Compare current home equity loan rates and understand how they differ from HELOCs.
Current Home Equity Loan Rates
Home equity loan rates are fixed, meaning your rate and monthly payment stay the same for the life of the loan. Rates are higher than first mortgages because the lender is in second-lien position — if you default, the primary mortgage gets paid first. Your credit score and loan term are the two biggest factors in the rate you’ll receive.
Rates as of March 2026. Updated weekly.
| Credit Score | 10-Year Rate | 15-Year Rate | 20-Year Rate |
|---|---|---|---|
| 760+ | 8.00% | 8.25% | 8.50% |
| 720-759 | 8.50% | 8.75% | 9.00% |
| 680-719 | 9.00% | 9.25% | 9.50% |
| 660-679 | 9.50% | 9.75% | 10.00% |
| 620-659 | 10.00%+ | 10.25%+ | 10.50%+ |
Home Equity Loan vs HELOC Rates
The fundamental trade-off is predictability versus flexibility. A home equity loan locks in a fixed rate and delivers a lump sum — ideal when you know exactly how much you need. A HELOC gives you a revolving credit line you can draw from over time, but the variable rate means your costs can shift with the market.
| Feature | Home Equity Loan | HELOC |
|---|---|---|
| Current Rate | 8.25-9.50% | 8.00-10.00% |
| Rate Type | Fixed | Variable (usually) |
| How You Receive | Lump sum | Draw as needed |
| Payment | Same monthly payment | Changes with balance/rate |
| Best For | One-time large expense | Ongoing/uncertain needs |
| Rate Risk | None | Rates could rise |
Monthly Payment Calculator
Home equity loan payments are fully amortised, so you pay the same amount every month for the entire term. Shorter terms mean higher monthly payments but substantially less total interest. A $100,000 loan at 8.50% costs $48,584 in interest over 10 years versus $115,700 over 20 years — choosing the shortest term you can comfortably afford saves tens of thousands.
Fixed-rate home equity loan payments:
10-Year Term @ 8.50%
| Loan Amount | Monthly Payment | Total Interest |
|---|---|---|
| $25,000 | $310 | $12,146 |
| $50,000 | $620 | $24,292 |
| $75,000 | $929 | $36,438 |
| $100,000 | $1,239 | $48,584 |
| $150,000 | $1,859 | $72,876 |
15-Year Term @ 8.75%
| Loan Amount | Monthly Payment | Total Interest |
|---|---|---|
| $25,000 | $249 | $19,803 |
| $50,000 | $498 | $39,606 |
| $75,000 | $747 | $59,409 |
| $100,000 | $996 | $79,212 |
| $150,000 | $1,493 | $118,818 |
20-Year Term @ 9.00%
| Loan Amount | Monthly Payment | Total Interest |
|---|---|---|
| $25,000 | $225 | $28,925 |
| $50,000 | $450 | $57,850 |
| $75,000 | $675 | $86,775 |
| $100,000 | $900 | $115,700 |
| $150,000 | $1,350 | $173,550 |
How Much Can You Borrow?
Your borrowing limit is determined by how much equity you have after accounting for your existing mortgage. Most lenders cap your combined loan-to-value at 80%, so you need at least 20% equity before any home equity borrowing is available.
Most lenders allow 80-85% combined LTV:
| Home Value | Mortgage Balance | Max Equity Loan (80% LTV) |
|---|---|---|
| $350,000 | $200,000 | $80,000 |
| $400,000 | $250,000 | $70,000 |
| $500,000 | $300,000 | $100,000 |
| $600,000 | $350,000 | $130,000 |
| $750,000 | $400,000 | $200,000 |
Formula: (Home Value × 80%) - Mortgage Balance = Max Home Equity Loan
Home Equity Loan Rates by Loan Amount
Lenders often offer better rates on larger loans because the fixed origination costs are spread over a bigger balance. Loans under $25,000 tend to carry higher rates and may not be worth the closing costs. If you only need a small amount, a personal loan might be a simpler alternative.
| Loan Amount | Typical Rate | Notes |
|---|---|---|
| $10,000-$24,999 | 9.00-10.00% | Higher rates, small loan |
| $25,000-$49,999 | 8.50-9.50% | Standard rates |
| $50,000-$99,999 | 8.25-9.00% | Better rates |
| $100,000+ | 8.00-8.75% | Best rates, larger loans |
Rates by Loan Purpose
| Purpose | Rate Impact | Notes |
|---|---|---|
| Home improvement | Best rates | Tax-deductible interest possible |
| Debt consolidation | Standard rates | Saves vs. credit card rates |
| Education | Standard rates | Consider federal loans first |
| Major purchase | Standard rates | Compare to other financing |
| Emergency | Standard rates | Build emergency fund instead |
Closing Costs
Home equity loans carry closing costs similar to a first mortgage but on a smaller scale. Expect to pay $500-$2,000 in total fees depending on your loan size and lender. Some lenders waive closing costs entirely in exchange for a slightly higher interest rate — worth considering if you plan to pay off the loan early.
| Fee | Typical Amount | Can Negotiate? |
|---|---|---|
| Application fee | $0-$100 | Yes |
| Origination | 0-1% of loan | Yes |
| Appraisal | $300-$500 | Limited |
| Title search | $100-$300 | No |
| Credit report | $25-$50 | No |
| Recording | $50-$150 | No |
| Total | $500-$2,000 |
Note: Some lenders offer no-closing-cost options with slightly higher rates.
Home Equity Loan vs Cash-Out Refinance
$100,000 needed, current mortgage: $300,000 at 5.50%
Home Equity Loan
| Feature | Value |
|---|---|
| New loan | $100,000 @ 8.50% |
| Keep existing mortgage | $300,000 @ 5.50% |
| Payment 1 (mortgage) | $1,703 |
| Payment 2 (equity) | $1,239 |
| Total Payment | $2,942 |
Cash-Out Refinance
| Feature | Value |
|---|---|
| New loan | $400,000 @ 7.00% |
| Payment | $2,661 |
| Closing costs | $8,000-$12,000 |
| Total Payment | $2,661 |
Analysis: Refinance has lower payment but replaces your 5.50% rate with 7.00%. Home equity loan preserves cheap first mortgage. Better choice depends on how long you keep the loan.
Qualification Requirements
Lenders evaluate the same core factors as a mortgage: credit score, equity, income, and debt load. The key difference is that home equity loans require sufficient equity after your first mortgage is accounted for. Meeting the minimums gets you approved, but a stronger credit profile unlocks materially better rates.
| Requirement | Typical Minimum |
|---|---|
| Credit score | 620 (680+ for best rates) |
| Home equity | 15-20% minimum |
| Combined LTV | 80-85% maximum |
| Debt-to-income | Under 43% |
| Income | Documented, stable |
| Property | Primary residence |
Tax Implications
| Use of Funds | Interest Deductible? |
|---|---|
| Home improvement | Yes (up to $750K total mortgage debt) |
| Debt consolidation | No |
| Education | No |
| Other personal | No |
Example: $100K home equity loan for new roof at 8.50%:
- Annual interest: ~$8,000
- Tax bracket: 24%
- Tax savings: ~$1,920/year
- Effective rate: ~6.46%
Getting the Best Rate
| Strategy | Potential Savings |
|---|---|
| Credit score 760+ | 0.50-1.00% lower rate |
| Shop 3-5 lenders | Find best offer |
| Credit union | Often lowest rates |
| Relationship discount | 0.25-0.50% off |
| Autopay | 0.25% off |
| Larger loan amount | Better rate tiers |
Home Equity Loan Rate History
| Period | Average Rate |
|---|---|
| March 2026 | 8.75% |
| 2025 Average | 8.85% |
| 2024 Average | 8.70% |
| 2023 Average | 8.45% |
| 2022 Average | 6.30% |
| 2021 Average | 5.85% |
| 2020 Average | 5.95% |
When to Choose a Home Equity Loan
Best Uses
| Situation | Why Home Equity Loan Works |
|---|---|
| Major renovation | Lump sum needed, fixed payment |
| Debt consolidation | Lower rate than credit cards |
| One-time large expense | Predictable repayment |
| Rate-sensitive borrower | Locked rate, no surprises |
Avoid If
| Situation | Better Alternative |
|---|---|
| Need ongoing access | HELOC instead |
| Variable amount needed | HELOC instead |
| Small amount (<$10K) | Personal loan may be cheaper |
| Planning to sell soon | May not recover costs |
| Tight budget | Risk losing home |
How to Qualify for a Home Equity Loan
Lenders evaluate four factors when approving home equity loans. Meeting strong criteria on all four gets you the best rate; weakness in one area can mean a higher rate or denial.
The Four Qualification Factors
1. Combined Loan-to-Value Ratio (CLTV) Most lenders cap CLTV at 85%, meaning you can only borrow up to 85% of your home’s appraised value, minus what you owe on your first mortgage.
Example:
- Home value: $400,000
- 85% maximum: $340,000
- First mortgage balance: $230,000
- Maximum home equity loan: $110,000
| Max CLTV | Home Value | First Mortgage | Max Equity Loan |
|---|---|---|---|
| 80% | $400,000 | $230,000 | $90,000 |
| 85% | $400,000 | $230,000 | $110,000 |
| 90% | $400,000 | $230,000 | $130,000 |
Some lenders go to 90% CLTV but charge higher rates.
2. Credit Score A 720+ score gets the best rates. Below 680, expect significant rate premiums or denial at traditional lenders. Credit unions are often more flexible with scores in the 650-680 range.
3. Debt-to-Income Ratio (DTI) Most lenders require total monthly debt payments (including the new equity loan payment) stay below 43% of gross monthly income. Lower DTI = better rate.
4. Home Appraisal Lenders order an appraisal to confirm your home’s value before approving the loan. You typically pay $300-$600 for this upfront. If your home appraises lower than expected, the loan amount will be reduced accordingly.
Tax Deductibility of Home Equity Loan Interest
Interest on a home equity loan is tax-deductible only if the loan is used to buy, build, or substantially improve the home securing the loan. Using a home equity loan to consolidate credit card debt or pay for a vacation disqualifies the interest deduction. The combined mortgage debt limit for deducting interest is $750,000 ($375,000 married filing separately) for loans taken out after December 15, 2017.
Home Equity Loan vs. Cash-Out Refinance
When interest rates are rising (as they have been since 2022), a home equity loan often beats a cash-out refinance for borrowers with a low existing mortgage rate. A cash-out refi replaces your entire first mortgage at today’s higher rate — costing you significantly more on the loan balance you already had.
| Scenario | Home Equity Loan | Cash-Out Refinance |
|---|---|---|
| Existing mortgage rate | Keep your 3% rate | Replace with 7%+ rate |
| New borrowing rate | ~8.5% on equity amount only | ~7% on entire balance |
| Best when | Rates have risen since original mortgage | Rates are similar or lower |
| Closing costs | $1,000-$3,000 | $3,000-$8,000 |
| Monthly payment impact | Adds a second payment | Replaces one payment |
For most homeowners who locked in rates below 4.5% in 2020-2021, a home equity loan is the smarter choice than a cash-out refi in the current rate environment.
Related: HELOC Rates | Home Equity Calculator | Home Equity Loan vs HELOC
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