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HELOC rates are a little higher than current mortgage rates, but they could still allow a homeowner to save money on borrowing for construction costs or consolidating debt when compared to personal loan rates or credit card rates.
Current HELOC rates
| HELOC | Rate |
| 10-year | 8.00% |
| 20-year | 7.88% |
How are HELOC rates determined?
Factors influencing HELOC rates
HELOC rates are tied to an index, meaning they can fluctuate over time depending on what's going on in the broader economy. For example, HELOC rates are typically tied to the prime rate, which is based on the federal funds rate set by the Federal Reserve.
The Fed sets this rate based on its policy goals. When inflation is high, the Fed raises rates to slow economic growth. If the economy is struggling, central bankers may lower rates to help avoid a recession. This in turn impacts the rates consumers pay on their loans, including HELOCs.
Lenders add a margin to their HELOC rates as well. So a lender could set its rates based on the prime rate plus 0.50 percentage points, for example.
The exact rate you'll pay also depends on your own financial situation. Those with better credit scores, for example, tend to get better rates.
How do HELOC rates work?
Variable vs. fixed HELOC rates
HELOCs usually come with variable interest rates. This means the rate you pay could change periodically, causing your monthly payment to go up or down. Depending on your lender, your rate could adjust every month.
Some lenders offer fixed-rate HELOCs, but these may come with higher rates and fees. Fixed-rate HELOCs work similarly to regular HELOCs; in fact, they're sort of a hybrid between a variable-rate loan and a fixed-rate loan. These HELOCs give you the option to lock some or all of your balance in at a fixed rate. This can be beneficial if interest rates start rising.
For example, Bank of America, one of our top HELOC lender picks, offers a fixed-rate option on its HELOC. With Bank of America, HELOC borrowers can have up to three fixed-rate balances at a time.
The Best HELOC Lenders
- Bank of America: Best overall
- New American Funding: Best for fair credit scores
- Navy Federal Credit Union: Best for no fees
- Flagstar Bank: Best for large loan amounts
- Citizens Bank: Best for small loan amounts
- Alliant Credit Union: Best credit union
Compare the top HELOC lenders
The best HELOC lenders offer loans with beneficial features like no fees, lower minimum credit score requirements, large loan amounts, and high maximum CLTVs. They also rank high in customer satisfaction. These are the best HELOC lenders according to Business Insider editors in 2024.
Best overall: Bank of America
6.490% intro variable APR for 6 months then 9.590% Variable (vary by location)
Undisclosed
- 85% Max CLTV
- Available in 50 states and Washington, DC
- No cons
Bank of America is an overall solid option for borrowers, with a max CLTV on the more affordable end, no fees, and the ability to explore rates by state on its website.
- Set up and maintain automatic monthly payments from your Bank of America checking or savings account and receive a 0.25% interest rate discount (does not apply to Bill Pay service).
- Make an initial withdrawal when you open your account and receive a 0.10% interest rate discount for each $10,000 withdrawn (up to a maximum discount of 1.50%).
- Depending on tier level, Preferred Rewards members can get an interest rate discount of up to 0.625%. Learn more about Preferred Rewards.
Bank of America is an overall solid option for borrowers, with a max CLTV on the more affordable end, no fees, and the ability to explore rates by state on its website.
Current Bank of America customers may be able to get a small rate discount if they set up auto payments from their checking or savings account, or if they're a Preferred Rewards member. You may also be able to receive a 0.10% discount for each $10,000 withdrawal you make.
Bank of America offers the option to convert some or all of your balance to a fixed rate. HELOCs almost always come with variable rates, though some lenders offer this option to convert some of your balance to a fixed rate after you've started making withdrawals.
What to look out for: Bank of America doesn't disclose the minimum credit score you'll need to get a HELOC, but HELOC lenders typically look for scores in the high 600s.
Best for fair credit scores: New American Funding
Undisclosed
Fair
- High CLTV with high credit score
- Credit scores can be as low as 620
- Doesn't disclose rates online
New American Funding is a good choice if you have little equity or a lower credit score.
New American Funding HELOC- Lower interest rates than personal loans or credit cards
- Can be used for debt consolidation
- Can be used for major home renovations, repairs, and improvements
- Lower or no origination fees
- Can be used for investing in real estate
- No restrictions for use
- Higher credit limits
New American Funding is a good choice if your credit score is on the low end for a HELOC.
Typically, lenders want borrowers to have higher credit scores, sometimes above 700. But New American Funding offers HELOCs to borrowers with credit scores as low as 620, which makes it a good option if you can't get approved for a HELOC elsewhere.
What to look out for: New American Funding doesn't disclose its rates online, so it's difficult to compare its overall affordability to other lenders.
Best for no fees: Navy Federal Credit Union
7.75% to 18.00% Variable
None
- No lender fees
- No annual fee
- No inactivity fee
- Max CLTV is 95%
- Not available in Texas
- Must be a member of Navy Federal
Navy Federal Credit Union charges no lender fees, no annual fee, and no inactivity fee, making it an affordable option for borrowers.
- Ability to borrow up to 95% of your home's equity
- Variable rate based on the prime rate
- 20-year draw period, followed by 20-year repayment period
- No application, origination, annual or inactivity fee
- Convenient ways to access your funds
- Navy Federal servicing for the life of your loan
Navy Federal Credit Union charges no lender fees, no annual fee, and no inactivity fee, making it an affordable option for borrowers.
With a HELOC from Navy Federal Credit Union, you can borrow up to 95% of your home's value, minus what you currently owe on your first mortgage. This is particularly beneficial for VA loan borrowers who put 0% down at closing, since they may not have a ton of equity built up in their home yet.
What to look out for: To get a HELOC with this lender, you must be a member of Navy Federal. You need to be a member of the military, a veteran, a family member of someone who has served, or a Department of Defense civilian to become a member.
The BBB gives Navy Federal an NR (No Rating) because it's responding to complaints that were previously closed.
Best for large loan amounts: Flagstar Bank
7.74% to 21.00% Variable (vary by location)
Good
- Offers HELOC loan amounts up to $1 million
- Offers customer discount
- Charges $75 annual fee
- High APR
Flagstar Bank is a good choice if you want to take out a lot of equity. But its maximum APR is on the high end, and it charges an annual fee.
- Line of credit amounts from $10,000 to $1 million
- Variable interest rate based on The Wall Street Journal prime rate
- 10-year draw period, 20-year repayment period
- No bank closing fees if HELOC remains open for 36 months
- 0.25% interest rate discount with automatic monthly payments from a Flagstar account
Flagstar Bank is a good choice if you want to take out a lot of equity. Flagstar Bank offers HELOC loan amounts up to $1 million, making it a strong choice if you have a lot of equity and are funding a high-cost project.
You may also be able to get a customer discount if you have a Flagstar checking or savings account. And you won't pay lender closing fees if you keep your HELOC account open for at least three years.
What to look out for: Flagstar isn't as affordable as some of the other lenders on this list. It charges a $75 annual fee (this is waived your first year) and APRs can go up to 21%.
Best for small loan amounts: Citizens Bank
2.50% to 21.00% Variable
Fair
- No application or closing fee
- Offers loan amounts as low as $5,000
- Offers a customer discount
- Not available in every state
- Charges a $50 annual fee
Citizens Bank offers both a traditional HELOC and its GoalBuilder HELOC. Its GoalBuilder HELOC offers loan amounts as low as $5,000, making it a solid option for borrowers who only need a small line of credit.
- Get your rate and line amount—up to $400K—in minutes with our new digital experience. There will be no impact to your credit score.
- Accept your offer, close in as few as 7 days and start spending in as little as 2 weeks. Access your account wherever you are, online or mobile.
- Take advantage of our low rates with no application fee or closing costs.
- Enjoy a borrowing period of 10 years with no minimum draw. Use it for what you need today and tomorrow.
Citizens Bank offers both a traditional HELOC and its GoalBuilder HELOC. Its GoalBuilder HELOC offers loan amounts as low as $5,000, making it a solid option for borrowers who only need a small line of credit.
Citizens Bank's advertised rates are relatively low, and you may be able to get a discount by setting up auto payments from your Citizens checking account.
This lender doesn't charge an application or closing fee, though you will pay a $50 annual fee (this is waived your first year).
What to look out for: Availability is limited compared to other lenders on this list, as you can't get a Citizens HELOC in most states.
Best credit union: Alliant Credit Union
8.00% to 16.00% Variable
Fair
- Affordable choice for borrowers looking to keep their out-of-pocket costs to a minimum
- Charges no lender fees at closing
- No annual fee on its standard HELOC
- Waive first year annual fee on interest-only HELOC
- Not available in every state
- $200 cancellation fee if close account within one year
Alliant Credit Union is an affordable choice for borrowers looking to keep their out-of-pocket costs to a minimum. It charges no lender fees at closing (for loans up to $250,000) and no annual fee on its standard HELOC.
- Flexibility to access funds as needed
- Use for home improvements, vacations, debt consolidation, education or medical expenses, large purchases, and more
- Low, variable interest rates
- 10-year interest-only draw period followed by a repayment period up to 20 years
- No closing costs or appraisal fees for up to $250,000 line of credit
- Available in most states including AZ, CA, CO, CT, FL, GA, HI, IL, IN, KY, MA, MI, MN, MO, NC, NJ, NV, NY, OH, PA, TN, UT, VA, WA, WI, and Washington, DC
Alliant Credit Union is an affordable choice for borrowers looking to keep their out-of-pocket costs to a minimum. It charges no lender fees at closing (for loans up to $250,000). Alliant's HELOC comes with an interest-only draw period that lasts 10 years, followed by a repayment period of up to 20 years.
What to look out for: If you close your Alliant HELOC within three years of getting it, you may be charged a $200 cancellation fee. Interest-only borrowers may pay slightly higher rates than standard borrowers. HELOCs from this lender are only available in 25 states and Washington, D.C.
How to choose the best HELOC lender
We've rounded up the HELOC lenders we think are best, but that doesn't necessarily mean every lender on this list is going to be a good fit for you. Here are some things you should think about as you shop for a HELOC.
Key factors for comparing HELOCs
- Your financial profile. Your credit score, debt-to-income ratio (DTI), and the amount of equity you have in your home will impact what HELOCs you qualify for and the rates available to you.
- How much you want to borrow. Each lender has its own requirements for how much equity they'll let you take out, and different lenders may be better for smaller or larger loan amounts.
- Interest rates. HELOC rates are often tied to the prime rate, plus an added margin. Compare different lenders to see which one can offer you the best rate.
- Closing costs and fees. You'll pay closing costs on your HELOC to cover third-party charges like appraisal fees as well as lender fees. To keep your closing costs down, look for a lender that doesn't charge lender fees. Some HELOCs also charge annual fees, or inactivity fees if you don't use your line of credit. If you ever want to close out your HELOC, you could also be charged a cancellation fee. But not all lenders charge these fees.
- Minimum withdrawals. Some HELOCs require you to withdraw a certain amount of money whenever you borrow from your line of credit. For example, if you only need to borrow $8,000 but your HELOC has a $10,000 minimum withdrawal requirement, you'll need to take out the full $10,000. This means you could end up paying interest on a larger sum than what you actually needed to borrow.
Where to find the best HELOC for you
- Your current bank or credit union. If the place you currently do your banking with offers HELOCs, it may be worth looking into what kind of deal they can offer you. Some banks even offer discounts for existing customers.
- Large banks and mortgage lenders. Bigger lending institutions may be able to offer better benefits and perks and a larger number of loan options to choose from.
- Online lenders. Many online mortgage lenders have HELOCs and can offer convenient application processes and quick funding. They may also be able to offer lower rates.
What is a HELOC?
Definition and overview
A home equity line of credit (HELOC) is a type of second mortgage that homeowners can use to get cash to fund home improvement projects, debt consolidation, or other financial goals. It works not unlike a credit card, but the money you're borrowing comes from your home's equity.
Home equity is the difference between what your house is worth and the total value of the loans you have on the property. It's the portion of your home's value that you own outright, without any debt attached. For example, when you make a down payment of 20% on a home purchase, you start out with 20% equity in the home.
How a HELOC works
HELOCs are split up into two periods: the draw period and the repayment period. During the draw period, your HELOC will work similarly to a credit card. You can borrow against your line of credit, and you'll only be charged interest on what you borrow. During this time, you'll need to make payments on the interest you accrue. This period usually lasts 10 years.
Then comes the repayment period, which is typically spread out over 20 years. You'll make both principal and interest payments during this time, and you won't be able to borrow from the HELOC anymore.
CLTVs and determining how much you can borrow
HELOC lenders typically like to see a combined loan-to-value ratio (CLTV) between 80% and 90%, but it varies. A loan-to-value ratio (LTV) is the ratio of how much you owe on your mortgage versus what your house is worth. A CLTV includes all of the loans you have on your property, including first and second mortgages.
Your CLTV is the inverse of your equity. If your house is worth $500,000 and you owe a total of $200,000 on your first mortgage and your HELOC, your CLTV is 40%, and you have 60% equity in your home.
HELOC eligibility
The main requirement to be eligible for a HELOC is that you'll need to have a certain amount of equity. This varies by lender, but you may need to keep at least 10% or 20% equity in your home (or a max CLTV of 80% or 90%, like we mentioned above)
Navy Federal Credit Union, one of our favorite HELOC lenders, lets you borrow up to 95% of your home's value. This means that you'd only need to keep 5% equity in your home. The rest you can access with the HELOC.
You'll also need to meet your lender's credit requirements. In general, you won't be able to qualify for a HELOC with a credit score below 620, and some lenders have higher minimum requirements.
Your DTI can't be too high. Exact requirements vary by lender, but it's typically below 50%.
How to get the best HELOC rates
Increase your credit score
If your current score isn't great, working to improve your credit score can help you snag a lower rate on your HELOC. Be sure to make on-time payments on any debt you owe and keep your utilization low.
Paying down credit card debt or asking for a credit line increase on your credit cards can help lower your utilization and boost your credit score.
Shop around to compare rates
Get rate quotes from multiple HELOC lenders and compare offers to make sure you're getting the best rate available to you. Experts generally recommend talking to at least three different lenders to compare rates.
Understand how your rate could change
Because HELOC rates are variable, you should talk to your lender about how much your rate could go up, and if it has a cap on its HELOC rates. Make sure you can afford your monthly HELOC payment even if your rate increases significantly over time.
Pros and cons of HELOCs
Advantages of HELOCs
HELOCs are flexible, letting you borrow what you need as you need it. Home equity loans require you to receive the full balance in one lump sum, meaning you'll pay interest on that full loan amount. But if you don't borrow the maximum amount from your HELOC, you'll only pay interest on your outstanding balance.
HELOCs often have lower rates compared to alternatives like credit cards and personal loans. And if you have a lot of equity, you may be able to borrow more than you could with other loan types.
Potential drawbacks of HELOCs
The big risk with a HELOC is that your payment could increase if rates start going up. It's also risky to tie debt to your property. If you default on your HELOC, the lender can foreclose on your home.
Some lenders may also have minimum withdrawal requirements, meaning you'll need to take out at least that amount every time you want to borrow from your HELOC. This could result in you paying interest on more money than you actually need.
How to apply for a HELOC
Aim to get quotes from a few different lenders to be sure you get the best deal. Pay attention to both rates as well as any fees a lender charges.
The HELOC application process is similar to applying for other types of loans. The lender will do a check of your credit and ask for documentation showing your income. They'll also likely need to order a home appraisal to confirm your property's current value.
Your lender will help guide you through this process. If you're approved, you'll pay your closing costs and close on the loan.
Comparing HELOC rates to other loan options
HELOC vs. home equity loan
A home equity loan is another type of second mortgage that utilizes your home's equity. But home equity loans are disbursed in one lump sum, so you'll immediately receive the full amount you're borrowing. You'll also begin principal and interest repayments right away.
Home equity loans have fixed rates, so your monthly payment will remain the same throughout the life of the loan.
HELOC vs. mortgage refinancing
Instead of getting a second mortgage like a home equity loan or HELOC, you could replace your first mortgage by refinancing. A cash-out refinance lets you tap into your home's equity while replacing your current mortgage with a new loan that has entirely new terms.
This can be beneficial if you're able to get a lower rate on the new mortgage than what you're currently paying. But if today's mortgage rates are higher than your current rate, a cash-out refinance probably doesn't make sense. These loans also come with closing costs, which can be between 3% and 6% of the loan amount.
HELOC vs. personal loan
Personal loans are a type of unsecured debt, meaning they aren't tied to any collateral. Because of this, they come with higher rates compared to HELOCs and home equity loans. They also typically have shorter terms, which means the monthly payments on these loans are higher.
The benefit of personal loans is the process is typically faster than the HELOC application process, so you can get your funds sooner. You also won't have to worry about losing your home if you default on the loan.
Current HELOC rates FAQs
Some lenders offer fixed-rate HELOCs, but be sure to understand the rates and fees that come with this option.
Current HELOC rates fluctuate from day to day and vary by lender, but they're generally a bit higher than the current prime rate.
A HELOC might be a good idea for you if you have a lot of equity in your home and want to fund a home improvement project or consolidate higher-interest debt.
Make sure your credit is in great shape before applying for a HELOC, and be sure to get quotes from at least three different lenders to be sure you're getting the lowest rate possible.
