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30Y FIXED6.85%↑ 0.02·15Y FIXED6.12%↓ 0.01·REFI 30Y6.78%↑ 0.01·HELOC9.20%0.00·JUMBO 30Y7.05%↑ 0.03·HYSA TOP4.85%↓ 0.05·12M CD5.10%0.00·24M CD4.85%↓ 0.02·5Y CD4.40%↑ 0.01·MMA TOP4.65%0.00·AUTO 60M NEW7.10%↓ 0.02·AUTO 60M USED8.45%↑ 0.04·PERSONAL EXC.8.20%0.00·10Y TREASURY4.32%↑ 0.01·30Y FIXED6.85%↑ 0.02·15Y FIXED6.12%↓ 0.01·REFI 30Y6.78%↑ 0.01·HELOC9.20%0.00·JUMBO 30Y7.05%↑ 0.03·HYSA TOP4.85%↓ 0.05·12M CD5.10%0.00·24M CD4.85%↓ 0.02·5Y CD4.40%↑ 0.01·MMA TOP4.65%0.00·AUTO 60M NEW7.10%↓ 0.02·AUTO 60M USED8.45%↑ 0.04·PERSONAL EXC.8.20%0.00·10Y TREASURY4.32%↑ 0.01·
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HELOC rates updated today

HELOC: a credit card backed by your house.

A home equity line of credit (HELOC) lets you borrow against your home's equity as needed, like a credit card with a much lower rate. The trade-off is that the rate is variable, the line can be frozen, and the lender holds a lien on your home. Here is how the draw mechanics work and when a HELOC beats a cash-out refi.

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HELOC snapshot

Updated today
HELOC avg rate
8.45%
Prime + 0.95 margin
HELOC range (740+)
7.99% to 9.50%
Across 14 lenders
Prime rate
7.50%
Wall Street Journal Prime
HELOAN avg rate
8.10%
Fixed second-lien loan
HELOC vs HELOAN

Two ways to tap home equity.

HELOCs and home equity loans (HELOANs) both create a second lien. The HELOC is a flexible credit line at a variable rate. The HELOAN is a one-time lump sum at a fixed rate. Pick the one whose mechanics fit how you actually plan to use the cash.

HELOC

  • Rate: Variable. Tied to prime plus a margin.
  • Access: Draw any amount up to the credit limit during the draw period.
  • Payment: Interest-only during draw. Principal+interest after draw.
  • Best for: Renovations with phased spending, emergency reserves, or unpredictable cash needs.
  • Watch out for: Rate hikes during draw period and payment shock at the repayment conversion.

HELOAN

  • Rate: Fixed for the life of the loan.
  • Access: One lump sum at closing. No revolving access.
  • Payment: Principal+interest from month one. Standard amortization.
  • Best for: One-time uses with a known cost: debt consolidation, kitchen remodel finished by one contractor, college tuition.
  • Watch out for: Higher fixed rate than HELOC start rate. Worth it for stability if you cannot absorb upward rate moves.
Mechanics

How the draw period actually works.

The interest-only draw period is the HELOC's biggest selling point and its biggest risk. Understand the mechanics before you sign.

Years 1 to 10: the draw period

You can borrow up to your credit limit, repay, and re-borrow at will. Most lenders require an interest-only minimum payment during this phase. On a $50,000 balance at 8.45%, the interest-only minimum is about $352 per month. Some borrowers run a HELOC like a checking overdraft, which works as long as you keep balances low.

The conversion: payment shock

After year 10, the HELOC closes for new draws and converts to a repayment period (typically 10 or 20 years). The balance must now amortize. On that same $50,000 balance with a 10-year repayment, the monthly payment jumps from $352 interest-only to about $620 principal+interest. The 76% jump catches many borrowers by surprise. The CFPB has flagged this risk in its consumer education materials.

The lender can freeze the line

Lenders are allowed to freeze new draws or reduce the credit limit if home values drop materially or the borrower's credit deteriorates. This happened broadly in 2008-2009. Bank failures during 2023 also led to short-term HELOC freezes at affected institutions, though FDIC resolution typically restored access. Keep an emergency cash reserve. Do not depend on the HELOC alone.

The variable rate problem

HELOC rates move with prime. When the Fed hikes 0.25%, your HELOC rate moves 0.25% within 1-2 billing cycles. Borrowers who opened HELOCs in 2021 at 4.50% saw rates climb above 9% by mid-2023 as the Fed responded to inflation. If you cannot absorb a 3 to 4 percentage point rise, consider a HELOAN instead.

When HELOC wins

Three setups where a HELOC is the right tool.

A HELOC works best when you need flexibility, when your first mortgage is at a low locked-in rate, and when the borrowed amount is small enough that closing costs matter.

Cheap first mortgage

Your first mortgage is locked at 3% to 5% from 2020-2022. A cash-out at 7%+ destroys that. The HELOC keeps the cheap first lien intact.

Phased renovation

You are renovating across 18 months and need to draw as invoices come in. The HELOC charges interest only on what you have borrowed, not the full line.

Emergency reserves

An open but unused HELOC costs $0 to maintain at most lenders. It is a low-cost emergency cushion if cash reserves get drawn down.

Tools and related

Run the math, then keep going.

Mortgage payment calc→
Estimate the HELOC payment.
Refi break-even→
Compare HELOC vs cash-out.
Cash-out refinance→
Replace the first mortgage instead.
Rates by state→
Local lender availability.
FAQ

Common questions about HELOCs.

How is the HELOC rate calculated?

Most HELOCs use prime rate plus a margin set by the lender. Prime is typically 3.0 percentage points above the federal funds rate. With prime at 7.50% in May 2026, a HELOC with a margin of +0.95% prices at 8.45%. The CFPB requires lenders to disclose the index, margin, and current rate on the early disclosure.

How does the draw period work?

Most HELOCs have a 10-year draw period during which you can borrow up to your credit limit and only pay interest on the balance. After draw ends, the line enters a 10- or 20-year repayment period during which the balance amortizes like a regular loan. Watch for the payment shock at conversion. It can double the monthly payment.

Can the lender freeze or cut your HELOC?

Yes. Lenders can freeze a HELOC if your home value drops or your credit score declines materially. This happened to thousands of borrowers in 2008 and again to a smaller group in 2020. The CFPB allows lenders to freeze or reduce HELOCs in these conditions per the Truth in Lending Act. Treat the line as conditional access, not guaranteed access.

Is HELOC interest tax-deductible?

Only when the funds are used to buy, build, or substantially improve the home that secures the line, per the 2017 Tax Cuts and Jobs Act. HELOC interest used for credit card payoff, education, or a car is not deductible. Consult a tax professional. Document use with receipts and contracts.

What credit score do you need for a HELOC?

Most lenders require 680 minimum and reserve best pricing for 740+. A few lenders go to 660 with strong income. HELOAN underwriting is similar. Lenders typically cap combined LTV (first mortgage plus HELOC) at 80% to 90%, so equity matters as much as score.

HELOC vs cash-out refinance: which costs less?

Depends on your existing first-lien rate. If your first mortgage is below 5.5%, the HELOC almost always wins because it leaves the cheap first mortgage in place. Above 6.5%, the cash-out usually wins because the new lower fixed rate applies to the full balance. See our cash-out page for the decision matrix.

See HELOC vs cash-out side by side.

Plug in your old rate, balance, and cash needed.

Mortgage calculatorCash-out refi