Best HELOC Lenders of 2025

How a home equity line of credit works

A HELOC allows you to borrow as needed, up to a certain credit limit based on your home’s value (minus any existing mortgages). Most HELOCs have variable interest rates, which rise and fall with the market.

As you pay down the HELOC balance, you’re able to continue borrowing more. This flexibility can be convenient if you’re financing a series of expenses.

HELOCs have two phases:

1. Draw period. The timeframe when you can borrow from the HELOC usually lasts 10 years. During this phase, you typically only have to pay interest on the amount you’ve borrowed.  

2. Repayment period. After the draw period ends, you can’t borrow any more and you begin paying the principal and interest. You’ll usually have up to 20 years to pay off the remaining balance.  

Requirements for a home equity line of credit

In order to qualify for a HELOC, you’ll need to meet lenders’ minimum requirements. These can vary across lenders, but following these guidelines will help you qualify with the widest range of lenders.

Enough home equity. Most lenders will allow you to borrow up to 80-85% of the value of your home, minus any other mortgage debt.

A solid credit score. Most lenders will want to see a score of at least 620, and some have higher minimums.

Minimal debt. Lenders will look at the percentage of your income that goes towards monthly debt obligations (called your debt-to-income ratio, or DTI). A DTI of 43% or less will help you qualify with the most lenders.

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Getting the best HELOC rate

To obtain the best HELOC rates, make sure you shop around with at least three lenders. This will help you find the combination of features and interest rates that make the best HELOC for your needs.

The best rates are also typically reserved for borrowers with strong credit scores (740 and higher). While a DTI of 43% is the maximum to qualify for a HELOC with many lenders, a ratio of 36% or less will help you get the best rate offers.

Benefits and disadvantages of HELOCs

Benefits

• Flexibility. You can borrow what you need as you need it, up to your credit limit. 

• Low initial payments. During the draw period, the minimum monthly payment usually covers just the interest on the balance, and you aren’t required to pay the principal.

Disadvantages

• Payments can be unpredictable. Most HELOCs have a variable interest rate. When the interest rate rises, the minimum monthly payment will increase, too. 

• Risk of foreclosure. If you can’t keep up with your monthly payments — especially if you made the minimum interest payment during the draw period and aren’t prepared to pay the principal — you could lose your home. 

» MORE: Pros and cons of HELOCs and home equity loans

A HELOC is not your only option for tapping your home's equity.

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