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Jeff Ostrowski covers mortgages and the housing market. Before joining Bankrate in 2020, he spent more than 20 years writing about real estate, business, the economy and politics.
Linda Bell is a senior writer on Bankrate's Home Lending team, producing content around HELOCs, financing home renovations, home equity loans and more.
Troy Segal is a senior editor for Bankrate. She edits stories about mortgages and home equity, along with the finer financial points of owning and maintaining a home.
Troy Segal is a senior editor for Bankrate. She edits stories about mortgages and home equity, along with the finer financial points of owning and maintaining a home.
Check your credit The higher your credit score, the better your rate.
Calculate your home equity How much you can borrow will be determined by the difference between your home’s value and how much you owe on your mortgage.
Consider how much other debt you already have A little consumer debt is fine, but if you have car loans and credit card balances, getting approved might be tricky.
Complete the lender's application Many lenders let you start the application process online by entering your personal and financial information.
Be aware of potential fees You may also need to pay fees for a loan application, credit check and home appraisal.
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What are today's average interest rates for home equity loans?
LOAN TYPE
AVERAGE RATE
AVERAGE RATE RANGE
Home equity loan
8.38%
7.83% – 9.49%
10-year fixed home equity loan
8.53%
7.90% – 9.31%
15-year fixed home equity loan
8.45%
8.04% – 10.17%
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 December 11, 2024. 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.
National home equity loan interest rate trends
Home equity loan rates retreat ahead of Fed meeting
Home equity rates dropped this week with the average rate on the 10-year, $30,000 home equity loan and the 15-year $30,000 loan falling to 8.53 percent and 8.45 percent respectively, as of Dec. 11, according to Bankrate’s survey of large lenders.
Unlike HELOCs, home equity loan rates are fixed. Once you close your loan, your rate will stay the same whether market rates rise or fall (unless you refinance). However, interest rates on new home equity loans do shift in response to economic conditions and influences, including Federal Reserve policy. After cutting interest rates at its last two meetings, the Fed is gearing up for its final meeting of the year on Dec. 17-18.
Generally, a home equity loan is best when you’re certain of the total lump sum you need and exactly when and how you’ll spend the money. Twenty-three percent of baby boomers believe there’s no good reason to tap into their home equity, compared to 19 percent of Gen Xers and 9 percent of millennial homeowners, according to Bankrate’s Home Equity Insights Survey.
“Many homeowners are using these products for debt consolidation to get out of high-interest rate credit card debt or pay off student loans,” says Tanya Bates, mortgage regional-manager at BOK Financial. “Also, with [mortgage refinance] rates still higher than some prefer, using the equity to improve their existing home has seen strong demand.”
How to choose the best home equity loan
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.
How to choose the best home equity loan for you:
Compare your credit score to lender requirements. Some lenders accept applications from borrowers with credit scores in the 600s, others don’t.
Weigh each lender’s combination of interest rates and fees. Both can range widely from one lender to another. The annual percentage rate (APR) on a loan reflects the combined impact of rates and fees.
Figure out how much home equity you have. Some lenders let you tap up to 90 percent of your home’s value. Others cap that amount at 80 percent.
Determine your debt-to-income ratio: all your current monthly obligations divided by your monthly gross income. Lenders look at this ratio to measure your ability to repay the loan, and some allow a larger ratio than others.
Determine how much you need to borrow. Some lenders offer home equity loans as big as $500,000, others have a max of $100,000.
Choosing the right lender is an important part of the home equity loan process. Start out with three lenders. Take the time to research them thoroughly, comparing their reputation, loan terms, rates and customer service. Not only will this streamline the borrowing process, but it will also help you secure the right home equity loan for your financial situation.
— Linda Bell, Senior Writer, Home Lending
Identification or Social Security Number
Employment history and employer’s contact information
Evidence of your income for the past two years, typically through your tax returns
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.
Note: The above APRs are current as of December 5, 2024. 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 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.
Overview
Lender
Police and Fire Federal Credit Union
APR starting at
6.99%
Loan Amount
Up to $600,000
Max LTV Ratio
Up to 100%
Max Debt-to-income ratio
N/A
Min. Credit Score
700
Term Lengths
Five to 20 years
Fees
Appraisal upgrade fee ($150), returned loan payment fee ($15), credit card payment fee ($10), late payment fee (5% of monthly principal and interest payment)
Available Nationwide?
Philadelphia and South Jersey
Average days to close
Within 35 days of application
There are no closing costs or application fees on home equity loans or HELOCs.
PFFCU offers competitive rates without charging any points; loans can be as high as $600,000.
You can receive a decision in one business day when applying during regular business hours.
PFFCU requires membership, and to become a member, you must be an active or retired Philadelphia firefighter or police officer or family member of the same; or an employee of one of the credit union’s affiliated organizations.
The credit union’s HELOC has a five-year draw period, half the length of the decade-long draw that other lenders offer.
The late fee for home equity loans is 5% of the loan’s monthly principal and interest.
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.
Overview
Lender
Regions Bank
APR starting at
6.75%
Loan Amount
$10,000 to $250,000
Max LTV Ratio
89%
Max Debt-to-income ratio
N/A
Min. Credit Score
N/A
Term Lengths
10, 15, and 20 years
Fees
Late payment fee of 5% of amount due ($29 - $100)
Available Nationwide?
Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Mississippi, Missouri, North Carolina, South Carolina, Tennessee and Texas
Average days to close
32 days
The company’s home equity loans have low interest rates, no annual fee and flexible repayment terms.
Regions pays all closing costs.
Borrowers may also qualify for a rate discount by setting up autopay from a Regions Bank checking account.
The property securing your home equity loan has to be located in a state where Regions has a branch, and you’ll need to close on the loan at a branch location.
You’ll need at least $10,000 in equity to qualify for a loan.
The bank charges several fees, including 5% late fees (with a minimum of $29 and a maximum of $100 in most states) and a $15 returned check fee.
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.
Overview
Lender
Connexus
APR starting at
7.31%
Loan Amount
$5,000 minimum
Max LTV Ratio
90%
Max Debt-to-income ratio
N/A
Min. Credit Score
N/A
Term Lengths
5, 10, and 15 years
Fees
Closing costs between $175 and $2,000
Available Nationwide?
All states except Alaska, Hawaii, Maryland and Texas
Average days to close
Within 30 days of applying
Within 24 hours of applying for the home equity loan, a personal lender will reach out to you to begin the process.
Connexus’ home equity loans don’t have an annual fee.
Most applications don’t require an appraisal and can be completed entirely online in minutes.
Borrowers are responsible for closing costs that can range from $175 to $2,000, depending on the property location and loan terms.
Connexus doesn’t offer home equity loans in Alaska, Hawaii, Maryland and Texas.
Membership in the company’s credit union is required to get a HELOC or home equity loan.
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.
Overview
Lender
Third Federal Savings and Loan
APR starting at
7.24%
Loan Amount
$10,000 to $200,000
Max LTV Ratio
80%
Max Debt-to-income ratio
N/A
Min. Credit Score
N/A
Term Lengths
Five to 20 years
Fees
No prepayment or origination fees
Available Nationwide?
California, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, Missouri, New Hampshire, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, Tennessee, Virginia, Washington, Wisconsin, and Washington D.C.
Average days to close
N/A
Third Federal offers the choice of an adjustable-rate or fixed-rate home equity loan.
Home equity loans and HELOCs have no application and origination fees.
If you find a lower rate with a competitor, you may qualify for a rate match or a $1,000 check.
HELOC borrowers are charged a $65 annual fee, although it’s waived the first year.
The company’s rate guarantee is only good for comparable HELOCs and home equity loans (including criteria like the term, loan amount and lien position) for the same property.
Third Federal’s home equity loans are offered in fewer states than its other loan products.
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.
Overview
Lender
U.S. Bank
APR starting at
7.65%
Loan Amount
$15,000 to $750,000
Max LTV Ratio
80%
Max Debt-to-income ratio
N/A
Min. Credit Score
660
Term Lengths
Up to 30 years
Fees
No closing costs
Available Nationwide?
All U.S. States
Average days to close
N/A
The company offers a 0.50 percent rate discount for those who make automatic payments from a U.S. Bank checking or savings account.
You may be able to borrow as much as $750,000 (or up to $1 million in California) depending on your available equity, current monthly debt and credit history.
Funds are typically available within three business days after closing.
U.S. Bank tends to have stricter credit requirements: The best interest rates go to people with credit scores around 730 or higher.
Home equity loans can’t be obtained for properties held in a trust in Louisiana, Hawaii, Louisiana, New York and Rhode Island.
Not all loan programs are available in all states for all loan amounts.
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.
Overview
Lender
TD Bank
APR starting at
7.99%
Loan Amount
$10,000 minimum
Max LTV Ratio
90%
Max Debt-to-income ratio
43%
Min. Credit Score
620
Term Lengths:
5, 10, 15, 20 and 30 years
Fees
$99 origination fee, mortgage discharge fee when refinancing
Available Nationwide?
Connecticut, District Of Columbia, Delaware, Florida, Massachusetts, Maryland, Maine, North Carolina, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, South Carolina, Virginia, Vermont
Average days to close
2.5
You can get a 0.25% rate discount for setting up autopay from a TD Bank checking or savings account.
TD Bank’s fixed-rate home equity loans have a wide range of terms, from 5 to 30 years.
In most cases, you can avoid paying closing costs.
Unlike many other lenders on this list, TD Bank charges a $99 origination fee.
The company’s home equity products are not available in all states.
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.
Overview
Lender
Discover
APR starting at
6.75% 1st lien | 7.93% 2nd lien
Loan Amount
$35,000 to $300,000
Max LTV Ratio
90%
Max Debt-to-income ratio
43%
Min. Credit Score
680
Term Lengths
10, 15, 20 and 30 years
Fees
No origination, application, appraisal, processing or closing costs
Available Nationwide
All states except Iowa and Maryland
Average days to close
N/A
Discover’s home equity loans allow you to borrow up to $300,000 against your home equity.
You can choose a loan term of 10, 15, 20 or 30 years.
There are no origination fees, application fees, processing fees, home valuation fees or cash required at closing.
Discover only offers fixed-rate home equity loans.
Borrowers need a credit score of 680 or more to qualify for a home equity loan.
If you repay the loan within the first three years, Discover may require an expense reimbursement maximum of $500.
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.
Overview
Lender
Rockland Trust Bank
APR starting at
8.12%
Loan Amount
$25,000-$400,000
Max LTV Ratio
75%
Max Debt-to-income ratio
N/A
Min. Credit Score
N/A
Term Lengths
Five to 20 years
Fees
No annual fees or closing costs
Available Nationwide?
Massachusetts only
Average days to close
N/A
Rockland Trust Bank offers a fixed-rate home equity loan of up to $400,000, with a variable term length of five to 20 years.
The company’s home equity loans have no closing costs or annual fees.
Typically, you will need a loan-to-value ratio of 75% or less to qualify, vs. 80% with other lenders.
Rockland Trust Bank mainly serves Massachusetts, so availability is limited.
You have to borrow a minimum of $25,000, higher than other home equity lenders.
Advertised rates for Express Mortgage, the company’s first lien, fixed-rate home equity loan, require an automatic repayment from a Rockland Trust checking account.
Methodology
To determine the best home equity loan rates, we surveyed over 30 home equity lenders. The top home equity loan rates listed account for the lowest advertised APR (annual percentage rate), based on a borrower with a credit score of 700 or higher and a combined loan-to-value (CLTV) ratio of 80 percent obtaining a 30-year home equity loan for $30,000.
Note that these lenders listed here are based solely on their offering the lowest APR, and are not necessarily the best overall home equity lenders Bankrate has scored. Learn more about Bankrate’s lender review methodology.
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. 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.
Calculating your home's equity
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.
PROS
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.
CONS
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.
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.
Home improvements: Because they can often add value over time, upgrades, updates and other renovations to your home are important. You may also qualify for tax deductions on the interest on the loan, if it’s used for improvements or repairs.
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.
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)
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 — just like a traditional mortgage — a HELOC allows you to make periodic draws up to a certain amount, like a credit card. You pay interest on the withdrawals at a variable rate. You can withdraw funds, repay them and then borrow again, for a number of years. After that, you can no longer tap the credit line, but must repay it all, over a period of time.
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 short-term remodel that would require all of the funds upfront, a home equity loan may be the best option.
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 and up for a Home Equity Conversion Mortgage, the most popular reverse mortgage product, or 55 and up for some proprietary reverse mortgages).
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 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.
FAQs about home equity loans
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, depending on the lender, the home's location, your state laws, or other factors, you may have to pay for title insurance, property insurance, flood insurance, or certain taxes.
If you have poor credit, you may have a harder time getting approved for a loan, but it is still possible. The first step is to shop around: 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. And there are in fact reputable financial institutions that cater to the credit-challenged.
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
If you don't meet the requirements, you may want to consider getting a co-signer to increase your chances of approval.
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.
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.
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.
