Compare Current Home Equity Loan Rates

Current Home Equity Loan Rate Trends

Although mortgage rates have stayed relatively steady in recent history, rates have been falling on second-lien loans including home equity loans and home equity lines of credit (HELOCs).

Homeowners who might first consider refinancing their existing mortgage at a lower rate are finding that they can't easily find a rate that's lower than their current mortgage. As a result, they are increasingly gravitating toward other ways of leveraging their home equity.

Average Rates, Home Equity Loans and HELOCs

With a home equity loan, creditworthy homeowners are able to extract some of the equity they own in their home—usually at rates lower than those offered by unsecured personal loans and other borrowing methods.

Meanwhile, home values in most residential housing markets are continuing to hold. Online realtor Zillow shows average home values leveling off in 2025 after years of aggressive increases.

Home Values in the U.S.

Unfortunately for both would-be homebuyers and home sellers, mortgage rates are also similarly leveling off in 2025, despite numerous rate cuts from the Federal Reserve in 2024.

Mortgage Rate Trends for the Past 5 Years

Learn more: How Does the Fed Affect Mortgage Rates?

What Affects Home Equity Loan Rates?

Home equity loans are fixed-rate loans made by banks and other lenders to creditworthy homeowners with significant equity in their home. Most lenders require borrowers to have at least 15% to 20% equity in their home, although requirements can vary.

As with primary mortgages, home equity loan rates are largely governed by the bond market. Lenders typically use longer-term Treasury securities as a benchmark when setting rates on home equity loans, whose terms usually range from five to 20 years. As Treasury yields have increased sharply since 2021, so have home equity loan rates.

Nonetheless, a fixed-rate home equity loan may currently be one of the most attractive loans available, at least as far as rates are concerned. Home equity loans are secured by the home, however, so defaulting on the loan could result in the loss of property.

Home Equity Loan Requirements

Although underwriting requirements for home equity loans vary by lender, at a minimum a homeowner will need:

• Sufficient home equity: This is the value of your home minus any mortgages and loans you may owe to lenders.
• Income verification: Lenders will verify your income to ensure you'll be able to pay back the loan and to help determine the loan amount.
• Adequate credit score and debt management: Checking your credit shows the lender what types of credit you're currently maintaining, and how well you've been managing your debt. This includes calculating how much in monthly payments you owe creditors on credit cards, auto payments and other debts compared to your income, known as your debt-to-income ratio. Better credit scores may result in a lower annual percentage rate (APR) for would-be home equity loan borrowers.

Learn more: How Do Lenders View Your Credit?

Pros and Cons of a Home Equity Loan

The pros and cons of home equity loans include:

How to Get the Best Home Equity Loan Rate

Getting a good, if not the best, home equity loan rate is similar to getting lower rates for other types of loans. You'll need to demonstrate that you have the income to service the home equity loan, that you're managing your existing credit well and that it's not demanding too much of your income.

Additionally, once those conditions are met, lenders will likely appraise the home equity loan property to determine how much equity you have and, based on that, how much they're willing to lend to you.

How Much Does a Home Equity Loan Cost?

Home equity loans are among the least costly loans a homeowner can take on, averaging 8.27% in August 2025, according to Curinos. Borrowers will pay thousands less in interest over 10 years versus a similar borrowing and repayment schedule for credit card loans.

^*Most personal loans are for 60 months or less.
^**Monthly payments are constant over 120 months and reduce balance to $0; minimum monthly payments would be lower and not fully repay the credit extended
Note: All calculations exclusive of any fees; presumes no change in variable APR rates
Rates source: Curinos LLC as of August 2025

Most home equity loans are lump-sum loans. Know that you'll be repaying interest on the entire home equity loan, even if it turns out you borrowed more than you needed.

The Bottom Line

Home equity loans can be an effective way for homeowners with significant home equity to borrow money for home improvement, debt consolidation and other financial needs. However, just like a mortgage, homeowners should be aware of the risks of defaulting on any type of loan that's secured by home equity, defaulting on a home equity lan could result in defaults and even foreclosure on the property.