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Home equity loans and home equity lines of credit are two products that let homeowners tap into their home equity. What’s the difference?
A home equity loan is a fixed-rate, lump sum loan that is secured by the borrower’s equity in their home. This type of loan enables a homeowner to borrow up to 85% of their home equity and pay it back in monthly installments over a period of five to 30 years depending on the loan term.
A home equity line of credit (HELOC) is a variable-rate second mortgage that utilizes a portion of your home’s value through a revolving line of credit. You can use, pay down and reuse the credit line during a set time period as needed
Related: Best Home Equity Loan Lenders
$100K HELOC Rates
—Ideal for Medium-Sized Projects
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
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
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 October 26, 2023
5-Year Home Equity Loan Rates (60 Months)
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)
With a 10-year term, borrowers can enjoy a balanced monthly payment while still building equity quickly. Ideal for medium-sized projects or financial needs.
15-Year Home Equity Loan Rates (180 Months)
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)
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)
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 October 26, 2023
What Is Home Equity?
When you buy your home with a mortgage, your lender pays 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?
You earn home equity every month when you make your mortgage payments. The more payments you make, the more your equity increases.
A home equity loan is a lump-sum loan based on how much of your home you own outright. So if your loan-to-value ratio (LTV) is 50%, you can borrow, say, 80% of that LTV. Most lenders won’t let you access 100% of your home’s equity, but even getting a portion of it through a home equity loan could be a game-changer for your big financial needs.