Last updated: December 29, 2023

Market Insights

Current home equity loan rates

Couple at a laptop comparing lenders and reviewing current home equity loan rates.

With a home equity loan, you can secure a relatively low interest rate on the money you need for renovations or sudden expenses.

However, interest rates are dynamic, and they can fluctuate higher or lower up until you lock in a rate. Current interest rates depend on each unique lender, borrower, and the housing market. Learning how lenders calculate home equity loan interest rates can help determine the best time to lock in on your rate. 

Quick facts about current home equity loan rates

  • Home equity loans allow you to borrow from the difference between your mortgage balance and your home’s current market value within limits set by a lender.
  • Home equity loan rates vary over time, depending on factors like the Federal Reserve and economic trends.
  • Your credit and income also impact the home equity loan rates lenders may offer you.
  • Home equity loans come with a fixed rate, while home equity lines of credit (HELOCs) typically come with a variable rate.

Check out the current rates from Discover Home Loans for more information.

Each bank, creditor, and lender set interest rates based on their own “prime rate” — the rate that the most creditworthy borrowers receive. Prime rates depend on the federal funds rate, which the Federal Reserve sets to influence economic trends as needed.

The Federal Reserve typically increases the federal funds rate in response to inflation, so interest rates on home equity loans tend to go up as inflation does. Monitoring market trends can help you save on your home equity rate.

Lending institutions treat prime rates as a baseline for building individual interest rates. Your financial background and credit history typically shape the final interest rate lenders offer you.

What are home equity loans?

Home equity loans allow homeowners to borrow against the equity they have in their homes. You can calculate your equity by subtracting the current balance on your mortgage from your home’s value. For example, if you have a home valued at $300,000 and you have $150,000 remaining on your mortgage, your home equity would be 50%, or $150,000.

Lenders usually cap how much you can borrow with home equity loans at 80% to 85% of home equity, though this will vary by lender. Your home becomes collateral for the home equity loan and secures the loan with relatively low interest rates.

With a home equity loan, you receive your loan proceeds as a one-time lump sum and repay it over time. Home equity loans can help you fund home repairs, renovations, and other major one-time expenses like down payments on investment properties, debt consolidation, or an emergency.

What are current home equity loan rates?

Due to Federal Reserve decisions and economic trends, home equity loan rates can frequently change throughout the year. Your location also influences your final home equity loan rate, so researching on a state and local level can help you make an informed financial decision.

How to qualify for good home equity loan rates

While some aspects of home equity loan rates depend on national circumstances, a portion of your rate is within your control. You can take the following steps to qualify for a lower interest rate.

  • Work on improving your credit. Lenders usually require a minimum credit score to qualify you for a home equity loan. Aiming higher for great credit can help you maximize your loan and minimize your interest.
  • Reduce your debts. Lenders look for a low debt-to-income ratio of around 43% or lower before approving home equity loans. The lower your ratio, the better. By paying down your debts, you can show lenders you have more flexibility to repay your loan.
  • Increase your income. You can improve your debt-to-income ratio if you increase your consistent income through a second job, a promotion, or a raise.
  • Increase your home equity. Your home equity determines the maximum loan size you can receive and impacts your interest rate. One way you can increase your equity is by increasing your mortgage payments — but you may be able to find other ways to grow your home equity.

Discover Home Loans offers low fixed rates on home equity loans with terms of 10, 15, 20, or 30 years and $0 application fees, $0 origination fees, $0 appraisal fees, and $0 costs due at closing.  

Home equity loan vs. home equity line of credit (HELOC)

If a home equity loan doesn’t seem like a good fit, you can also tap into your home’s value through home equity lines of credit (HELOCs). Like home equity loans, HELOCs allow you to borrow based on your home equity, with your house as collateral. However, some key factors set them apart. HELOCs provide revolving credit, so you can withdraw from the HELOC as needed during a set withdrawal period instead of borrowing one lump sum.

Interest rates also work differently between the two types of loans. Home equity loans have fixed interest rates, meaning your monthly payments remain the same throughout the repayment period. HELOCs have variable interest rates, so you could owe more over time than anticipated.

Learn More: Home equity loan vs Home equity line of credit (HELOC)

Pros and cons of home equity loans

Home equity loans offer more stability than HELOCs. Not only do interest rates remain the same over time, but so do monthly payments. That way, you can incorporate payments into your monthly budget. The collateral keeps interest rates relatively low. Home equity loan maximum loan amounts exceed many credit cards or personal loans, making them an affordable option for many homeowners.

There is some inflexibility to home equity loans that can lead to a few downsides. You can only borrow a fixed amount and receive it all at once. That means if the scope of your project or other expense grows, you’ll have to find an additional funding source. Home equity loans also have closing costs and fees that reduce the amount of your loan. Both home equity loans and HELOCs come with the risk of losing your home, though this is a worst-case scenario.

Pros and cons of home equity lines of credit (HELOC)

HELOCs offer more flexibility than a home equity loan. Because you can take out funds as needed, you only have to pay interest on the amount you actually spend. You can begin paying interest immediately, but payments on your principal don’t start until after the withdrawal period. The malleability makes them a good option for longer-term renovations with uncertain budgets.

Variability with HELOC interest rates, however, makes them somewhat challenging to manage over time. Market conditions can change HELOC interest rates during the life of the loan, making them vulnerable to issues affecting the economy. Payments can change too, and sometimes borrowers end up paying a huge amount toward the end of the loan’s term to cover outstanding debt.

Find your home equity loan rate

Many factors influence home equity loan rates, including the lender you choose. To make sure you’re getting the best rate available, shop lenders and compare rates and loan terms.

Please note: Discover Home Loans offers low, fixed rates on home equity loans, but does not offer HELOCs. 

Find your low,
fixed rate

Use our Monthly Payment Calculator to find a rate and payment that fit your budget.


Start your application online or give us a call.

  • Weekdays 8am–Midnight ET
  • Weekends 10am–6pm ET