Homeowners with ample equity have a ready-made source of low-cost capital to finance significant expenses like home improvement or repair projects, debt consolidation, medical and long-term care expenses, and college tuition or loan payoff for which they lack the necessary liquidity.
Because the intrinsic value of the home secures it, a home equity loan or home equity line of credit (HELOC) typically costs far less than unsecured alternatives, such as a personal loan or high-limit credit card.
But rates do vary significantly — not just by lender but due to borrower-specific factors like credit score, credit history, income, and location.
Whether on a revolving (draw-as-you-go) credit line or lump-sum second mortgage worth tens of thousands of dollars, it doesn’t take much lower interest rates — just a few tenths of a percentage point difference — to dramatically lower lifetime borrowing costs.
Best Home Equity Loan and Line of Credit Rates
That’s why it’s so important to know which lenders tend to offer lower rates to borrowers like you. Rates on home equity loans and home equity lines of credit fluctuate by the day, so keep your finger on the pulse until you choose a lender and lock in your rate.
The home equity lenders on this list consistently offer competitive fixed or variable interest rates on home equity loans, lines of credit, or both.
When available, each listing includes the lender’s minimum annual percentage rate (APR) for each product type, minimum and maximum principal or line size (credit limit), and any rate discounts offered.
Consult a tax professional (we’re fans of H&R Block) to determine whether interest paid on these products is tax-deductible. Contact the lenders themselves for information about application fees, appraisal fees, annual fees, prepayment penalties, and other potential costs.
- APR Range: Rates start as low as 3.00% APR with all available discounts, including automatic payments (autopay). Figure offers fixed interest rates.
- Loan or Draw Range: The maximum amount any Figure client can borrow is $250,000 on a home equity line and $500,000 on a home refinance loan.
- Discounts Available: 0.25% discount for autopay; 0.50% discount for credit union membership.
Figure is a nimble, tech-driven lender disrupting the rather staid world of home equity loans and lines. Though technically a HELOC, Figure’s primary product is a proprietary hybrid with characteristics of both home equity loans and HELOCs.
You can borrow up to 95% of the home’s combined loan-to-value ratio (LTV) — 10% to 15% more than what most home equity lenders allow, with a maximum loan amount of $250,000.
Alternatively, choose a more traditional home refinancing loan option (cash-out refinance) with a maximum loan amount of $500,000.
Figure’s other big differentiator is its smooth, rapid application and underwriting. Whereas traditional lenders can dally for a month or two, Figure’s approval and funding process typically take less than a week.
Terms (repayment periods) range from 10 to 30 years. The biggest drawback: an upfront origination fee as high as 4.99% to secure the best rates.
Read our Figure review to learn more. Note that Figure also offers unsecured personal loans up to $50,000 at competitive rates.
2. Discover Bank
- APR Range: About 4.00% APR to about 12.00% APR, depending on borrower creditworthiness and lien position. First lien loans are more affordable.
- Loan or Draw Range: $35,000 to $200,000.
- Discounts Available: Not specified.
One of the best online banks around, Discover is probably best known for its unsecured credit products, such as credit cards and personal loans. But its home equity loan division stands out for relatively low rates and friendly customer service.
The biggest downside here is Discover’s low maximum loan size: just $200,000, which might not be enough firepower for homeowners with ample equity and big plans.
Home equity loan terms range from 10 to 30 years.
Read our Discover Bank review to learn more.
3. Citizens Bank
- APR Range: Home equity rates start at the prime rate minus 0.25% on 10-year loans between $100,000 and $399,000 (which have the lowest rates of any Citizens Bank home equity loan). Interest on HELOC draws varies with underlying benchmarks, but the base rate is generally 50 basis points (0.50%) below the prime rate.
- Loan or Draw Range: $10,000 minimum. Maximums vary by borrower equity and creditworthiness, but home equity loans larger than $400,000 are available.
- Discounts Available: Not specified.
Citizens Bank is a big deal in the northeastern United States, where its 1,000-odd physical branches reside. But you don’t have to live within easy reach of a Citizens branch to take advantage of its low home equity rates.
Citizens offers two home equity options: home equity loans with 10- to 20-year terms and HELOCs with 10-year draw periods. Citizens’ HELOCs have an interest-only option, which can significantly reduce payments early on.
4. BMO Harris Bank
- APR Range: As low as 3.65% APR for variable-rate HELOCs and under 4.80% for fixed-rate loans with all available discounts applied (including automatic loan payments). Special introductory rates on HELOCs (as low as 1.99% APR for 12 months) may be available. Maximums vary by loan size, borrower creditworthiness, and location, with larger loans generally more affordable.
- Loan or Draw Range: Home equity loans start at $5,000, and HELOCs start at $25,000. Maximums vary by location, borrower creditworthiness, and available equity. Both are available in amounts greater than $150,000.
- Discounts Available: All home equity products have an optional autopay discount of 0.50%.
BMO Harris Bank offers home equity loans and lines of credit at very competitive rates.
Its unusually low minimums — just $5,000 for home equity loans — are ideal for borrowers looking to consolidate moderate amounts of debt or finance smaller home renovation projects without needless risk.
The five-year home equity loan term, another rarity, speaks to borrowers eager to put their debts behind them. Terms on both loans and HELOCs range up to 20 years.
- APR Range: Rates range from about 3% APR to upward of 10% APR, depending on borrower creditworthiness, loan size, and location.
- Loan or Draw Range: Maximum loan sizes range up to $1 million.
- Discounts Available: BBVA periodically offers promotional rates for three to six months after closing; ask your banker for details. BBVA may also pay closing costs on HELOCs between $10,000 and $500,000.
BBVA’s trade area covers most of the southwestern United States, including the two most populous states: California and Texas. All told, at least 100 million Americans live in an area served by BBVA — enough to justify mentioning the bank’s excellent home equity products.
High loan limits (up to $1 million) and relatively low rates are both top selling points.
6. TD Bank
- APR Range: Rates vary by location, but HELOCs generally start around 3.75% APR (prime plus 0.50%) and loans start around 4.50% APR. Maximum rates vary.
- Loan or Draw Range: The minimum loan or line size is $25,000. There’s no minimum HELOC draw.
- Discounts Available: 0.25% rate discount on HELOCs with a qualifying TD Bank checking account.
TD Bank has several impressive bank account promotions for new deposit customers. Its home equity division is customer-friendly too, with low rates on loans and HELOCs and further discounts for checking customers.
Terms range from five to 30 years, making it easy for borrowers to borrow and pay on time scales they’re comfortable with.
Update: Citibank has temporarily ceased accepting new HELOC and home equity loan applications but is likely to resume home equity lending in the future. Check back for updates as the situation evolves.
- APR Range: The minimum HELOC rate is 3.99% (variable), and the minimum home equity loan rate is 6.59% (fixed). Rates vary by location and amount borrowed.
- Loan or Draw Range: Generally, up to $1 million for HELOCs and up to $300,000 for home equity loans. The best HELOC rates are reserved for draws of $25,000 or greater.
- Discounts Available: Not specified.
Despite its reputation for serving big corporations and super-wealthy individuals, Citibank has an active home equity division that’s quite accessible for everyday homeowners.
HELOC draws start at just $10,000, plenty low to consolidate credit card debt or fund a home repair project.
Meanwhile, the upper HELOC limit of $1 million is robust enough for smaller-scale landlords who own two- to four-unit properties in most markets.
Why Home Equity Loan & Line Rates Vary
Home equity loan and line of credit rates can vary widely by lender.
They also vary — sometimes dramatically — based on borrower-specific factors, such as credit score, income, home value, mortgage balance, desired loan size, and geography.
If the results of your initial search for affordable home equity loan or line rates surprise you, these factors could be to blame. Improving those within your control could be your ticket to a more affordable home equity product.
- Credit Score. Your credit score directly impacts your home equity loan and line rates. The higher your score, the lower your rate, assuming all other factors remain constant.
- Debt-to-Income Ratio. Home equity lenders prefer borrowers with low debt-to-income ratios — total eligible debt divided by gross income. The ideal debt-to-income ratio is below 36%. Lenders tend to balk at ratios starting at about 43%, though exceptions exist.
- Desired Loan Size. The equity in your home limits the size of your home equity loan or line. Generally, the amount you borrow against the value of your home, including your first mortgage, can’t exceed 85% of the home’s appraised value.
- Desired Loan Type. Home equity loans with fixed terms and rates tend to have slightly higher interest rates than home equity lines of credit since they’re perceived to be riskier. A similar pattern applies in the refinancing realm, where refinance-only loans (loans that directly pay off a current mortgage loan) typically have lower rates than higher-LTV cash-out refinance loans.
- Home Value and Current Mortgage Balance. Since the amount you borrow against the appraised or market value of your home usually can’t exceed 85%, the size of your home equity loan or line could be constrained as a result.
- Location. Home equity loan and line rates vary by state. While the difference between the most and least expensive states tends to be less than 50 basis points (0.5%), that’s enough to make a meaningful difference in borrowing costs.
Home equity loan and line rates can change daily in response to fluctuations in benchmark interest rates. While these daily moves tend not to be dramatic, they can make a big difference to your expected monthly payments over periods of weeks or months.
Different lenders do offer different rates at any given point in time, but broadly speaking, rates tend to move in unison across financial institutions and products. That matters if you’re shopping for a home equity loan or line of credit in the hope of taking advantage of low interest rates.
If you know you’ll need a home equity loan or line in the near future, your best move is to check rates at least every month, and maybe as often as every week. That way, you’ll spot early signs of increasing rates and avoid paying more than necessary for financing.