What to know about today’s home equity loan rates

Home equity loan rates have been trending lower, making them a relatively affordable way to borrow large amounts of money, especially compared to credit cards and personal loans.

These loans are best for homeowners who:

• Want to borrow a lump sum at a fixed interest rate
• Need predictable monthly payments over a set repayment period

Home equity loan interest rates are typically fixed, meaning your rate won’t change over time. So, if fixed home equity loan rates are favorable right now, you can lock in those savings for the life of the loan.

Is now a smart time to get a home equity loan?

A home equity loan may be a smart choice if:

• You have built at least 15% to 20% equity in your home
• You want to borrow a one-time lump sum
• You prefer fixed monthly payments with a set interest rate
• You want to avoid high-interest credit card debt or personal loans
• You have a specific large expense—such as renovations, medical bills, or tuition—and want a structured repayment plan

How do I know if I have enough home equity for a loan?

To qualify for a home equity loan, most lenders require that you have at least 15% to 20% equity in your home. You can estimate your equity using this formula:

Home value – Mortgage balance = Estimated equity

For example, if your home is worth $400,000 and your remaining mortgage balance is $280,000, you likely have about $120,000 in equity, or 30%. That’s typically more than enough to qualify.

Lenders will confirm your equity during the application process, often using an appraisal or a property value estimate. Many offer prequalification tools online so you can check your options without affecting your credit.

It’s usually recommended to visit a couple different lender’s website to see who is offering the best rates on home equity loans based on your situation.

How to qualify for the best home equity loan rates

Home equity loan rates are influenced by overall economic conditions, but your personal finances play a big role too.

To get the best rates on home equity loans, focus on:

• Credit score – Higher scores usually qualify for the lowest home equity loan rates
• Debt-to-income ratio (DTI) – Less debt compared to your income makes you a lower risk to lenders
• Home equity – The more equity you’ve built (typically 20%+), the better your chances of getting a low rate
• Loan amount and term – Shorter terms often come with lower rates
• Shopping around – Lenders offer different rates, terms, and fees; comparing offers helps you find the best equity loan rates

How to check your personalized home equity loan rates

To check your personalized rate, most lenders offer a quick prequalification process online. You’ll typically answer a few questions about your home, income, and credit. This usually results in a soft credit check, which won’t impact your credit score.

If you choose to move forward, the lender will conduct a hard credit inquiry to verify your information and finalize your loan terms.

How to find who has the best home equity loan rates using APR

When shopping for home equity loans, you’ll often see the APR (annual percentage rate) listed alongside or instead of the base interest rate. That’s because APR gives a more complete picture of your total cost by including interest plus any fees (like annual maintenance fees and loan closing costs).

• The interest rate tells you what you’ll pay on the amount you borrow
• The APR includes that rate plus lender fees, making it easier to compare loan offers side by side

By focusing on APR, you can better understand which lender is offering the best overall deal, not just the one with the lowest home equity loan rates.

How the home equity loan process works

A home equity loan is a second mortgage. You borrow a lump sum from your lender and repay it in fixed monthly installments over a term that typically ranges from 5 to 30 years.

Here’s how it works:

• You apply for the loan and provide income, debt, and property information
• The lender confirms your home’s value and calculates your equity
• If approved, you receive the lump sum upfront
• You repay the loan over time at a fixed interest rate

Once issued, the loan amount can’t be borrowed again (unlike a HELOC). Because payments are fixed, you’ll know exactly what to expect each month, which makes it easier to budget long-term.

You don’t need to go through your current mortgage lender to apply. It’s smart to shop around to determine who has the best home equity loan rates. Different lenders may offer lower rates, fewer fees, or more flexible terms.

What experts predict for home equity loan rates in 2025

Experts anticipate home equity loan rates in 2025 to remain steady or gradually decline if inflation cools and the Fed eases rates. That said, regional trends still matter.

For example, home equity loan rates in Michigan continue to stay competitive, especially through credit unions and regional banks offering flexible terms in areas like Detroit and Grand Rapids.

Meanwhile, the best home equity loan rates in Texas are often found in fast-growing cities like Austin and Houston, where lender competition is high and rate promotions are common.

Wherever you're located, comparing personalized offers is the easiest way to lock in low fixed home equity loan rates.