Most home equity lines of credit come with variable interest rates, which means that their rates — and monthly payment amounts — can change over time.
Each lender determines how an individual HELOC’s interest rate is calculated, but the same factors are always included.
Factors that affect home equity line of credit rates
1. Your loan amount
Borrowing 80% or less of your home’s value is likely to get you lower HELOC rates, although most HELOC lenders let you borrow up to 85%. The lower the percentage of equity you borrow, the better your rate will be.
2. Your credit score
A 780 score or higher is recommended to get the lowest HELOC rates offers. However, some lenders will allow a 620 minimum credit score.
3. Your debt-to-income (DTI) ratio
Your DTI ratio measures your gross monthly income relative to your monthly debt, and keeping it low will help drive down your home equity line of credit rate. The less monthly debt you have compared to your income, the better. HELOC lenders will usually allow a maximum 43% DTI ratio.
4. Interest rate adjustments
Similar to adjustable-rate mortgages, HELOCs typically have interest rates that change on a specific schedule. Lenders are required to tell you how they’ll calculate your rates before you close on the loan. There are three factors that figure into your rate adjustments:
- The index is the moving part of the formula that determines your HELOC rate. Common indexes for HELOCs are the U.S. prime rate and the Constant Maturity Treasury (CMT).
- The margin is a set amount added to the index to calculate your interest rate. This gap between what the market determines and what you pay is how lenders make money on a HELOC.
- The ceiling sets a limit on how high your rate can rise at any time during the loan term.
5. Loan-to-value (LTV) ratio
Your LTV ratio measures how much of your home’s value you’re financing. Most lenders will require you to maintain at least 15% equity in your home, which limits your maximum LTV to 85%. There are some lenders who offer high-LTV HELOCs with LTVs of up to 100% — however, you usually have to accept a higher interest rate.
Average 30-year HELOC monthly payments
Loan amount | Monthly payment |
$25,000 | $160.08 |
$50,000 | $316.03 |
$100,000 | $623.87 |
$150,000 | $935.80 |
Average rates disclaimer
Rates are calculated based on conditional offers for both home equity loans and home equity lines of credit with 30-year repayment periods presented to consumers nationwide by LendingTree’s network partners in the past 30 days for each loan amount. Rates and other loan terms are subject to lender approval and not guaranteed. Not all consumers may qualify. See LendingTree’s Terms of Use for more details.
What is the monthly payment on a $75,000 HELOC?
Assuming you have spent up to the HELOC’s credit limit, the monthly payment on a $75,000 HELOC at today’s rates would be about $559 for an interest-only payment, or $672 for a principle-and-interest payment. Your payments could be lower, however, if you haven’t used the full amount of the line of credit.