If you can’t move to a new home or get financing to use the equity you’ve built up in your home, you’re probably considering a home equity loan or home equity line of credit. But without interest rates, how do you choose between a HELOC or a home equity loan?
HELOC and mortgage loan rates: Tuesday, July 7, 2026
The average adjustable ELOC ratio is 7.25%according to real estate data analytics company Curinos. The lowest HELOC rate for 2026 was 7.19% in mid-May. The national average for home equity loans is 7.86%up appreciably from last month, and far from its 2026 decline of 7.36% that we saw in mid-March and most of May. Both rates are based on applicants with a minimum credit score of 780 and a combined maximum loan-to-value ratio (CLTV) of less than 70%.
How do HELOC interest rates work?
Most HELOCs are variable-rate products, meaning their interest rates are tied to foreign interest rates. If that rate goes up or down, the rate on your HELOC usually follows suit.
HELOCs are typically tied to the principal amount, the first rate banks currently charge their most credit-worthy customers.
The best HELOC lenders will assess the risk any borrower presents and add margin to protect themselves. Riskier borrowers will have larger margins, while those considered less risky will receive smaller ones. Factors such as your credit score, debt-to-income ratio (DTI), and loan-to-value (LTV) ratio will all be considered in this evaluation.
How do mortgage interest rates work?
Home equity loans and their interest rates work like a HELOC in some ways and like a basic mortgage in others.
Like a HELOC, the principal rate usually affects the amount of your home loan, and lenders add a margin to your rate. Both HELOC and home loan loan rates are loosely influenced by the Federal Reserve’s federal funds rate and broader economic conditions.
However, like a home loan, home equity loans are often fixed-rate products, meaning you will have the same interest rate throughout the term. Fixed-rate HELOCs do exist, but they’re not very common.
Read more: HELOC and home equity loan interest rates: How they work and what you can expect to pay
How to qualify for a HELOC or home equity loan
Specific loan requirements vary by lender, but in general, home loans and HELOCs require the borrower to:
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Have a FICO credit score of 680 or higher
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Show good credit history and proof of sufficient monthly income
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Get an appraisal to find out the current market value of the home
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Have at least 15% to 20% equity in the home
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Have a credit-to-income ratio of 43% or less
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Show proof of enforced homeowners insurance.
Lenders may charge an origination fee and other closing costs for a HELOC or home equity loan. When shopping for yours, be sure to ask about all possible application fees, annual fees, early account closing fees, and other one-time or ongoing fees. Shop around multiple lenders to get the lowest interest rate and lowest fees.
Read more: Home equity line of credit (HELOC) vs. Home equity loans: What’s the difference, and which is right for you??
HELOC and mortgage loan rates FAQ
What is a good interest rate on a HELOC or HEL right now?
Rates vary widely from one lender to the next. You can see rates from about 6% to 18%. It depends on your creditworthiness and how diligent you are as a buyer. The national average for a HELOC is 7.25%again 7.86% for housing loans. Those can serve as a guide when buying prices from second mortgage lenders.
Is it a good idea to get a HELOC or home equity loan right now?
For homeowners with low mortgage rates and significant equity in their homes, it may be a good idea to consider a HELOC or home equity loan now. First of all, the prices are the lowest in years. And you don’t give up that great mortgage you got when you bought your house. You can use the money taken from your equity to make home improvements, repairs, and improvements. Anything else.
What is the monthly payment for a $50,000 home equity line of credit?
If you draw down the full $50,000 on a home equity line of credit and pay 7.25% interest, for example, your monthly payment over a 10-year HELOC draw period would be $302. That sounds good, but remember that the rate is often variable, so it changes from time to time, and your payments will increase over the course of a 20-year repayment period. A HELOC essentially becomes a 30-year loan. HELOCs and HELs are best if you borrow and repay the balance within a very short period of time.
