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Published: Jul 21, 2023 18 min read

Obtaining large loans can be challenging without capital. Home equity loans and home equity lines of credit (HELOCs) are solutions that will allow you to get a large amount of financing by putting your home or a property you own up as collateral.

In this article, we look at lenders with the best home equity loan rates in order to help you find one that best suits your financial situation.

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Our Top Picks for Best Home Equity Loan Rates

Best Home Equity Loan Rates Reviews

Here are our choices for vendors with the best home equity loan rates.

Pros
  • Easy to find current rates
  • Can borrow against primary, secondary or investment properties
  • Discounts for autopay available with personal TD Bank account
Cons
  • Origination fee of $99
  • Only available in 16 states
  • Loans must be closed in-person

Why we chose it: TD Bank allows you to borrow home equity loans against primary, secondary or investment properties and clearly lists the rates for each on its website.

TD Bank was founded in 1855 and provides banking and lending services. It operates in Washington D.C. and the following 15 states:

  • Connecticut
  • Delaware
  • Florida
  • Massachusetts
  • Maryland
  • Maine
  • North Carolina
  • New Hampshire
  • New Jersey
  • New York
  • Pennsylvania
  • Rhode Island
  • South Carolina
  • Virginia
  • Vermont

TD Bank is very transparent about its loan pricing. Its website dedicates a page to helping you find the amount you can expect to pay by entering your location, choosing a tab to distinguish if this is a primary or secondary home or investment property, choosing your loan term and finally, the amount of your loan. This transparency makes it easy to find current home equity loan rates, compare prices and budget for your repayments with the help of a loan calculator.

Loan terms are five, 10, 15, 20 and 30 years, however the 30-year term option is not available for investment properties. The minimum amount available to borrow is $10,000. TD Bank does not list a maximum amount except in the case of second homes, which is $1,500,000. All loan options include a $99 origination fee and are eligible for a discount if autopay is enabled from a personal TD Bank account.

TD Bank is Better Business Bureau (BBB) accredited and boasts an A+ rating. However, customer reviews on the site give the financial institution an average of 1.04 out of 5 stars, with complaints about customer service and problems with payments. TD Bank has replied to each customer directly.

Pros
  • Lowest Rate Guarantee program ensures you will get lowest possible rates
  • Maximum 30-year term on 5/1 adjustable home equity loan
  • No prepayment penalties, annual fees or closing costs
Cons
  • Home equity loans only available in 8 states
  • Eligibility requirements not listed

Why we chose it: Third Federal has a Lowest Rate Guarantee program, which guarantees it will deliver the lowest rates for home equity loans. If it doesn’t, it will beat the competitor rate or pay you $1,000.

Founded in 1938, Third Federal offers banking and lending services in the following states:

  • Ohio
  • Florida
  • Kentucky
  • California
  • Pennsylvania
  • New Jersey
  • Virginia
  • North Carolina

Third Federal’s Lowest Rate Guarantee states that if you find a home equity loan or line of credit with a lower rate and you can submit proof in the form of an advertisement, website, email or other form of documentation, it will lower its rate to beat the competitor or pay you $1,000.

There are a number of home equity loans available at Third Federal, including a 5/1 adjustable rate home equity loan and a five or ten-year fixed rate home equity loan. The 5/1 home equity loans can have terms that last up to 30 years. All of these loan options allow you to borrow up to 80% of your home’s equity and have no closing costs, prepayment penalties or annual fees. Third Federal lists rates on its website based on your location. Its website doesn’t list eligibility requirements, such as necessary income and credit score.

Third Federal is not a BBB-accredited business and has a BBB rating of A- for its record of closing customer complaints. Its reviews average 1.73 out of 5 stars, with customers mainly complaining about the application process.

Pros
  • No fees
  • Fixed and variable rates available
  • Loans allow borrowing off up to 100% of home's equity
Cons
  • Membership is limited
  • Third-party closing costs
  • Only 20-year repayment term available for HELOC

Why we chose it: Navy Federal Credit Union offers competitive rates for home equity loans and HELOCs with no fees as long as you qualify for membership.

Navy Federal Credit Union was founded in 1933 and currently has over 12 million members. It has strict membership requirements and limits its members to:

  • Veterans, retirees and annuitants
  • Active duty military members
  • Department of Defense Officer Candidates and Reservists
  • Delayed Entry Program candidates
  • Family members

Navy Federal Credit Union offers fixed-rate home equity loans with set monthly payments. Loan rates can go as low as 6.64% APR with terms of five, 10, 15 and 20 years. It allows you to borrow up to 100% of your home’s equity with a minimum amount of $10,000 and a maximum of $500,000. These loans don’t have prepayment, application or origination fees. Loans do include third-party closing costs, which may include:

  • Credit report fee
  • Flood determination fee
  • Government fees and recording charges
  • Taxes
  • Property valuation
  • Title search/insurance
  • Fees associated with condominium properties

HELOCs are also available. These lines of credit from Navy Federal Credit Union allow you to borrow up to 95% of your home’s equity in the same range of $10,000 to $500,000. The variable rate is based on the U.S. Prime Rate but can be as low as 8.5% APR. Navy Federal Credit Union provides a 20-year draw period and a 20-year repayment period as its only HELOC option. HELOCs don’t have application, origination, annual or inactivity fees.

Navy Federal Credit Union is neither BBB-accredited nor does it hold a BBB rating. Nearly 150 customers have given the financial institution an average of 1.45 out of 5 stars on the BBB.

Pros
  • Several discounts available
  • 6-month introductory rate
  • Ability to convert to a fixed-rate HELOC
Cons
  • Poor customer reviews
  • Online application requires a minimum HELOC amount of $25,000
  • Not transparent about eligibility requirements

Why we chose it: Bank of America offers variable HELOCs that come with introductory rates, multiple discounts and an option to convert to a fixed-rate HELOC if you choose.

Bank of America offers an introductory variable APR for the first six months, which starts at 6.74%. After the introductory rate ends, the new variable rate will depend on your location and can be found on the Bank of America website.

There are also multiple discounts available that will improve your rate. If you set up and maintain automatic payments from a Bank of America account, you can receive a 0.25% discount. Bank of America Preferred Rewards members can get a rate discount of up to 0.625%. Also, after opening your HELOC, you can receive a 0.10% rate discount for withdrawals of $10,000 up to 1.50%.

To get a HELOC through Bank of America, you can complete an online application in 15 minutes, but you must apply for at least $25,000 or else you’ll need to contact a representative by phone. The eligibility requirements to receive a HELOC are not on the website, so you should speak with a representative to find out if you qualify.

Bank of America usually allows you to borrow up to 85% of your available home equity. Its HELOC borrowing periods are 10 years, and repayment periods are 20 years. One unique feature of Bank of America’s HELOC is that you can convert $5,000 or more from a variable rate to a fixed rate for no additional fee.

Bank of America has BBB accreditation and a BBB rating of A+ for replying to customer complaints. Customer reviews on the BBB average out to 1.06 out of 5 stars, with most complaints referencing poor customer service or problems relating to credit or debit accounts. Bank of America has replied to these complaints but uses the same response to each comment.

Pros
  • Accepts 620 minimum credit score or higher
  • Minimum loan term of 10 years
  • No fees or closing costs
Cons
  • Doesn't offer HELOCs
  • Poor customer reviews
  • Usually takes 6 to 8 weeks to close on a loan

Why we chose it: Discover allows you to take out a home equity loan with a credit score as low as 620, making it our choice for the best home equity loan for bad credit borrowers.

Discover offers fixed-rate home equity loans but not HELOCs. The loan amounts range from $35,000 to $300,000 and can be repaid monthly for terms of 10, 15, 20 or 30 years. Discover doesn’t charge for application, origination or appraisal fees and requires no additional cash at closing. Loan rates for first liens start at 6.24%, and second liens at 7.49%. The length of time it takes from application to closing your loan varies and may take between six to eight weeks.

Discover notes some specific eligibility requirements that it looks for, including:

  • Credit score of 620 or higher
  • Debt-to-income ratio of 43% or less
  • Employment and income
  • History of responsible credit use

Discover is a BBB-accredited business and has an A+ rating for closing out customer complaints on the platform. Its customer review score is 1.13 out of 5 stars. Many of these complaints detail a lack of fraud protection.

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Other home equity loan rates we considered

Here are some other home equity loan rates that we considered.

Connexus Credit Union

Pros
  • 6-month introductory rates for HELOCs
  • Loan minimum of $5,000
Cons
  • High closing costs
  • Selective membership requirements

Connexus Credit Union has a selective membership that requires you to belong to one of 22 specific groups to be eligible to apply for a home equity loan. It offers home equity loans with rates as low as 8.99% and HELOCs with 6-month introductory rates of 4.50% and then rates of 7.99% after that. Loan minimums are as low as $5,000. Connexus Credit Union also has closing costs that can range from $175 to $2,000, which is why we didn't include it as one of our top picks.

Figure

Pros
  • Approval takes 5 minutes
  • Funding can occur in as fast as 5 days
Cons
  • High minimum loan amount
  • Short draw period

Figure is an online lender that offers HELOCs. You can apply for a HELOC online, get approved in five minutes and receive funding in as few as five days. Loan amounts start at a high $20,000 minimum and increase to a maximum of $400,000. Draw periods are only available for two to five years. Figure wasn’t included as one of our top picks due to its high minimum loan amount.

KeyBank

Pros
  • Discount for opening KeyBank account
  • Low minimum amount for HELOCs
Cons
  • High minimum loan amount
  • Only available in 15 states

KeyBank offers fixed-rate home equity loans with terms ranging from five to 30 years. The loan amounts range from a high minimum amount of $25,000 up to $500,000. HELOCs are also available ranging from $10,000 up to $500,000. A 0.25% client discount is available if you have a KeyBank bank account. KeyBank wasn’t placed in one of our best of categories due to its high loan minimum.

Home Equity Loan Rates Guide

Before you get a home equity loan, you should make sure that you understand what home equity loans and HELOCs are and how they work.

What are interest rates on home equity loans?

A home equity loan is a type of loan that uses your equity as collateral. In this case, your equity is your current mortgage balance subtracted from the current value of your property. Finding out how to build equity in a home can help you save money in the long run. Home equity loan lenders are usually willing to offer lower interest rates for home equity loans instead of unsecured personal loans. Once approved, your lender will disperse your funds as a lump sum.

An interest rate is a percentage of the principal loan amount a lender charges you. Lenders determine interest rates by considering your credit score, debt-to-income ratio, loan amount, repayment period, collateral and current economic conditions. Home equity loans often come with a fixed rate of interest that doesn’t change over the entire course of the loan. HELOCs, on the other hand, often have variable rates that change with the market.

How to get the best home equity loan rates

There are some things you can do to ensure you're getting the best home equity loan rates possible. You should compare home equity loan interest rates and loan terms from multiple lenders, work on improving your credit score, maintain a low debt-to-income ratio, choose a shorter-term loan and consider using a co-borrower with a strong credit history.

Compare interest rates and loan terms from multiple home equity lenders

While the interest rates of home equity loans will depend on your financial situation, lenders' rates will also vary. To find the best terms for your loan, research the best home equity loans available and compare what the lenders are offering. One way to do this is to create a spreadsheet and include all information relevant to that lender's loan terms. Some lenders don't list their requirements and terms online, so you will need to speak with a representative via phone, online chat or meet in person.

Work on improving your credit score

Having a good credit score is vital in many aspects of your life. Lenders look at your credit score to determine how likely you are to repay your loan and make on-time payments. Bad or fair credit borrowers may want to look into ways that they can improve their score if it is low. Some things you can do to get a higher score is to pay down your debts to keep your credit utilization low, check your credit report to make sure the information is accurate and see if you are eligible for any score-boosting programs.

Maintain a low debt-to-income ratio

When applying for a home equity loan, lenders will look at your debt-to-income ratio to see if you’ve accumulated more debt than you can handle. With this formula, you can find your debt-to-income ratio: your monthly debt divided by your gross monthly income. For example, if your monthly debt payments amount to $1,500 and your gross monthly income, income before any deductions are taken out, is $4,500 a month, the equation is 1,500 / 4,500. In this case, your debt-to-income ratio would be 0.33 or 33%.

The lower your debt-to-income ratio, the better your chances of getting approved for a loan and receiving a good rate. Most lenders look for a debt-to-income ratio of 43% or less. If your debt-to-income ratio is above 43%, lenders may think that your debts are already unmanageable and refuse to give you a loan. To lower your debt-to-income ratio, you’ll either need to increase your amount of gross monthly income or pay down your debts.

Choose a shorter loan term

For lenders, loaning out funds long-term is a bigger risk than a short-term loan. During the course of a long-term loan, the economy could change, or you could experience hardships that make it difficult to meet your repayment obligations. Because of this, if you choose a shorter loan term, the lender may be willing to work with you and give you a lower interest rate as you’re lessening their risk.

Consider using a co-borrower with a strong credit history

Another option to lower the interest rate of your home equity loan is to cosign with someone that has a strong credit history. Cosigning is when you and another person agree to the loan terms, making the loan much less of a risk for the lender. Using a co-borrower with a strong credit history can be a great way to lower your rate, but your cosigner should be comfortable with the terms as they will need to repay the debts if you can’t.

Home Equity Loan Rates FAQs

Who has the best home equity loan rates?

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The best home equity loan rates will depend on your financial situation and the lender's terms. To determine your interest rates, the lender will consider several factors, including your credit score, debt-to-income ratio, repayment period, loan amount and more. To determine the best home equity rates for your financial situation, compare the loan terms of multiple lenders.

What is the average home equity loan rate?

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The rates of home equity loans are in constant flux to match the market. According to debt.org, as of March 8, 2023, the average home equity loan rate was 7.74%

What is a good home equity loan rate?

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As the average home equity loan rate is 7.74% as of March 2023, if you are able to get an interest rate that is lower, you should consider it a good home equity loan rate. You can consider loans above this rate as less than ideal. Getting a lower-than-average home equity loan rate will depend on your credit score, collateral and other things.

What is a fixed-rate home equity loan?

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Most home equity loans have a fixed rate of interest. Fixed rates are interest rates that are set in the loan terms at the beginning and don't change over the entire course of the loan. In contrast, a variable rate will change over time depending on economic conditions.

How We Chose the Best Home Equity Loan Rates

To determine the best home equity loan rates, we looked at multiple factors, including these:

  • Interest rates and fees: We considered the types and percentages of interest rates offered by the lenders and whether they charged additional fees.
  • Transparency: We looked to see if things like eligibility requirements and loan pricing were listed on the website.
  • Loan terms: We compared the lengths of repayment periods available for the loans offered.
  • Loan amounts: We considered how much the lenders were willing to loan out.
  • Discounts: We checked if the lender offered any type of price reductions.
  • Application process: We looked into how straightforward it was to apply for credit and the speed it takes to get approved.
  • Eligibility requirements: We considered how easy or difficult it is for someone to qualify for a loan.
  • Customer satisfaction: We checked how customers rated their experiences with the lenders.
  • Third-party ratings: We looked into how third-party sites view the companies.

Summary of Money’s Best Home Equity Loan Rates