Best Home Equity Line of Credit (HELOC) Rates of January 2025
Updated December 27, 2024 at 3:02 am
A home equity line of credit (HELOC) offers plenty of benefits to homeowners. For example, the flexibility of a HELOC makes it a great way to borrow money for any purpose. And interest rates are often lower than other types of loans and are only paid on the amount borrowed.
But a HELOC comes with some risks. Variable interest rates can increase over time, making future payments unpredictable. And since your home serves as collateral, failure to repay can lead to foreclosure. There are also various fees that can add to the cost.
To help you choose the best HELOC with the most affordable interest rate. we’ve evaluated a wide variety of HELOC lenders to create this list of options.
Our Methodology Our research is designed to provide you with a comprehensive understanding of personal finance services and products that best suit your needs. To help you in the decision-making process, our expert contributors compare common preferences and potential pain points, such as affordability, accessibility, and credibility.
Our Picks - Best for Investment Properties: Guaranteed Rate
- Best for Fast Funding: Figure
- Best for Low Fees: Better
- Best for Wide Availability: PenFed
- Best for Customer Discounts: Citizens Bank
- Best Maximum Loan Amount: Flagstar Bank
- Best Customer Service: TD Bank
- Best Introductory Rate: Bethpage Federal Credit Union
8 Best HELOC Rates of 2024
Best For Investment Properties
Guaranteed Rate
Why We Chose It
Many HELOCs are only available on primary residences. But with Guaranteed Rate, you can take out a line of credit on your primary home, vacation home or investment property, which sets this lender apart from many others.
Pros
- Available for primary, secondary and investment properties
- Quick turnaround time
- Rate is fixed with each draw
Cons
- Origination fee
- Short draw period
- Unavailable in five states
Additional Information
Fees:
Origination fee of 1.99%
Repayment Schedule:
Draw period of 2 – 5 years, repayment period up to 30 years
Loan Availability:
Available in 45 states and the District of Columbia. Unavailable in New York, Kentucky, West Virginia, Delaware and Maryland.
Best For Fast Funding
Figure
Why We Chose It
Figure says it can fund your line of credit within five days if you use its remote online notary service.
Pros
- Quick turnaround time
- Low credit score requirement
- Low minimum line of credit
Cons
- Must draw full amount upfront
- Origination fee
- Unavailable in five states
Additional Information
Fees:
0% – 4.99% origination fee, recording fee, subordination fee
Repayment Schedule:
Draw period of 2 – 5 years, repayment period of 5 – 30 years
Loan Availability:
Available in 45 states and the District of Columbia. Unavailable in Delaware, Hawaii, Kentucky, New York and West Virginia.
Best For Low Fees
Better.com
Why We Chose It
The fees you pay on a HELOC can add up. But with Better.com, you won’t pay an origination fee, application fee, annual fee or prepayment penalty—potentially saving you hundreds of dollars compared to some other lenders.
Pros
- No fees or prepayment penalties
- Several repayment options
- Available for primary, secondary and investment homes
Cons
- Not available in all states
- High minimum line of credit
- Initial draw must be at least $50,000 or 75% of credit limit, whichever is greater
Additional Information
Fees:
No fees
Repayment Schedule:
Draw period of 3 – 10 years, repayment period of 15 – 30 years
Loan Availability:
Not available in all states.
Best For Wide Availability
Pentagon Federal Credit Union
Why We Chose It
PenFed’s HELOC is a solid option for several reasons—including a high maximum loan limit, long repayment terms, low fees and a low APR, plus the flexibility to borrow against a primary or secondary residence. It’s also the only lender on this list that offers HELOCs in every state and the District of Columbia.
Pros
- No origination fee
- High maximum line of credit
- Long repayment terms
Cons
- Annual fee
- High credit score requirement
Additional Information
Fees:
$99 annual fee, appraisal fee (if required)
Repayment Schedule:
Draw period of 10 years, repayment period of 20 years
Loan Availability:
All 50 states and the District of Columbia
Best Minimum Loan Amount
Citizens Bank
Why We Chose It
Some other lenders set a much higher minimum, such as $50,000, and may include an origination fee. But Citizens Bank’s GoalBuilder HELOC starts at $5,000 and doesn’t charge origination fees or annual fees, which is a good option if you’re looking to keep costs low.
Pros
- Low minimum line of credit
- APR discounts for Citizens Bank customers
- No application fees, closing costs, origination fees or prepayment penalties on GoalBuilder HELOC
Cons
- Not available in 21 states
- Low maximum line of credit
Additional Information
Fees:
No fees or prepayment penalties
Repayment Schedule:
Draw period of 10 years, repayment period of 15 years
Loan Availability:
Available in 29 states and the District of Columbia. Not available in Alaska, Arizona, California, Colorado, Hawaii, Idaho, Kansas, Louisiana, Mississippi, Missouri, Montana, Nevada, New Mexico, North Dakota, Oregon, Texas, Utah, Washington, West Virginia, Wyoming and Wisconsin.
Best Maximum Loan Amount
Flagstar Bank
Why We Chose It
Many HELOCs are limited to $400,000, but Flagstar Bank offers HELOCs ranging from as little as $10,000 to as much as $1 million. This range gives you a lot of flexibility when deciding how much to borrow.
Pros
- High maximum line of credit
- No closing costs if you meet the requirements
- Widely available
Cons
- High maximum APR
- Annual fee
Additional Information
Fees:
$75 annual fee ($0 in the first year)
Repayment Schedule:
Draw period of 10 years, repayment period of 20 years
Loan Availability:
Available in 49 states and the District of Columbia. Not available in Texas.
Best Customer Service
TD Bank
Why We Chose It
T.D. Bank prides itself on top-notch customer service, with 24/7 live customer phone support, a dedicated phone number for HELOC questions, and in-person banking hours seven days a week. The bank also earned the No. 3 spot in the J.D. Power 2023 U.S. National Banking Satisfaction Study.
Pros
- Top-rated customer service
- No closing costs on lines under $500,000
- Available on primary residences, second homes and investment properties
- No minimum draw required
Cons
- Annual fee, origination fee, potential early termination fee
- Available only in 15 states and the District of Columbia
- High minimum line of credit
Additional Information
Fees:
$50 annual fee for lines over $50,000, $99 origination fee, 2% early termination fee (max $450), potential mortgage discharge fee
Repayment Schedule:
Draw period of 10 years, repayment period of 20 years
Loan Availability:
Not available in 35 states. Available in the District of Columbia, Connecticut, Delaware, Florida, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, Vermont and Virginia.
Best Introductory Rate
Bethpage Federal Credit Union
Why We Chose It
Bethpage offers a low, fixed interest rate of 6.99% for its most creditworthy applicants who borrow up to $500,000. After one year, the APR changes to a variable rate that’s based on the Prime rate. While you’ll need to meet requirements and jump through a few hoops to get the low rate, it can help save you money on your line of credit if you qualify.
Pros
- No closing costs (requirements apply)
- No application, origination or appraisal fees
- Up to three fixed-rate balances at one time
Cons
- Very slow turnaround time
- Must join credit union to apply
Additional Information
Fees:
No fees
Repayment Schedule:
Draw period of 10 years, repayment period of 5 – 20 years
Loan Availability:
Available in the District of Columbia and all states except for Texas.
Reliable Rates From Vault
Please note that the annual percentage rates (APRs) listed are accurate as of the date of publication. As financial rates can fluctuate, the current APRs may differ. We strive to update our data regularly to reflect these changes. For our complete methodology, please refer to the “Our Methodology” dropdown above.
What Is a Home Equity Line of Credit?
A home equity line of credit, or HELOC, is a revolving line of credit that’s secured by your property. Lenders usually let you borrow up to 90% of your home’s current value, minus the balance on your mortgage.
Using a HELOC is a bit like using a credit card: You can borrow up to your maximum credit limit, pay down some or all of your balance, and borrow again on demand. Your account may have a variable APR, but each time you borrow, the lender may give you a fixed rate on the portion you draw.
This draw period lasts about 10 years and usually requires you to make interest-only payments, though you can pay down more of the balance if you want to reuse the credit limit. Once the draw period ends, you’ll enter a repayment period lasting about 20 years.
Because your home secures the line of credit, you may qualify for lower interest rates compared to an unsecured loan. The downside to this feature is you risk losing your home to foreclosure if you default on payments.
Home Equity Line of Credit vs Home Equity Loan
A home equity loan is another type of financing that’s based on the amount of equity you’ve built up. You can typically borrow around 90% of your home’s value, minus the balance on your mortgage.
The key difference between HELOCs and home equity loans is how you receive the money. With a home equity loan, you receive a one-time lump sum upfront. Then you’ll repay the debt over time in fixed installments, usually with a fixed interest rate.
Unlike the HELOC, you’ll need to submit a new application and go through the underwriting process again if you want to borrow more money. And similar to the HELOC, you may lose your property if you default on your home equity loan payments.
Borrowers typically choose a HELOC if they need to make repeat draws and they’re unsure how much they need to borrow. A home equity loan is a better fit if you need all of the funds upfront and won’t need to borrow again.
Why Would You Need a Home Equity Line of Credit?
A home equity line of credit provides the funds to help you cover significant expenses or improve your financial situation in some way. Compared to other forms of financing, you typically pay a lower interest rate and access a larger loan amount. HELOCs are also repaid over a longer term compared to some other options such as a personal loan.
The most common reasons to use a HELOC include:
- Debt consolidation: A HELOC can be used to pay off several debt balances at a lower interest rate. This strategy can help you save money.
- Home improvements: Many homeowners use HELOCs to pay for improvements because borrowing amounts are high and the interest may be tax-deductible. You may also replenish some of your home equity if the improvements increase the value of your home.
- Emergency expenses: If you have a financial emergency and no savings to cover the costs, HELOC funds can help cover your expenses.
- Investment opportunities: Although investing carries some risk, you may use HELOC funds to buy a rental property or invest in the stock market. This may be a good option if you’d earn more on the investments than what you pay for the HELOC interest rate.
- Business expenses: It can be difficult to qualify for a business loan if your venture is new or you don’t meet other requirements. But you can use HELOC funds to pay for your startup costs like office supplies, equipment, inventory and more.
HELOCs Pros and Cons
A HELOC can help you borrow a large amount and comes with flexible repayment terms, but there are some drawbacks to using this type of financing. Here are some pros and cons to consider:
Pros
- Lower interest rates compared to many unsecured financing options
- Interest may be tax-deductible
- Potentially large borrowing amounts
- Flexible repayment terms
Cons
- Risk of foreclosure if you default on payments
- Drains your home equity
- Variable APRs could increase over time
How To Choose the Best HELOC For You
Every HELOC comes with unique features, including a fee schedule, interest costs, borrowing limits and more. Comparing your options can help ensure you pick the right HELOC for your situation and save on costs. Here are a few factors to find and compare when you’re doing your research:
Borrowing Limits
Many HELOCs range from about $15,000 to $500,000, though some offer lower minimum and higher maximum limits. A HELOC with a high limit may come with stricter eligibility criteria. But because you can borrow from the line of credit and repay it as many times as you need to, you might not need a HELOC with a high maximum limit.
Interest Rate
Some lenders offer a low, fixed introductory rate as a way to get your business. While the lower rate can help you save money, you should know how long the offer lasts and how the rate is structured afterward.
Once the introductory period ends, the rate typically becomes a variable rate that can go up or down over time. The lender usually sets a base rate tied to a market index, such as the Prime rate, then adds a markup that reflects your creditworthiness. The lender may also have a rate cap that shows the maximum APR you may pay. Shopping for the lowest available markup—and knowing whether it can change—will help you control costs.
Fees
Check whether the lender charges any fees and when they may apply. For instance, HELOCs may come with an origination fee you pay at closing, a recurring annual fee, a fee to lock or unlock your rate, an early termination fee and late payment fees. All of these increase your borrowing costs, so it’s important to shop around and find a HELOC that’s affordable to you.
Repayment Terms
You can typically borrow money from your line of credit, up to the specified limit, as many times as you’d like during the draw period. Some lenders allow you to make interest-only payments during this time. Once the draw period ends, you can no longer borrow from the account and your repayment period starts. Make sure you know when the draw period will end and the length of your repayment term.
Closing Costs
Closing costs are expenses a lender may charge you for processing the loan. Some of these costs may include:
- Appraisal fee
- Property search fee
- Recording fee
- Local taxes
- Credit report fee
- Flood report fees
- Income verification
- Notary or electronic close
- Attorney fees
Some lenders waive these fees entirely, while others may reimburse you for the fees at some point. You may need to meet requirements such as keeping the account open for a certain time frame.
Alternatives to HELOC
While HELOCs are a popular way to finance large home projects or consolidate debt, they’re not your only option. Consider these alternatives to HELOC:
Personal Loan
A personal loan is a type of installment loan where you receive the funds upfront and then repay the money over time, usually with a fixed interest rate and a fixed monthly payment. Interest rates are slightly higher than the rates on HELOCs but lower compared to some other forms of financing, such as credit cards.
Most personal loans are unsecured and go up to $50,000, making them a good option if you don’t want to risk losing collateral and you need to borrow a small amount.
Cash-out Refinance
A cash-out refinance replaces your current mortgage with a new loan for more than you currently owe. The lender gives you the difference in cash, which you can use for any purpose. This type of financing may be a good option if you want a home loan with new terms.
Reverse Mortgages
A reverse mortgage is a loan available to homeowners aged 62 or older. Like a HELOC, it provides access to a home’s equity. But unlike a HELOC or traditional mortgage, the homeowner doesn’t make monthly payments. The loan is instead repaid when the homeowner sells the house, moves out or passes away. Funds are provided as a lump sum, monthly payments or a line of credit.
Home Equity Loan
A home equity loan is also known as a second mortgage. It works similarly to a HELOC, allowing homeowners to borrow against the equity in their home. But the loan is disbursed as a lump sum instead of a line of credit. The home equity loan is then repaid with fixed monthly payments over a set term. The amount you can borrow is typically based on the difference between your home’s current market value and the remaining balance on your mortgage.
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