economy
Home equity loan and HELOC rates: Aug. 19, 2026
Homeowners can access the value they’ve built in their property, whether through steady mortgage payments or an all-cash purchase, by taking out either a home equity loan or a home equity line of credit (HELOC). Since your house backs the debt, these loans often come with more favorable interest rates than unsecured borrowing. So what differentiates the two?
TL;DR
- Home equity loans provide a lump sum, while HELOCs offer a revolving credit line.
- Secured by property, these loans generally have lower interest rates than unsecured loans.
- HELOCs have two phases: a draw period for borrowing and a repayment period for paying off the balance.
- Risks include losing your home and potentially still owing a balance if foreclosure sale proceeds are insufficient.
- Closing costs typically range from 2% to 5% of the borrowed amount.
- To qualify, a good credit score, manageable DTI, steady income, and at least 15-20% equity are generally required.
- Home equity is calculated by subtracting the mortgage balance from the home's current estimated value.