HELOC Rates: Compare Top Lenders in December 2024
A home equity line of credit, or HELOC, is a second mortgage that allows homeowners to borrow against the value of their homes.Some or all of the mortgage lenders featured on our site are advertising partners of NerdWallet, but this does not influence our evaluations, lender star ratings or the order in which lenders are listed on the page. Our opinions are our own. Here is a list of our partners and here's how we make money.
- Specializes in HELOCs.
- The initial balance and any additional draws have a fixed interest rate.
- Closing may be available in just five days.
- HELOCs are available for second homes.
- Short draw period of two to five years.
- Requires a $15,000 minimum initial draw.
- Lender charges origination fees up to 4.99%.
- Offers a wide variety of purchase and refinance mortgages with an emphasis on helping underserved communities.
- Its home equity line of credit can be used for an owner-occupied or second home.
- Offers a program to enable buyers to make cash offers.
- Mortgage origination fees tend to be on the high end, according to the latest federal data.
- No closing costs
- Easy-to-join credit union.
- Fixed introductory rate is below the prime rate.
- Must pay back closing costs if the line is open for three years or less.
- Offers loans in terms of 5, 10, 15 and 20 years.
- No penalty for early repayment.
- Offers a high borrowing limit compared to other lenders.
- Home equity loans aren’t available for investment properties or second homes.
- Rates and fee information aren't published online.
- No application fee.
- Borrowers can apply within the lender’s mobile app.
- Home equity loans are available for second homes and investment properties.
- Home equity loan rates are not posted online.
- Home appraisal is required.
- Closing may be available within five to 10 days of applying.
- The initial balance and any additional draws have a fixed interest rate.
- Offers paths for rate discounts.
- No information about annual fees.
- Full amount (minus origination fee) must be drawn at closing.
- Short draw period of 2-5 years, compared with industry standard of 10 years.
- No annual fee.
- HELOCs with fixed-rate repayment.
- Fully digital application process.
- Draw period of only five years.
- Closing costs will apply.
- Not available for second homes or investment properties.
What is a HELOC?
A home equity line of credit — also known as a HELOC — is a way to extract cash from the value of your home. As you pay down your mortgage and the home’s value appreciates, the share of your home that you actually own (called your equity) grows relative to the portion that the lender owns (your mortgage debt).
By converting some of your equity back into debt, you gain access to a line of credit that you can tap when you need it. Many lenders will allow you to tap up to 80% of your equity, though some will let you borrow more.
How does a HELOC work?
HELOCs are divided into two timelines: the draw period and the repayment period. During the draw period, you may borrow from the credit line. The minimum monthly payments during the draw period are usually interest-only, although you may pay toward principal if you wish. The draw period is often 10 years, but this can vary by lender.
During the repayment period (often 20 years), you pay the loan off. You can no longer borrow against the credit line, and the minimum monthly payments include principal and interest.
Today’s HELOC rates: What to expect
Current rate trends
Most HELOC rates are indexed to a base rate called the prime rate, which is the lowest credit rate lenders are willing to offer to their most attractive borrowers.
This rate is influenced by the Federal Reserve, which meets every six weeks and votes to raise, lower or maintain the federal funds rate. When the Fed raises the federal funds rate, the prime rate goes up, and HELOC rates follow. When the Fed cuts the federal funds rate, the prime rate goes down, and so do HELOC rates.
Current prime rate | Prime rate last week | Prime rate in the past year — low | Prime rate in the past year — high |
|---|---|---|---|
7.75% | 7.75% | 7.75% | 8.50% |
The last Federal Reserve meeting ended on Nov. 7, 2024, when central bankers voted to lower the federal funds rate by 0.25 percentage points. The next meeting is Dec. 17-18, 2024.
Follow the ups and downs with NerdWallet's explanation of how the Fed affects mortgage and HELOC rates.
How to get the best HELOC rate
Lenders will consider your profile — including your credit score, income and debt-to-income ratio — and determine a margin to add to the prime rate, which becomes your rate offer. The stronger your borrower profile is, the lower this margin will be.
Nerdy Tip
Your best HELOC rate offer will be the one with the lowest margin. For example, if a lender applies a margin of 1.45% to a prime rate of 7.5%, your rate will be 8.95%.
Some lenders offer a negative introductory margin, so that your rate is below prime for a specific period.
Borrowers with credit scores north of 620 will generally qualify for lower rates. Typically, all of your debts combined — including housing costs — shouldn’t exceed 36% of your income in order to receive the best rate offers.
Shopping around with multiple lenders will allow you to compare HELOC offers, which can give you further confidence that you’re getting the best possible rate. If you have an existing account with any banks or credit unions (including the lender that financed your original mortgage), this can be a good place to start your search — some offer rate discounts to their customers. You can expand your search using NerdWallet’s roundup of the best HELOC lenders.
Variable vs. fixed rates
Unless you go with a lender that offers a fixed-rate HELOC option, your rate will be variable and can change over time as the prime rate shifts. HELOCs are a long-term loan, and some borrowers choose to “lock” some or all of their balance in a fixed rate because they prefer having predictable payments. Not every lender offers a fixed-rate option.
» MORE: HELOC calculator
How much does a HELOC cost?
Closing costs for a HELOC may amount to 2% to 5% of the total loan amount. You should also budget for any ongoing yearly fees.
Many lenders don’t charge closing costs at all, though some require that you keep the line open for a certain amount of time.
Once you have a HELOC, the costs vary, depending on the interest rate, the amount borrowed and whether the credit line is in the draw period or the repayment period.
» MORE: Good reasons to get a HELOC
Pros and cons of HELOCs
The main advantage of a HELOC is its flexibility: You draw money only when you need it, and you pay interest only on that amount. Meanwhile, you can repay as much or as little of the principal as you want during the draw period. The main drawbacks have to do with variable rates and putting your home at risk.
Pros
- You pay interest only on the amount you have borrowed: If you have a credit line limit of $50,000, and you've borrowed $10,000, you pay interest only on that smaller amount.
- Interest-only payments during the draw period.
- A flexible way to pay for recurring expenses, such as a series of home renovations or tuition payments.
Cons
- A variable interest rate means that when the Fed raises the federal funds rate, your monthly payments may go up.
- You could lose your home if you fail to repay.
» MORE: Ways to tap your home’s value
Alternatives to HELOCs
If you’re not sure if a HELOC is the right choice for you, here are some alternative loan types you can consider.
Home equity loans
Similar to a HELOC, a home equity loan allows you to borrow against a portion of your home equity. However, rather than an open line of credit, you receive the cash from a home equity loan as one lump sum. Additionally, home equity loans have fixed rates, rather than variable ones. This makes home equity loans a sensible choice if you know exactly how much you need to borrow and don’t want to risk rising rates.
See NerdWallet’s list of the best home equity loan lenders to start your search.
Cash-out refinances
If your mortgage rate is higher than today’s rates, a cash-out refinance will allow you to refinance to a larger loan with a new interest rate — paying off the original mortgage while you pocket the difference. A cash-out refinance can also be an ideal option for borrowers who would prefer to manage a single loan, rather than two (like you’d have with a home equity loan or HELOC).
NerdWallet’s list of the best cash-out refinance lenders can help you in your research.
Personal loans
If you haven’t accrued enough equity in your home yet to qualify for a HELOC, you might consider a personal loan instead. Personal loans are less risky, because they aren’t secured by an asset (your home). For this same reason, personal loans usually come with higher interest rates than HELOCs or home equity loans.
Your reasons for needing a loan can determine what type of personal loan is a good fit. For example, if you’re exploring loan options to finance a home repair or renovation, you may be interested in a lender from NerdWallet’s list of the best home improvement loans.
Home equity sharing agreements
While home equity sharing agreements are typically much more expensive than HELOCs or home equity loans, this type of loan also has more flexible borrowing requirements and requires no monthly payments or interest. Instead, you will owe the company a portion of the value of your home at the end of the loan term, to be paid as one lump payment.
NerdWallet’s HELOC reviews
As you explore HELOC options, NerdWallet’s reviews of individual HELOC lenders can help you narrow your choices.
Learn more about HELOCs
Check out our other mortgage and refinance tools
Frequently asked questions
- Is a HELOC a good idea right now?
Whether or not a HELOC makes sense for you depends on your goals. You take on risk when you borrow against your equity, as you could lose your home if you can’t make your payments. It’s a smarter move to use a HELOC for something that will reinvest in the home and grow your wealth, like putting on a new roof or installing central air. Expenses that aren’t worth this risk — such as a vacation or a wedding — aren’t typically a good use of HELOC funds.
Most HELOCs have a variable rate, so you’ll also want to make sure that you can afford to continue making payments even if the interest rate goes up.
- How do I get a HELOC?
A HELOC requires you to provide some of the same documentation you gave when you got the mortgage to buy the home: at minimum, your Social Security number, proof of income and estimated home value. The lender will check your credit report.
After applying, you'll be given a stack of disclosures to read. Underwriting may take anywhere from hours to weeks, and then you'll close on the credit line, similar to closing on the purchase mortgage.
- How much HELOC can I get?
The amount that you can borrow with a HELOC depends on the amount of equity you have in your home, the value of your home, and your financial profile. You can find your estimated borrowing limit using NerdWallet’s HELOC calculator.
- Is HELOC interest tax-deductible?
Sometimes. HELOC interest accrued from 2018 to 2025 is only tax-deductible if the borrower meets certain guidelines outlined by the Tax Cuts and Jobs Act of 2017, a short-term program set by the Trump administration. Under these conditions, HELOC interest is tax-deductible only if the lien was for a primary or secondary home and if the proceeds were used to buy, build or substantially improve the home.