The Mortgage Reports : Today's Mortgage Rates & Strategy Sponsored Content
Key Takeaways
- Rates are holding in the mid-7% range, near three-year lows, giving borrowers a stable window to shop.
- No single lender offers the best rate to everyone, so always compare at least three quotes.
- Improving your credit score and LTV ratio before applying can save you thousands over the life of the loan.
Verify your home equity loan eligibility. Start here
Home equity loan rates are holding near multi-year lows, which is good news if you’ve been considering tapping your home’s equity.
Average home equity loan rates currently range from roughly 7.20% to 8.00% depending on the loan term and product type, according to national surveys from Curinos and Bankrate. Rates are based on borrowers with a minimum credit score of 780 and a combined loan-to-value ratio (CLTV) below 70%.
Borrowers with strong credit profiles can do significantly better, with some qualifying for offers closer to 6.50%. That spread is exactly why shopping around matters.
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Home equity loan vs. HELOC: Which rate is better right now?
If you’re weighing a home equity loan (HEL) against a home equity line of credit (HELOC), the rate comparison is closer than it used to be but each product works differently.
| Home Equity Loan | HELOC | |
|---|---|---|
| Rate type | Fixed | Variable |
| Current avg. rate | 7.47% | 7.20% |
| Disbursement | Lump sum | Revolving line |
| Best for | One-time expenses | Ongoing or flexible needs |
On paper, HELOCs currently carry a slightly lower average rate. But that gap can close (or reverse) quickly once the introductory period ends. Many HELOCs feature below-market teaser rates lasting six to twelve months before converting to a higher variable rate. Home equity loans have fixed rates from day one, with no teaser to watch out for.
The bottom line: if you’re comparing both options, request quotes for each at the same time and compare the full cost (including fees) not just the headline rate.
How home equity loan rates work
Home equity loan rates are almost always fixed, which means your monthly payment stays the same from the first installment to the last. That predictability is a big reason homeowners choose them, especially when rates are uncertain.
Verify your home equity loan eligibility. Start here
Unlike your primary mortgage rate, which is largely driven by the bond market, second mortgage rates like HELs are based on an index (usually the prime rate, currently at 6.75%) plus a lender’s margin. That’s why your home equity loan rate won’t move in lockstep with the 30-year fixed mortgage rate you see in the headlines.
The flip side of a fixed rate: if rates fall significantly, your rate stays put. Refinancing is an option, but you’ll need to factor in closing costs to see if it’s worth it.
What affects your home equity loan rate?
Lenders look at three core factors when pricing your loan:
Verify your home equity loan eligibility. Start here
1. Credit score. This is the biggest lever you have. Scores above 760 typically qualify for the lowest rates; scores below 680 often come with a meaningful rate penalty. Even a 1% rate difference can add more than $10,000 in interest over the life of a $100,000 loan.
2. Loan-to-value (LTV) ratio. This compares your total mortgage debt (including the new loan) to your home’s value. Most lenders cap combined LTV at 80–85%. The more equity you have, the better your rate is likely to be. Aim for an LTV of 80% or lower.
3. Debt-to-income (DTI) ratio. Lenders generally prefer a DTI below 43%. If you’re borrowing to consolidate existing high-interest debt, some lenders will factor that into their assessment favorably.
If you have time before applying, pay down credit card balances, ideally to below 10% of each card’s limit. That single step can lift your credit score and lower your DTI simultaneously.
What experts are saying
Aleksandra Kadzielawski, Realtor® and Housing Market Expert
“Credit score tiers can have a meaningful impact on your rate. Moving from the mid-600s into the 700 range could lower your rate by a noticeable margin, and borrowers with scores above 740 often qualify for the most competitive offers. Even a modest improvement in your credit score before applying can translate into meaningful savings over the life of the loan.”
Who offers the best home equity loan rates?
We’d love to be able to name a lender that always offers the best home equity rates to every applicant. But there are two main reasons why there’s no such lender.
Verify your home equity loan eligibility. Start here
There’s no single lender that offers the best home equity loan rate to every borrower. Understanding how home equity loan rates are determined can help explain why. Lenders specialize in different borrower profiles. Some cater to top-tier applicants with excellent credit and low LTVs, while others work primarily with borrowers who don’t fit a standard mold. Your best home equity loan rate will likely come from a lender experienced with applicants who look like you.
Lender pricing also shifts frequently, depending on how much business they’ve already booked that month. The lender offering the lowest home equity loan rate today may not be the leader next week.
Online lenders and credit unions often offer more competitive rates than large brick-and-mortar banks, but not always. The only way to know is to compare. Aim for at least three quotes, and ideally more.
How to find your best home equity loan rate
1. Get multiple quotes. Request a formal loan estimate from at least three lenders, including a bank, a credit union, and an online lender. The loan estimate is a standardized document, so comparing them side by side is straightforward.
2. Compare total cost, not just the rate. Home equity loans come with upfront fees and closing costs. A slightly lower rate from one lender could be offset by higher fees. Look at the annual percentage rate (APR) and total cost of the loan.
3. Check your credit before you apply. Pull your credit report and dispute any errors. Even a small score improvement could move you into a better rate tier.
4. Know your equity position. Calculate your current LTV before shopping. The more equity you have, the more options you’ll have, and the more leverage you’ll have to negotiate.
Best home equity loan rates FAQ
Time to make a move? Let us find the right mortgage for you
Yes. Home equity loans almost always carry fixed rates, which means equal monthly payments for the life of the loan and no exposure to future rate hikes.
Currently, HELOCs carry a slightly lower average rate, but home equity loans have a fixed rate that won’t adjust — making direct comparisons tricky. Get quotes for both and compare total cost.
The national average is around 7.47%. Strong borrowers with excellent credit and low LTV ratios may qualify for rates in the mid-to-upper 6% range. The “good” rate for you is the lowest offer you receive after comparing multiple lenders.
No. Fixed-rate home equity loans lock in at closing. Your rate, and your monthly payment, will not change.
It depends on what you need the money for. A home equity loan’s lump sum and fixed rate make it ideal for large, defined expenses such as home renovations, debt consolidation, or major purchases where you know the total upfront. A HELOC is better suited for ongoing or unpredictable needs, or situations where you want the flexibility to borrow and repay over time.
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
By refinancing an existing loan, the total finance charges incurred may be higher over the life of the loan.
