- A $50,000 HELOC at 8.5% costs $354/month during the interest-only draw period. When repayment starts at the same rate, that payment jumps to $434/month for 20 years, and the rate may have changed.
- Most lenders cap your combined loan-to-value (CLTV) at 80-85%. On a $400,000 home with a $250,000 mortgage, you have roughly $70,000 to $90,000 in available equity.
- Intro teaser rates typically last 6 to 12 months. After that, your rate equals the prime rate plus the lender's margin. If prime rises 1%, your payment on a $50,000 balance rises about $42/month.
Why the draw period is the whole decision
A HELOC gives you flexible access to home equity at a variable rate. It works well for ongoing projects or expenses where you draw funds as needed. The key risk most borrowers underestimate is payment shock: when the draw period ends, your monthly obligation can jump significantly even if rates hold steady, because you shift from interest-only to fully amortizing payments.
Shop at least three lenders, compare margins (not just teaser rates), and know what your payment looks like the day repayment starts before you sign.
Quick answer
The best HELOC lenders in 2026 split by what you need: Figure and Third Federal for the lowest fees, Bank of America and US Bank for the largest credit lines, and Flagstar for borrowers who want a fixed-rate sub-account option inside a variable line. Whichever lender you pick, the margin over prime, not the advertised teaser rate, is what determines your long-term cost, so compare margins across at least three lenders before applying. Run the numbers on your specific balance with our HELOC payment calculator to see your draw-period payment and the repayment-period jump side by side.
Quick picks
- Lender
- Figure
- Starting APR
- Competitive variable
- Notable feature
- All-digital, low/no closing costs
- Lender
- Third Federal
- Starting APR
- Competitive variable
- Notable feature
- No closing costs, low annual fee
- Lender
- Bank of America
- Starting APR
- Variable, relationship discounts
- Notable feature
- Lines up to $1 million
- Lender
- US Bank
- Starting APR
- Variable
- Notable feature
- Up to $750,000 CLTV 80%
- Lender
- Figure
- Starting APR
- Competitive variable
- Notable feature
- Approval in minutes, funding in 5 days
- Lender
- Flagstar
- Starting APR
- Variable
- Notable feature
- Sub-account draw flexibility
- Lender
- Bank of America
- Starting APR
- Rate discount with Preferred Rewards
- Notable feature
- Up to 1.50% rate reduction
How a HELOC actually works
A HELOC is a revolving line of credit secured by your home. It has two phases.
Draw period (typically 10 years): You borrow as little or as much as you want, up to your credit limit. Most HELOCs require interest-only payments during this phase, though some allow you to pay down principal.
Repayment period (typically 20 years): The line closes and you repay whatever balance remains in equal monthly payments over 20 years. These payments cover both principal and interest.
Your rate equals index plus margin
Most HELOCs are variable-rate products tied to the prime rate, currently 6.75% and moving with federal funds rate changes. The average HELOC rate tracked on this site runs near 8.20% APR. Your actual rate is:
Your rate = prime rate + lender margin
If a lender offers a 0.50% margin, your rate at today's prime is 9.00%. If prime falls to 7.50%, your rate drops to 8.00%. If prime rises to 9.50%, your rate becomes 10.00%.
The margin is the number to negotiate and compare. A lender offering a "low" teaser rate with a 2.00% margin costs you more over time than a lender with a 0.25% margin and no teaser.
Intro rates expire
Many lenders advertise a fixed introductory rate (often 6 to 12 months), then your rate resets to prime plus margin. Read the disclosure carefully to know what month your rate adjusts and what the ceiling (lifetime cap) is.
What rate difference costs you
Scenario: $50,000 HELOC, 8.5% variable rate.
During the draw period (interest-only): Monthly payment = $50,000 x 0.085 / 12 = $354/month
When repayment starts at the same 8.5% rate (20-year amortization): Monthly payment = $434/month
That is an $80/month jump even with zero rate change. If rates rise 1.5 percentage points by the time repayment starts (to 10%), the repayment payment on the same $50,000 becomes approximately $483/month, a $129/month increase from your draw-period payments.
Total interest over the full life (10-year draw interest-only + 20-year repayment at 8.5%): roughly $42,500 in draw-period interest plus $54,100 in repayment interest = $96,600 total interest on a $50,000 balance.
Run your own balance and rate through the HELOC payment calculator below rather than relying on the example above; a $20,000 difference in balance or a 1-point difference in margin changes both numbers substantially.
Calculate your draw-period interest-only payment, the jump to fully amortizing repayment, and how a rate rise changes both. See the payment shock before you commit.
Variable rate tied to prime. Compare current HELOC rates.
Basis points added to model a rate increase. 200 bps = +2.00%.
Draw-Period Payment (Interest-Only)
$354
Use this result as one input in your broader Money Map, not as a one-off number.
What to do
Use this result to narrow your next financial move.
Pre-tax estimates. For illustration only — not financial advice.
HELOC vs home equity loan: the short version
- HELOC
- Variable (prime + margin)
- Home equity loan
- Fixed
- HELOC
- Interest-only (usually)
- Home equity loan
- N/A (lump sum disbursed)
- HELOC
- Borrow as needed
- Home equity loan
- One lump sum
- HELOC
- Ongoing projects, uncertain costs
- Home equity loan
- Known lump-sum needs
- HELOC
- Low (rate floats)
- Home equity loan
- High (fixed)
Compare a fixed-rate home equity loan against a variable-rate HELOC. See the monthly payment, total interest, and payment-shock risk for the same amount borrowed.
Use the same figure for both options — apples to apples
Fixed for the life of the loan — never changes
Variable rate tied to prime — moves with the Fed
Interest-only payments here pay down none of the balance
The balance amortizes as principal + interest over this term
Stress-test a variable HELOC — assume the rate rises this much
Home Equity Loan — Monthly Payment (Fixed)
$485
Use this result as one input in your broader Money Map, not as a one-off number.
What to do
Use this result to narrow your next financial move.
Pre-tax estimates. For illustration only — not financial advice.
CLTV and how much you can borrow
Most lenders limit your combined loan-to-value (CLTV) to 80-85%. CLTV = (mortgage balance + HELOC limit) / home value.
Example on a $400,000 home with a $250,000 mortgage:
- At 80% CLTV: $400,000 x 0.80 = $320,000. Subtract $250,000 mortgage = $70,000 HELOC maximum.
- At 85% CLTV: $400,000 x 0.85 = $340,000. Subtract $250,000 mortgage = $90,000 HELOC maximum.
Some lenders go to 90% CLTV for highly qualified borrowers, which would allow $110,000 in the same example. This carries more risk: a modest home price drop can leave you underwater on total debt.
Fees to expect
- Typical range
- $0-$75
- Notes
- Some lenders waive with autopay or balances
- Typical range
- $0-$2,000
- Notes
- Many lenders offer no-closing-cost HELOCs
- Typical range
- $300-$500
- Notes
- If you close within 2-3 years
- Typical range
- $300-$600
- Notes
- Some lenders use automated valuation and waive this
- Typical range
- $25-$75/year
- Notes
- If you open the line but rarely draw
Figure and Third Federal are standouts for low/no-fee structures. Bank of America and US Bank tend to have more fees but also more rate-discount programs for existing customers.
Choose a HELOC if
- Your project has uncertain or phased costs (home renovation in stages, tuition payments over years).
- You want flexibility to repay and reborrow during the draw period.
- You expect rates to decline, which would lower your payment.
- You can handle variable payments if rates rise.
- You only need funds intermittently, not all at once.
A home equity loan is a better fit if you need a fixed payment, a single lump sum, or have limited income flexibility to absorb rate increases; see our home equity loan lender roundup for a fixed-rate comparison. If less than 10 years remain on your first mortgage, also weigh a cash-out refinance against either option, or run a full Money Map scan to see how a HELOC fits alongside your other debt and savings decisions before you apply.
Top HELOC lenders
Figure
Why: Figure operates a fully digital HELOC platform that can approve and fund in as few as 5 business days, which is faster than most traditional lenders. Its fee structure is lean.
Terms: Variable rate tied to prime. No closing costs on most products. No annual fee. CLTV up to 95% in some states. Loan amounts from $15,000 to $400,000.
Who should apply: Borrowers who need access quickly and prefer a streamlined digital process.
Who should skip: Borrowers who want in-person service or prefer a traditional bank relationship.
Third Federal Savings
Why: Third Federal consistently offers competitive margins with no or very low fees, making it a strong pick for cost-conscious borrowers who plan to hold the line for several years.
Terms: Variable rate, low margin, no closing costs. Annual fee waived with autopay. CLTV to 80%. Loan amounts from $10,000 to $200,000. Available in limited states.
Who should apply: Borrowers in available states who want low total cost over a 5-10 year draw period.
Who should skip: Borrowers outside Third Federal's service area.
Bank of America
Why: Bank of America offers large credit lines (up to $1 million), significant rate discounts through its Preferred Rewards program (up to 1.50% rate reduction for Platinum Honors tier), and a nationwide branch network.
Terms: Variable rate, prime-based. Relationship discount tiers. CLTV to 85%. No application fee, no annual fee, no closing costs on standard products.
Who should apply: Existing Bank of America customers with Preferred Rewards status, or borrowers who want a large credit line with branch access.
Who should skip: Borrowers without a Bank of America relationship who can get a lower margin elsewhere.
US Bank
Why: US Bank offers large HELOC limits, flexible sub-account draw options on some products, and competitive rates for existing customers.
Terms: Variable rate. CLTV to 80%. Lines up to $750,000. Annual fee varies by product and relationship status.
Who should apply: Existing US Bank customers or borrowers who need flexibility in how they draw funds.
Who should skip: Borrowers who do not have a US Bank relationship and want the lowest-margin product.
Flagstar Bank
Why: Flagstar offers flexible draw options including fixed-rate sub-accounts (locking in a fixed rate on a portion of the balance), which is useful for borrowers who want some payment certainty within a variable-rate structure.
Terms: Variable rate base, fixed sub-account option available. Nationwide availability. Standard CLTV requirements.
Who should apply: Borrowers who want HELOC flexibility but want to lock in a fixed rate on specific draws.
Who should skip: Borrowers who want a simple variable-rate line without managing sub-accounts.
When this recommendation changes
The HELOC picks above assume a relatively stable or declining rate environment. The calculus changes if:
- Prime rate rises significantly (each 1% prime increase costs you $42/month per $50,000 outstanding). If prime rises 3 percentage points, your draw-period payment on $50,000 goes from $354 to $479/month.
- You need funds all at once, not in phases. A home equity loan's fixed payment may be worth the simplicity.
- Home values decline. If your CLTV climbs above 80-85%, the lender may freeze or reduce your line even mid-draw.
- You are nearing retirement or have fixed income. Variable-rate debt on your home carries more risk when income is fixed.
How we ranked
We evaluated HELOC lenders on margin over prime, fee structure (annual fee, closing costs, early closure penalties), CLTV limits, funding speed, customer service accessibility, and product availability by state. We did not score lenders on teaser rates because those expire and do not reflect long-term cost.
SwitchWize earns revenue through affiliate referrals when you click "Check my rate" or similar links. Lenders do not pay to appear in editorial rankings. Rate data is sourced from lender disclosures and updated regularly. Confirm current rates directly with each lender before applying.
Sources
- CFPB HELOC guide — consumer protections and disclosure rules for home equity lines of credit
- HUD home equity resources — federal guidance on avoiding foreclosure and understanding home-secured debt
- Lender disclosures (Figure, Third Federal, Bank of America, US Bank, Flagstar) checked against published rate sheets and product terms
What to Do Now
Frequently Asked Questions
How is a HELOC rate determined?
What is payment shock on a HELOC?
How much can I borrow with a HELOC?
Is HELOC interest tax deductible?
What is the difference between a HELOC and a home equity loan?
Act on this: today's top heloc
Ranked by SwitchWize's composite score. We may earn a referral fee, and it never changes the ranking order.
Editorial review
What changed since the last update
Was this guide helpful?
