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LendingTree leaf icon Written by Rene Bermudez | Edited by Crissinda Ponder | Updated December 3, 2024
The current average annual percentage rate (APR) for a 30-year, $100,000 home equity loan is 6.63%.

Home equity loan rates are relatively high right now, especially compared to the low rates we saw before the pandemic.

Home equity rates tend to fall when the Federal Reserve cuts the federal funds rate, which it did most recently on November 7th. The Fed has one more opportunity to make an additional rate cut this year and, if they do, we can expect home equity loan rates to fall further.

Expert insights on home equity loan rates this month

Jacob Channel LendingTree Senior Economist headshot

Jacob Channel

Senior economist

Home equity loan rates could see some declines, but they probably aren’t going to move down by the exact same amount as the Fed cuts its benchmark rate. In other words, would-be home equity loan borrowers might see some marginally lower rates this month, but they shouldn’t expect any major drops.

The best home equity lenders of 2025

Best For:
Low credit scores
Rocket Mortgage logo
Best For:
High LTV ratios
Navy Federal Credit Union logo
Best For:
Online experience
TD Bank logo
Best For:
Discounts
BMO Harris logo
Best For:
Fast closings
SpringEQ logo
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  How to choose the best home equity loan lender for you

Every home equity offer comes with different loan terms and features. Of course you want a low interest rate, but don’t forget to evaluate the lender offering you that rate, too. Here are things to consider when shopping for a home equity loan lender:

Qualification requirements: Lenders can set their own requirements. If one lender is too strict, look for one with different requirements that better fit you.
Loan costs and fees: The lender you choose can affect your total costs and fees. Some costs are standard, but many are set by the lender.
Customer service: Choose a lender that offers services that work for you, like a brick-and-mortar network or digital-first capabilities.

How to get the best home equity loan rates on LendingTree

There are many lenders to choose from, and each of them set their own home equity loan requirements. The approval guidelines are usually a bit more strict than traditional mortgages, so you should strive to:

  • Boost your credit score. The lowest score that most home equity lenders accept is 620, but others may set their minimums at 660 to 680. The higher your credit score, the better your home equity loan interest rate will be.
  • Reduce your DTI ratio. Lenders divide your total debt, including your new home equity loan, by your pretax income to find your debt-to-income (DTI) ratio. The DTI limit is usually 43%, but a lower DTI could snag you a better rate.
  • Borrow less of your home’s value. The typical maximum loan-to-value (LTV) ratio is 85%, but lenders offer better rates if you borrow a smaller amount, which is less of your home’s value.
  • Avoid second home or investment property home equity loans. The best home equity loan rates go to homeowners that live in their home as a primary residence.
  • Shop around. Home equity lenders may offer special incentives to earn your business, like discounted rates if you have other deposit or credit accounts with them. Compare the costs and rates from at least three lenders to ensure you’re getting the best deal. Get started on LendingTree today!
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How do home equity loan interest rates work?

Most home equity loans come with fixed interest rates, which means that you can enjoy consistent payments that won’t change over time. Because a home equity loan is paid out to you all at once, the amount of money you’re paying interest on never changes.


How are home equity loan rates determined?

  • 1. Your credit score

    The lower your credit score, the better your rate will usually be. Most lenders will allow a 620 minimum score, but some set the bar even higher at 660 or 680.
    LendingTree leaf icon Get your free credit score on LendingTree Spring today.
  • 2. Your DTI ratio

    Your debt-to-income (DTI) ratio measures how much your monthly debt load is compared to your gross monthly income. Home equity lenders typically allow a 43% maximum DTI ratio, but the lower the ratio is, the better your rate offers will be.
  • 3. Your LTV ratio

    Your loan-to-value (LTV) ratio compares how much you’re borrowing to your home’s value. The typical maximum LTV ratio is 85%, though lenders offer better rates if you borrow less. But some lenders offer high-LTV home equity loans with LTVs of up to 100% if you’re willing to accept a higher rate.

  How much does a $100,000 home equity loan cost?

At current rates, you would pay about $775 each month for a $100,000 home equity loan. Assuming a 20-year repayment term, you’ll end up paying $86,000 in interest over the life of that loan.

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Quick guide to home equity loans

What is a home equity loan?

A home equity loan is a second mortgage that converts your home equity into cash. Home equity is the difference between how much your home is worth and the amount you owe on your outstanding mortgage balance.

When you get a home equity loan, you receive the money all at once and make fixed monthly payments to pay it off. You can use the cash from a home equity loan to make home improvements, pay down high-interest debt or cover any other expense you choose.

  See how much you could borrow with a home equity loan calculator.

  Home equity loan requirements

DTI ratio: 43% maximum
Credit score: 620 minimum
LTV ratio: 85% maximum This is the standard LTV ratio maximum. However, some home equity lenders let you borrow up to 100% of your home’s value.

  Is a home equity loan tax deductible?

Yes, if the funds from the home equity loan are used for home improvements, you can deduct the interest from your taxable income. Learn more about how to get your home equity loan tax deductible.

How do I calculate my home equity loan amount?

The easiest way to figure out how much you can borrow with a home equity loan is to let our home equity loan calculator do the math for you. You’ll just need three pieces of information:

  1. An estimate of your home’s value
  2. Your current mortgage balance
  3. Your current credit score
Note: The results are based on a maximum 85% LTV ratio.
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Pros and cons of home equity loans

ProsCons

  Lower interest rates: You’ll pay lower interest rates than you would with credit cards or personal loans.

  Fixed rates: Your payment will be the same each month because your rate doesn't change.

  Tax implications: You may be able to deduct home equity loan interest from your tax bill.

  One-time closing costs: Your closing costs will typically be on par with HELOC closing costs, but you won’t have any ongoing membership or inactivity fees.

  Very flexible: You can use the money for any purpose.

  Second mortgage rates: You’ll pay a higher rate than with a HELOC or cash-out refinance.

  Tougher guidelines: You may need higher scores and lower debt to qualify than you would with a cash-out refinance.

  Reduced equity: You’ll lower the available equity in your home.

  Another monthly payment: You’ll have two monthly house payments.

  Collateral requirement: You could lose your home if you default on your payments.

What is the downside to a home equity loan?

There are two main disadvantages to home equity loans:

1. A home equity loan ties new debt to your home.
This complicates your finances and puts your house at additional risk of foreclosure. If the worst happens and you can’t keep up with either your mortgage payments or your home equity loan payments, you could lose both the place you lay your head and your biggest asset all at once.

2. Home equity loans are a more expensive way to borrow money.
Other options that use your home as collateral can also save you money. However, if you find these options aren’t right for you, it can make sense to take on the heftier costs of a home equity loan.

Alternatives to home equity loans: Which has the best rates?

HELOC

HELOC rates are usually slightly lower than home equity loan interest rates.

Consumers sometimes confuse home equity loans with home equity lines of credit (HELOCs), but they work very differently. A HELOC is a line of credit that can be used like a credit card, and HELOC rates are almost always variable.

LendingTree leaf icon Unsure which is right for you? Read our comparison of home equity loans vs. HELOCs.

Cash-out refinance

Cash-out refinance rates are usually lower than home equity loan interest rates.

A cash-out refinance gives you access to cash by replacing your existing mortgage with a larger one. It’s a first mortgage, so you can get lower interest rates than you could with second mortgages like home equity loans. A cash-out refi is also easier to qualify for.

LendingTree leaf icon Not sure which is right for you? Read our home equity loan vs. cash-out refinance comparison.

Personal loan

Personal loan rates are usually higher than home equity loan interest rates.

If you prefer to leave your home equity alone, you may qualify for an unsecured personal loan. Rates on a personal loan are often higher than home equity products, but you won’t have to worry about the lender foreclosing on your home if you default on your payments.

LendingTree leaf icon Not sure which to choose? Read our comparison on home equity loans vs. personal loans.

How home equity loan rates compare to other loan options

Let’s say you need to borrow $100,000 and you’re wondering what your best option is: a fixed-rate loan (like a home equity loan) or a variable-rate option.

Fixed-rate options

A cash-out refinance is a common fixed-rate option and typically offers a lower rate than a home equity loan. However, in order to access this option you have to alter your first mortgage, since you’re refinancing it.

Takeaway: A home equity loan may be the better choice for someone who wants a fixed interest rate, but doesn’t want to touch their primary mortgage.

Variable-rate options

In a market with falling rates, you may be able to save by choosing a variable-rate loan, like a HELOC or adjustable-rate cash-out refinance. But if rates rise, variable-rate options can get more expensive over time and quickly overtake the (fixed) rate on a home equity loan.

Takeaway: A home equity loan may be a better choice for someone who wants stable payments or who’s borrowing in a market with rising interest rates.

  Think a home equity loan is right for you?
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