On this page
- How home equity loan rates compare with mortgage rates
- How a home equity loan works
- What sets home equity loan rates
- Example monthly payments on a home equity loan
- Home equity loan rates vs. HELOC rates
- Home equity loan requirements
- Costs beyond the rate and how to shop
- Is a home equity loan a good idea?
- Frequently asked questions
There is no single figure for home equity loan rates. Instead, each lender prices the loan for each borrower, based mainly on your credit, the equity you keep and the loan amount and term. Most home equity loans have a fixed rate, and because they sit behind your first mortgage, they often cost more than first-mortgage rates.
This guide explains what sets the rate and shows example payments. It also covers how much you can borrow, what lenders require and what the loan costs beyond the rate.
How home equity loan rates compare with mortgage rates
Freddie Mac’s weekly survey put the average 30-year fixed rate at 7.11% on November 12, 2026, up from 6.24% a year earlier. That measures first mortgages. Home equity loans are second liens, and the CFPB says second mortgages often carry higher rates.
The reason is repayment order. If a home is sold to pay off its loans and the sale price falls short, the first mortgage is paid before the second lender, according to the CFPB. As a result, the second lender may not get the full amount it is owed, and it prices for that risk.
The Freddie Mac survey covers first mortgages only. So for a home equity loan, the quotes lenders give you are the figures that count.
The rate is also only part of the price. The CFPB notes that home equity loans may have upfront fees and costs, so compare more than the monthly payment. For that reason, quotes from several lenders on the same loan amount and term are the clearest way to see what you may qualify for.
How a home equity loan works
A home equity loan lets you borrow against your equity, which is the home’s value minus what you owe on it. You receive the money as one lump sum. After that, you repay it in equal monthly payments, usually at a fixed rate, until the balance reaches zero.
When you still owe on your first mortgage, a home equity loan is one kind of second mortgage. You keep your first mortgage and its rate, and you add a second monthly payment. If you cannot repay the home equity loan, the lender could foreclose on your home.
Federal rules give you two protections on this loan:
- Standard disclosures. A home equity loan is closed-end credit secured by real property. Therefore, the lender must send a Loan Estimate within three business days of your application. You must also receive a Closing Disclosure at least three business days before closing (12 CFR 1026.19(e) and (f)).
- A right to cancel. When the loan is secured by your principal residence, you can cancel it until midnight of the third business day after closing. If the lender delivers the rescission notice or required disclosures later, the clock starts then (12 CFR 1026.23(a)(3)).
What sets home equity loan rates
Each lender sets its own pricing. Still, these factors are the ones most likely to move your quote, although each lender weighs them differently.
- Credit history and scores. In general, borrowers with higher credit scores receive lower rates, the CFPB says. Lenders set their own minimum scores.
- Equity left after the loan. Lenders measure this with the combined loan-to-value ratio (CLTV): your first mortgage balance plus the new loan, divided by the home’s value. A lower CLTV leaves the lender more cushion, which can help your rate.
- Loan amount. Very small or very large loans can carry higher rates. Lenders may also set a minimum loan amount, and minimums vary.
- Term. Shorter terms generally come with lower rates and lower total interest, but higher monthly payments.
- Debt-to-income ratio (DTI). DTI is your monthly debt payments, including the new loan, divided by your gross monthly income. A lower DTI makes the file stronger.
- Property use. Lenders decide which property types they will lend on. Terms can also differ for a primary home, a second home or a rental.
- Points and fees. Some lenders let you pay discount points, an upfront fee, in exchange for a lower rate. Likewise, a loan with fewer fees may come with a higher rate.
Interest rate versus APR
The interest rate is the yearly cost of borrowing the money, and it does not include fees. By contrast, the annual percentage rate (APR) reflects the interest rate plus points, fees and other charges, according to the CFPB. So when two lenders quote the same rate, compare the APRs too. The APR is a broader measure of the cost of borrowing than the rate. Still, the CFPB says not to look at the APR alone, so compare the full Loan Estimate.
Example monthly payments on a home equity loan
This table shows principal and interest only, on a fixed-rate, fully amortizing loan. The rates are examples, not today’s rates or a quote. In addition, the figures leave out property taxes, homeowners insurance and your first mortgage payment.
| Loan amount | Example rate | Monthly payment, 10-year term | Monthly payment, 15-year term | Total interest, 15-year term (approx.) |
|---|---|---|---|---|
| $50,000 | 8% (example) | $606.64 | $477.83 | $36,008.69 |
| $50,000 | 9% (example) | $633.38 | $507.13 | $41,283.99 |
| $50,000 | 10% (example) | $660.75 | $537.30 | $46,714.46 |
| $100,000 | 9% (example) | $1,266.76 | $1,014.27 | $82,567.99 |
The term changes both the payment and the total cost. Say you borrow $50,000 at the example rate of 9%. A 15-year term cuts the payment from $633.38 to $507.13, which saves $126.25 a month. However, you pay $41,283.99 in interest over 15 years, compared with about $26,000 over 10 years.
Terms vary by lender, so ask each one which terms it offers. A longer term lowers the payment further, but it also adds more total interest.
Home equity loan rates vs. HELOC rates
A home equity loan usually has a fixed rate. In contrast, a home equity line of credit (HELOC) typically has a variable rate made of two parts, according to the CFPB’s HELOC booklet. The first part is an index, which tracks interest rates in general. The second is a margin, which the lender adds on top.
A common index is the U.S. prime rate. The bank prime loan rate was 7.00% on each day shown from Nov. 5 through Nov. 11, 2026, in the Federal Reserve’s H.15 release of Nov. 12, 2026. A HELOC rate tied to prime would equal that index plus the margin a lender quotes you, and it can change over time.
So a HELOC quote and a home equity loan quote measure different things. The HELOC rate can move later, while a fixed home equity loan rate stays the same for the life of the loan. For a full side-by-side, see HELOC vs. home equity loan.
Home equity loan requirements
Lenders set their own requirements within federal rules. Expect them to review your equity, credit, income and debts, and the home’s value.
Equity and how much you can borrow
The CFPB booklet describes the amount you can borrow as generally a percentage of your home’s appraised value, minus the amount you owe on your mortgage. That percentage is the lender’s maximum CLTV, and each lender sets its own.
Here is an illustration, not a standard limit. Say your home is worth $400,000 and you owe $250,000 on your first mortgage.
| Lender’s maximum CLTV (example) | Total debt allowed on the home | Minus first mortgage | Most you could borrow |
|---|---|---|---|
| 80% | $320,000 | $250,000 | $70,000 |
| 85% | $340,000 | $250,000 | $90,000 |
| 90% | $360,000 | $250,000 | $110,000 |
Your income and debts can lower that figure, so treat it as a ceiling. If you also have a HELOC or another lien, see how lenders count it in HCLTV and HTLTV.
Credit
Minimum credit scores vary by lender. Because a higher score generally earns a lower rate, check your credit reports for errors before you apply. Fixing an error can take time, so start early.
Debt-to-income ratio and ability to repay
The federal ability-to-repay rule covers closed-end loans secured by a dwelling and excludes HELOCs, so it applies to a home equity loan (12 CFR 1026.43(a)). However, it sets no maximum DTI for a home equity loan. Instead, each lender sets its own limit.
Under that rule, the lender must make a reasonable, good-faith determination that you can repay. It must consider your income or assets, employment, the new payment, your other debts, your DTI or residual income, and your credit history (12 CFR 1026.43(c)).
Income documents and a home valuation
The lender must also verify the information it relies on with reasonably reliable third-party records. For example, expect requests for pay stubs, W-2s, tax returns or bank statements. The lender will value the home as well, either with a full appraisal or another method, depending on the lender and the loan.
Costs beyond the rate and how to shop
Fees on a home equity loan vary by lender. Before you compare offers, ask each lender about:
- Origination or application fees
- An appraisal or valuation fee
- Title, recording and other third-party closing costs
- Discount points, if you choose to buy down the rate
- Prepayment penalties (the Loan Estimate must state whether the loan has one)
How to shop for a home equity loan
- Work out your equity and the amount you need, using the CLTV math above.
- Get quotes from banks, credit unions and online lenders for the same loan amount and term.
- Compare the Loan Estimates line by line: rate, APR, monthly payment, closing costs and any prepayment penalty.
- Ask how long a quoted rate is held and what happens if it expires before closing.
- Read the Closing Disclosure against your Loan Estimate before you sign.
Every Loan Estimate uses the same standard form. As a result, side-by-side comparison is easier than it is with lender ads or rate sheets.
Is a home equity loan a good idea?
A home equity loan can fit when you need a set amount, want a fixed payment and can comfortably carry two housing payments. The main risk is your home. If you cannot repay, the lender could foreclose.
You can generally use the money for any purpose, such as a renovation, a large medical bill or tuition. Some homeowners use it to pay off higher-rate debt, which has its own trade-offs; see using home equity to pay off debt. The CFPB also suggests talking with a nonprofit credit counselor before you borrow against your home to consolidate debts.
Taxes matter here too. According to IRS Publication 936 (2025), interest on a home equity loan is deductible only to the extent the money is used to buy, build or substantially improve the home that secures the loan. That applies no matter when the debt was taken out. Consequently, interest on money used to pay off credit cards or other debt is not deductible. The deduction also applies only if you itemize deductions. Ask a tax professional how the rules apply to you.
Other ways to tap your equity
- HELOC. A line of credit you draw from as needed, usually at a variable rate.
- Cash-out refinance. A cash-out refinance replaces your first mortgage with a larger one and pays you the difference. Since it is a new first mortgage, you give up your current rate, which can cost more when your existing rate is low.
- Home equity investment. A home equity investment pays you cash in exchange for a share of your home’s future value, with no monthly payment.
If a home equity loan still looks like the right fit, start with your numbers. Estimate your CLTV, pick a term whose payment fits your budget, and then request Loan Estimates from several lenders for that same amount and term.
Frequently asked questions
What are home equity loan rates?
Each lender sets home equity loan rates for each borrower, based on factors such as credit, CLTV, loan amount and term. Freddie Mac’s weekly survey tracks first mortgages only. Therefore, the quotes you get from lenders are the most useful figures.
Are home equity loan rates higher than mortgage rates?
Often, yes. The CFPB says second mortgages often carry higher rates than first mortgages. That is because the second lender is paid after the first if the home is sold and the equity falls short.
Is the rate on a home equity loan fixed?
Usually. The CFPB says a home equity loan usually has a fixed rate, so the payment stays the same. In addition, the Loan Estimate states whether the rate can increase after closing.
What is the monthly payment on a $100,000 home equity loan?
It depends on the rate and term. At an example rate of 9% over 10 years, principal and interest come to $1,266.76 a month. At the same example rate over 15 years, the payment is $1,014.27.
How many years do home equity loans last?
Terms vary by lender. This guide uses 10 and 15 years as examples, so ask each lender which terms it offers. A longer term lowers the payment but raises the total interest.
How much can I borrow with a home equity loan?
Lenders cap your first mortgage plus the new loan at a percentage of the home’s value, called the maximum CLTV. For example, with a $400,000 home, a $250,000 mortgage and an 85% limit, the most you could borrow is $90,000. Your income and debts can lower that amount.
