make monthly payments back to your lender until it’s repaid. Every month, you earn more equity in your home as you repay your mortgage.
Home equity is the amount of your home that you own, usually expressed as a percentage. You can calculate your home equity by taking the appraised value of your home and subtracting your mortgage balance or other home loans.
What Is a HELOC?
A home equity line of credit, often referred to as a HELOC, lets homeowners convert the equity in a residential property into cash through a revolving line of credit that’s secured by your home.
When you get a HELOC, you can take the money available in installments as you need it and pay interest only on what you use.
How Does a Home Equity Loan Work?
Your equity in your home comes from how much you’ve paid on your mortgage. The longer you’ve been paying off your mortgage, the more equity you have. You can tap into that equity through a home equity loan.
A home equity loan is paid out in a lump sum that you can use for home improvements, home repairs, debt consolidation or another major expense. The amount you’re approved for is based on how much equity you have in your home, your credit score and history, and how much you need.
Different home equity lenders offer different repayment terms, but longer repayment terms usually mean lower monthly payments. This might be helpful for you if you’re paying both your original mortgage and a home equity loan at the same time.
Find the Best HELOC Rates of 2024
Learn More
