- A $50,000 home equity loan at 8.5% over 10 years costs $620/month and $24,400 in total interest. That fixed payment never changes, which is the point.
- A HELOC at 8.5% costs only $354/month during the interest-only draw period, but you pay $42,480 in draw-period interest alone over 10 years before repayment even starts.
- Home equity loans typically close with more upfront fees than HELOCs. On a $50,000 loan, closing costs of $1,500-$2,500 add 3-5% to your effective borrowing cost.
Fixed payment, fixed tradeoff
A home equity loan gives you a lump sum at a fixed rate with predictable monthly payments for the full term. The fixed rate eliminates variable-rate risk. The tradeoff is higher upfront closing costs and no ability to reborrow as you repay. It is the right tool when you know exactly how much you need, want payment certainty, and do not need revolving access to funds.
The comparison to a HELOC is almost never straightforward. A HELOC's lower interest-only payment looks attractive until you account for the repayment period and the risk that rates may rise before you finish paying. Home equity loan rates tracked on this site currently run near 8.20% APR, against a HELOC average of 8.20% APR.
Quick answer
Choosing a home equity loan lender comes down to whether you care most about loan size, fees, or speed, since the rate itself is locked at closing no matter who you use. US Bank and Bank of America go the highest on loan size (up to $750,000 and $1 million respectively); BMO Harris and Third Federal keep fees the lowest; TD Bank strips closing costs down further than most East Coast competitors; and Rocket Mortgage closes fastest when timing, not rate, is the priority. Because nothing about your payment changes after closing, compare APR (which folds in fees) rather than the advertised rate, and run your exact loan amount through our home equity loan calculator before signing anything.
Quick picks
- Lender
- US Bank
- Notable feature
- Wide availability, strong fixed-rate program
- Lender
- BMO Harris
- Notable feature
- Competitive fixed rates, low fees
- Lender
- US Bank
- Notable feature
- Up to $750,000
- Lender
- Bank of America
- Notable feature
- Up to $1 million
- Lender
- TD Bank
- Notable feature
- No closing costs on some products
- Lender
- Third Federal
- Notable feature
- No application fee, competitive rates
- Lender
- Rocket Mortgage
- Notable feature
- Digital process, faster close
Home equity loan vs HELOC: the core difference
Both products let you borrow against your home's equity. The mechanics are different.
- Home equity loan
- Fixed for the full term
- HELOC
- Variable (prime rate + margin)
- Home equity loan
- Lump sum at closing
- HELOC
- Draw as needed up to limit
- Home equity loan
- Fixed principal + interest from day one
- HELOC
- Interest-only during draw (usually)
- Home equity loan
- 5-30 years
- HELOC
- Typically 10-year draw, 20-year repayment
- Home equity loan
- Known, one-time expenses
- HELOC
- Ongoing or phased costs
- Home equity loan
- None after closing
- HELOC
- Rate rises increase payment
- Home equity loan
- $500-$3,000 typical
- HELOC
- $0-$2,000 typical
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.
The dollar comparison most lenders bury
Here is the honest math on $50,000 borrowed at 8.5%.
Home equity loan (10-year fixed): Monthly payment: $620 Total payments over 10 years: $74,400 Total interest paid: $24,400
HELOC (8.5% variable, 10-year draw interest-only, 20-year repayment): Draw period monthly payment (interest only): $354 Draw period interest over 10 years: $354 x 120 = $42,480 Repayment period: $50,000 over 20 years at 8.5% = $434/month Repayment period interest: approximately $54,100 Total interest (draw + repayment): $96,580
The HELOC's lower draw-period payment is real. But the total interest is $72,180 more over the full 30-year life of the product compared to a 10-year home equity loan. The comparison flips if you pay down the HELOC principal aggressively during the draw period, but most borrowers do not. If a variable rate and revolving access fit your situation better, compare that math using our best HELOC lenders roundup instead.
Swap in your own numbers below rather than trusting the $50,000 example above; loan amount and term both move the total-interest figure substantially.
Calculate your monthly payment, total interest, and all-in cost for a fixed-rate home equity loan. See your CLTV after the loan and whether you are within typical lender limits.
Your remaining first-mortgage balance. Used to compute available equity and CLTV.
Fixed interest rate. Compare current home equity loan rates before locking.
Monthly Payment
$371
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 cap combined loan-to-value (CLTV) at 80-85%, with some going to 90% for strong borrowers.
CLTV formula: (first mortgage balance + home equity loan amount) / home value.
Example on a $500,000 home with a $320,000 mortgage:
- At 80% CLTV: $500,000 x 0.80 = $400,000. Subtract $320,000 mortgage = $80,000 maximum home equity loan.
- At 85% CLTV: $500,000 x 0.85 = $425,000. Subtract $320,000 mortgage = $105,000 maximum.
- At 90% CLTV: $500,000 x 0.90 = $450,000. Subtract $320,000 mortgage = $130,000 maximum.
Higher CLTV means more risk: a 10% drop in home value on a 90% CLTV situation puts you close to owing more than the home is worth.
Closing costs explained
Home equity loans typically carry more upfront fees than HELOCs. Expect:
- Typical range
- $0-$500
- Typical range
- $300-$600
- Typical range
- $200-$700
- Typical range
- $50-$200
- Typical range
- $500-$2,500+
Some lenders advertise no-closing-cost home equity loans. Read the fine print: closing costs are often rolled into a higher rate rather than eliminated. TD Bank and Third Federal have transparent low-cost structures worth comparing against "no closing cost" alternatives from larger banks.
Best use vs risky use
Good uses: home renovation or repair (adds to the asset securing the loan), medical emergency without other financing options, consolidating very high-rate debt (with a clear plan to avoid reaccumulating).
Caution: debt consolidation (you are converting unsecured debt into debt secured by your home; missing payments now risks foreclosure, not just a credit hit), education costs (consider federal student loan terms first), business investment with uncertain returns.
Risky: discretionary spending, vacations, luxury purchases, investment speculation. A home equity loan is not a substitute for an emergency fund or a savings habit. If you cannot afford the expense without borrowing against your home, consider whether the expense is appropriate at this time.
A home equity loan converts equity you have built into debt secured by your home. If you cannot make payments, foreclosure is a real outcome. Weigh this seriously before consolidating credit card or other unsecured debt into a home equity loan. The lower interest rate is real, but you are increasing the risk attached to your most important asset.
Tax deductibility
Interest on a home equity loan may be deductible if the funds are used to buy, build, or substantially improve the home securing the loan. The rules depend on how you use the proceeds, your total mortgage debt level, and current tax law. Consult a tax professional before making tax-related assumptions about any home equity product.
Choose a home equity loan if
- You know exactly how much you need and want it all at once.
- You want a fixed payment you can budget around for the full term.
- You are debt-consolidating and want the psychological clarity of a defined payoff date.
- You cannot tolerate the risk that a variable rate rises over the repayment period.
- You are renovating a room or project with a defined budget and contractor quotes in hand.
A HELOC is better if: your costs are unknown or phased, you want to borrow and repay multiple times, or you expect rates to decline and want to benefit from lower future payments. If you also have significant equity and less than 10 years left on your first mortgage, compare both against a cash-out refinance. Unsure which fits? A Money Map scan can weigh a home equity loan against your other debt and savings priorities before you commit your house as collateral.
Top home equity loan lenders
US Bank
Why: US Bank offers competitive fixed rates, large loan amounts (up to $750,000 on CLTV to 80%), and a broad national presence. Existing customers get rate discounts.
Terms: Fixed rate, 5-30 year terms. CLTV to 80%. Loan amounts $15,000 to $750,000. Rate discount for autopay and existing relationship.
Who should apply: Existing US Bank customers needing a large loan with a fixed payment and long term.
Who should skip: Borrowers who do not have a US Bank relationship and can find a lower rate at a lender without account minimums.
BMO Harris
Why: BMO Harris offers competitive fixed-rate home equity loans with low fees and available terms up to 20 years.
Terms: Fixed rate, multiple term options. CLTV to 85%. Competitive rates in its service area.
Who should apply: Borrowers in BMO Harris service states who want a straightforward fixed-rate product with low fees.
Who should skip: Borrowers in states outside BMO Harris's network.
TD Bank
Why: TD Bank frequently offers home equity loans with no or low closing costs, making it a strong pick for borrowers who want to minimize upfront cash out of pocket.
Terms: Fixed rate, terms up to 30 years. No closing costs on many products. Available in the Eastern US primarily.
Who should apply: East Coast borrowers who want low upfront costs and a fixed payment.
Who should skip: Borrowers in states without TD Bank branches.
Third Federal Savings
Why: Third Federal consistently offers competitive fixed rates with very low fees and transparent pricing.
Terms: Fixed rate. No application fee. Low annual fee on some products. CLTV to 80%. Available in limited states.
Who should apply: Borrowers in available states who prioritize total cost of borrowing over rate alone.
Who should skip: Borrowers outside Third Federal's service area.
Rocket Mortgage
Why: Rocket Mortgage's digital platform processes applications faster than most traditional lenders, often closing home equity products in 10-15 days versus the 30-45 days common at banks.
Terms: Fixed rate, multiple terms. Fully digital application. Available in most states.
Who should apply: Borrowers who need to close quickly or prefer a fully digital, no-branch process.
Who should skip: Borrowers who prioritize the lowest rate and have 4-6 weeks to shop and close.
When this recommendation changes
A fixed-rate home equity loan becomes less attractive if interest rates fall significantly after you close. You are locked into your rate, while a HELOC borrower benefits immediately from prime rate decreases.
The loan also becomes less appropriate if your financial situation changes: job loss, income reduction, or unexpected expenses can make a fixed payment harder to manage. A HELOC's interest-only draw period gives you more flexibility in tight months, though it does not solve long-term affordability problems.
The consolidation use case flips if you reaccumulate unsecured debt after paying it off with the loan. The net result is more total debt on your home, which was the original risk.
How we ranked
We evaluated lenders on fixed-rate competitiveness, fee transparency, CLTV limits, loan amount range, term flexibility, geographic availability, and application experience. Tax implications depend on individual circumstances. Consult a tax professional for guidance on deductibility.
SwitchWize earns revenue through affiliate referrals when you click through to a lender. Lenders do not pay for editorial ranking positions. Rate data is sourced from lender disclosures and updated regularly. Verify current rates directly with each lender.
Sources
- CFPB home equity guide — federal consumer protections and disclosure rules for home equity borrowing
- HUD home equity resources — guidance on foreclosure risk when borrowing against your home
- Lender disclosures (US Bank, BMO Harris, TD Bank, Third Federal, Rocket Mortgage) checked against published fixed-rate sheets and fee schedules
What to Do Now
Frequently Asked Questions
Is a home equity loan a good idea?
How is a home equity loan rate different from a HELOC rate?
How much can I borrow with a home equity loan?
What closing costs come with a home equity loan?
Is home equity loan interest tax deductible?
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