Home Equity Loan Rates: What You Pay and How to Get the Best Deal

When you tap into your home’s value with a home equity loan, a lump-sum loan secured by your home’s equity, often used for major expenses like renovations or debt consolidation. Also known as a second mortgage, it lets you borrow against what you’ve built up in your property. Unlike a HELOC, which gives you a revolving line of credit, a home equity loan gives you one payment amount with a fixed rate—making it predictable but less flexible. These loans are popular because they often come with lower interest rates than credit cards or personal loans, but only if you have solid equity and a good credit score.

Your credit score, a three-digit number lenders use to judge how risky you are as a borrower. Also known as a FICO score, it’s one of the biggest factors in what rate you’ll get directly impacts your home equity loan rates. Lenders typically offer the best rates to people with scores above 700. If your score is below 680, you might still qualify, but expect to pay more. Your debt-to-income ratio, the percentage of your monthly income that goes toward paying debts. Also known as DTI, it’s how lenders decide if you can handle another loan payment matters just as much. If you’re already paying 40% or more of your income on debt, lenders may say no—or charge you a higher rate to make up for the risk. Even your home’s loan-to-value ratio (how much you owe vs. how much it’s worth) plays a role. Most lenders want you to keep at least 15-20% equity after the loan.

Rates change often, based on the Federal Reserve’s moves, housing market shifts, and your personal financial picture. Right now, rates are hovering between 6% and 10%, depending on your profile. A 720 credit score with 30% equity might get you 6.5%, while someone with a 650 score and 10% equity could pay over 9%. You can’t control the market, but you can control your application. Pay down debt, check your credit report for errors, and avoid opening new accounts before applying. Compare offers from banks, credit unions, and online lenders—not just the one your current bank pushes. The difference between a 7% and 8.5% rate on a $50,000 loan could save you over $12,000 over 15 years.

What you’ll find below are real, practical guides that break down exactly what affects your home equity loan rates, what keeps people from getting approved, and how to fix common issues before you apply. You’ll see how HELOCs compare, what lenders look for behind the scenes, and how to avoid the traps that cost borrowers thousands. No fluff. No sales pitches. Just what works.