HELOC Rates: Compare Top Lenders in May 2025
A home equity line of credit, or HELOC, is a second mortgage that allows homeowners to borrow against the value of their homes.Many or all of the products on this page are from partners who compensate us when you click to or take an action on their website, but this does not influence our evaluations or ratings. Our opinions are our own.
- Specializes in HELOCs.
- The initial balance and any additional draws have a fixed interest rate.
- Closing may be available in just five days.
- HELOCs are available for second homes.
- Short draw period of two to five years.
- Requires a $15,000 minimum initial draw.
- Lender charges origination fees up to 4.99%.
- Offers a wide variety of purchase and refinance mortgages with an emphasis on helping underserved communities.
- Its home equity line of credit can be used for an owner-occupied or second home.
- Offers a program to enable buyers to make cash offers.
- Mortgage origination fees tend to be on the high end, according to the latest federal data.
- No closing costs
- Easy-to-join credit union.
- Fixed introductory rate is below the prime rate.
- Must pay back closing costs if the line is open for three years or less.
- No application fee.
- Borrowers can apply within the lender’s mobile app.
- Home equity loans are available for second homes and investment properties.
- Home equity loan rates are not posted online.
- Home appraisal is required.
- Terms range from 5 to 30 years.
- Available for investment properties or second homes.
- Closing can take as little as 20 days.
- Doesn’t publish home equity loan rates online.
- Charges closing costs, but as a flat fee.
- Maximum borrowing limit is higher than industry standard.
- Borrowers can apply online or via mobile app.
- Home equity loans are available for second homes.
- Info about home equity loans is very limited on Better’s website.
- No annual fee.
- HELOCs with fixed-rate repayment.
- Fully digital application process.
- Draw period of only five years.
- Closing costs will apply.
- Not available for second homes or investment properties.
- Maximum borrowing limit is higher than industry standard.
- Home equity loans are available for second homes.
- Borrowers must reach out for home equity loan rates.
- Home equity loan information is not available on the lender's site.
What is a HELOC?
A home equity line of credit (HELOC) is a way to borrow against the value of your home. As you pay down your mortgage and the home’s value appreciates, the share of your home that you actually own (called your equity) grows relative to the portion that the lender owns (your mortgage debt).
By converting some of your equity back into debt, you gain access to a line of credit that you can draw from when you need it. Many lenders will allow you to tap up to 85% of your equity, though some will let you borrow more.
How does a HELOC work?
HELOCs are divided into two parts:
Draw period. You can borrow from the credit line, and minimum monthly payments are usually interest-only (though it’s a good idea to pay toward principal). The draw period is usually 10 years, but this can vary by lender.
Repayment period. You can no longer borrow against the credit line, and the minimum monthly payments include principal and interest until you pay off the loan. The repayment period usually lasts up to 20 years.
Today’s HELOC rates: What to expect
Current rate trends
Most HELOC rates are variable, meaning that they move up and down with the market. This is one risk of HELOCs, because you won’t know what your payments will look like long-term.
Nerdy Tip
If you want your HELOC payments to be predictable, consider going with a lender that offers a fixed-rate option. This allows you to lock in your interest rate on one or more balance.
This variable rate is influenced by a base rate called the prime rate, which is the lowest credit rate lenders are willing to offer to their most attractive borrowers.
The prime rate usually moves alongside the federal funds rate. The prime rate is typically equal to the federal funds rate plus three percentage points.
The Federal Reserve meets every six weeks and votes to raise, lower or maintain the federal funds rate. When the Fed raises the federal funds rate, the prime rate goes up, and HELOC rates follow. When the Fed cuts the federal funds rate, the prime rate goes down, and so do HELOC rates.
Current prime rate | Prime rate last week | Prime rate in the past year — low | Prime rate in the past year — high |
|---|---|---|---|
7.5% | 7.5% | 7.5% | 8.5% |
The last Federal Reserve meeting ended on May 7, 2025, when central bankers voted to leave the federal funds rate unchanged. The next meeting is June 17-18, 2025.
Follow the ups and downs with NerdWallet's explanation of how the Fed affects mortgage and HELOC rates.
How to get the best HELOC rate
Get your financial profile in shape
The best rates are typically reserved for borrowers with these traits:
Enough home equity. Most lenders will allow you to borrow up to 85% of the value of your home, minus what you owe — meaning your equity needs to be at least 15-20%.
A strong credit score. Borrowers with scores above 740 are more likely to receive the best available rate offers.
Low existing debt. A debt-to-income ratio (the percentage of your income that’s allocated to monthly debt obligations) of 36% or lower will give you the best chances of getting attractive HELOC rate offers.
Shop lenders with the best HELOC rates and fees
As you start your HELOC lender search, NerdWallet’s list of the best HELOC lenders can help you find the right choice for you.
When your rate offers come in, be sure to read the fine print. Some lenders offset low interest rates with higher fees, so you’ll want to choose a lender that offers the best combination of each.
How much does a HELOC cost?
Closing costs for a HELOC may amount to 2% to 5% of the total loan amount. You should also budget for any ongoing yearly fees.
Some lenders don’t charge closing costs at all, though they may require that you keep the line open for a certain amount of time.
Once you have a HELOC, the costs vary, depending on the interest rate, the amount borrowed and whether the credit line is in the draw period or the repayment period.
» MORE: Is a HELOC a good idea?
Pros and cons of HELOCs
Pros
- You pay interest only on the amount you have borrowed. If you have a credit line limit of $50,000, and you borrow $10,000, your interest only applies to the amount you withdrew.
- Interest-only payments during the draw period.
- Offers flexibility to borrow as you need it.
Cons
- A variable interest rate means that your monthly payments may go up.
- You could lose your home if you fail to repay.
Alternatives to HELOCs
If you’re not sure if a HELOC is the right choice for you, here are some alternative loan types you can consider.
Home equity loans
Similar to a HELOC, a home equity loan allows you to borrow against a portion of your home equity. However, rather than an open line of credit, you receive the cash from a home equity loan as one lump sum.
Additionally, home equity loans have fixed rates, rather than variable ones. This can makes home equity loans a good fit if you know exactly how much you need to borrow and don’t want to risk rising rates.
See NerdWallet’s list of the best home equity loan lenders to start your search.
Cash-out refinances
If your mortgage rate is higher than today’s rates, a cash-out refinance will allow you to refinance to a larger loan with a new interest rate — paying off the original mortgage while you pocket the difference. A cash-out refinance can also be an ideal option for borrowers who would prefer to manage a single loan, rather than two (like you’d have with a home equity loan or HELOC).
NerdWallet’s list of the best cash-out refinance lenders can help you in your research.
Personal loans
If you don’t have enough equity in your home yet to qualify for a HELOC, you might consider a personal loan instead. Personal loans are less risky, because they aren’t secured by an asset (your home). For this same reason, personal loans usually come with higher interest rates than HELOCs or home equity loans.
Your reasons for needing a loan can determine what type of personal loan is a good fit. For example, if you’re exploring loan options to finance a home repair or renovation, you may be interested in a lender from NerdWallet’s list of the best home improvement loans.
Home equity sharing agreements
While home equity sharing agreements are typically much more expensive than HELOCs or home equity loans, this type of loan also has more flexible borrowing requirements and requires no monthly payments or interest. Instead, you will owe the company a portion of the value of your home at the end of the loan term, to be paid as one lump payment.
NerdWallet’s HELOC reviews
As you explore HELOC options, NerdWallet’s reviews of individual HELOC lenders can help you narrow your choices.
Learn more about HELOCs
Check out our other mortgage and refinance tools
Frequently asked questions
In addition to getting the best rate offer, you’ll want to evaluate a lender’s requirements before making a choice.
For example, does the lender require a minimum initial draw? If so, is this more than what you want to borrow? Does the lender offer repayment terms that will allow you to comfortably keep up with monthly payments? Will you have to pay closing costs?
The best HELOC lender for you will align with your needs and qualifications as a borrower.
Whether or not a HELOC makes sense for you depends on your goals. You take on risk when you borrow against your equity, as you could lose your home if you can’t make your payments. It’s a smarter move to use a HELOC for something that will reinvest in the home and grow your wealth, like putting on a new roof or installing central air. Expenses that aren’t worth this risk — such as a vacation or a wedding — aren’t typically a good use of HELOC funds.
Most HELOCs have a variable rate, so you’ll also want to make sure that you can afford to continue making payments even if the interest rate goes up.
A HELOC requires you to provide some of the same documentation you gave when you got the mortgage to buy the home: at minimum, your Social Security number, proof of income and estimated home value. The lender will check your credit report.
After applying, you'll be given a stack of disclosures to read. Underwriting may take anywhere from hours to weeks, and then you'll close on the credit line, similar to closing on the purchase mortgage.
The amount that you can borrow with a HELOC depends on the amount of equity you have in your home, the value of your home, and your financial profile. You can find your estimated borrowing limit using NerdWallet’s HELOC calculator.
HELOC interest accrued from 2018 to 2025 is only tax-deductible if the borrower meets certain IRS guidelines. Under these conditions, HELOC interest is tax-deductible only if the loan was for a primary or secondary home and if the funds were used to buy, build or substantially improve the home.