If you are asking what is the interest rate on a home equity loan, your credit score is one of the most important factors affecting the answer. Borrowers with stronger credit profiles generally qualify for lower rates, while borrowers with fair or weaker credit may receive higher rates or have fewer lender options.
As of September 30, 2026, the national average home equity loan interest rate was 8.46%, according to Bankrate. Five-year home equity loans averaged 8.46%, while 10-year and 15-year loans both averaged 8.56%. These benchmarks assume a $30,000 loan, a 700 FICO score, an 80% combined loan-to-value ratio, and a primary single-family home.
However, knowing what is the interest rate on a home equity loan nationally does not tell you exactly what you will pay. Your actual rate can be higher or lower because lenders also consider your home equity, combined loan-to-value ratio, debt-to-income ratio, income, repayment term, loan amount, property type, location, and overall credit history.
Quick Answer
As of September 30, 2026, the national average home equity loan rate was about 8.46%, although the rate you receive may be higher or lower.
If you are asking what is the interest rate on a home equity loan, the answer depends heavily on your credit profile. Borrowers with excellent credit may qualify below the national average, while borrowers with fair or weaker credit may pay more.
Your final rate can also depend on your CLTV, DTI, home equity, loan amount, repayment term, property type, location, and lender.
Key Takeaways
- The national average home equity loan rate was 8.46% on September 30, 2026.
- Five-year loans averaged 8.46%, while 10- and 15-year loans averaged 8.56%.
- Higher credit scores generally improve your chances of receiving lower rates.
- There is no universal home equity loan rate for a particular credit score.
- When asking what is the interest rate on a home equity loan, remember that CLTV, DTI, equity, income, loan term, and loan amount also matter.
- Many lenders prefer scores around 680 or higher, although some programs accept lower scores.
- Traditional home equity loans commonly use fixed rates and predictable monthly payments.
- Closing costs can range from roughly 1% to 5% depending on the lender and transaction.
- Compare APR and total borrowing costs, not only the advertised interest rate.
- Your home secures the debt, so failure to repay can ultimately put the property at risk.
What Is a Home Equity Loan?
A home equity loan lets you borrow against the ownership stake you have built in your home. Understanding this is important when researching what is the interest rate on a home equity loan, because lenders also consider how much equity you have available.
Home equity can be estimated with this formula:
Current home value − outstanding mortgage balance = home equity
For example, if your home is worth $500,000 and you owe $300,000 on your mortgage, your approximate equity would be:
$500,000 − $300,000 = $200,000
That does not mean you can automatically borrow the full $200,000. Lenders usually require homeowners to keep a portion of their equity after taking out the new loan.
A home equity loan generally provides a lump sum that you repay over a set term. Your home serves as collateral, so failure to repay can ultimately put the property at risk. If you already have a first mortgage, the home equity loan is commonly structured as a second mortgage.
What Is the Interest Rate on a Home Equity Loan Today?
For borrowers asking what is the interest rate on a home equity loan, current national averages provide a useful starting point.
As of September 30, 2026, average rates were:
| Loan Term | Average Rate | Average Rate Range |
|---|---|---|
| 5 years | 8.46% | 6.00%–10.49% |
| 10 years | 8.56% | 6.25%–10.54% |
| 15 years | 8.56% | 6.51%–10.75% |
These benchmarks assume a $30,000 loan, a 700 FICO score, an 80% CLTV, and a primary single-family home.
Your actual rate may be lower or higher. Borrowers with excellent credit, substantial equity, and low debt may qualify below the national average, while weaker credit or a higher CLTV can result in a more expensive offer.
What Is the Interest Rate on a Home Equity Loan by Credit Score?
Your credit score is one of the main factors lenders use to evaluate risk and determine pricing. When borrowers ask what is the interest rate on a home equity loan, higher credit scores generally improve the chances of receiving more favorable terms.
Credit Score of 760 or Higher
Borrowers with a score of 760 or above are generally in a strong position to qualify for competitive home equity loan rates.
A broad 2026 estimate is:
About 6.50% to 7.50%
However, excellent credit alone does not guarantee the lowest advertised rate. Lenders may also consider:
- Home equity
- CLTV
- DTI
- Stable income
- Recent payment history
- Property type
- Loan amount
- Autopay or relationship discounts
A borrower with excellent credit but a high CLTV, for example, may receive a higher rate than someone with a similar score and substantially more equity.
Credit Score of 700 to 759
Borrowers in the 700s may see rates around:
7.50% to 8.50%
This credit range generally provides access to a broad selection of lenders, but the final rate still depends on the complete financial profile.
For example, a borrower with a 740 score and 60% CLTV may receive better pricing than another borrower with the same score but an 85% CLTV.
Credit Score of 680 to 699
Borrowers in this range may receive rates toward the higher end of current market pricing.
Many lenders commonly look for a FICO score around 680 or higher, although requirements differ. Borrowers below 700 may still qualify when they have substantial equity, stable income, and manageable monthly debt.
This shows why what is the interest rate on a home equity loan cannot be determined by credit score alone.
Credit Score of 640 to 679
Borrowers in this range may face:
- Higher interest rates
- Smaller approved loan amounts
- Lower maximum CLTV
- Stricter DTI requirements
- Fewer lender choices
Typical market estimates may be around:
8.50% to 10% or higher
Actual pricing can vary considerably depending on the lender and borrower profile.
Credit Score Below 640
Home equity loan options generally become more limited below a 640 credit score.
Some lenders may still consider borrowers with substantial equity, strong income, and manageable debt, but rates can exceed 10% and underwriting requirements may be stricter.
If your score is close to a lender’s pricing threshold, improving your credit before applying could help you qualify for a lower rate.
How Does Credit Score Affect a Home Equity Loan Interest Rate?
Lenders typically use risk-based pricing when setting rates. A stronger credit history can signal lower lending risk, while a weaker credit profile may lead to less favorable terms. This is why credit score is important when evaluating what is the interest rate on a home equity loan for a specific borrower.
A lower credit score may result in:
- Higher interest rates
- Smaller approved loan amounts
- Lower maximum CLTV
- Stricter underwriting
- Additional documentation
- Fewer lender options
Even a one-percentage-point difference can add thousands of dollars to the total borrowing cost over a long repayment term.
Because lenders also consider equity, DTI, income, loan amount, and repayment term, what is the interest rate on a home equity loan cannot be determined by credit score alone.
How Much Can a Lower Home Equity Loan Rate Save?
Even a small rate difference can significantly affect the total cost of borrowing. When comparing what is the interest rate on a home equity loan, it helps to see how different rates change both the monthly payment and long-term interest.
For example, consider a $50,000 home equity loan with a 15-year repayment term.
| Interest Rate | Approx. Monthly Payment | Approx. Total Interest |
|---|---|---|
| 7.50% | $464 | $33,431 |
| 8.50% | $492 | $38,627 |
| 9.50% | $522 | $43,980 |
| 10.50% | $553 | $49,486 |
At 7.50%, the monthly payment is about $89 lower than at 10.50%, while the total interest difference over 15 years is approximately $16,055.
This shows why improving your credit profile and comparing several lenders can matter when determining what is the interest rate on a home equity loan and how much the loan may ultimately cost over time.
What Else Affects a Home Equity Loan Interest Rate?
Credit score is important, but it is only one part of determining what is the interest rate on a home equity loan. Lenders also review your equity, debt, loan structure, property, income, and current market conditions.
Combined Loan-to-Value Ratio
CLTV compares the total debt secured by your home with the property’s value.
The simplified formula is:
(Existing mortgage + new home equity loan) ÷ home value × 100
For example:
- Home value: $500,000
- Mortgage balance: $300,000
- New home equity loan: $50,000
Your CLTV would be:
$350,000 ÷ $500,000 = 70%
A lower CLTV gives the lender a larger equity cushion and may help you qualify for better pricing.
Debt-to-Income Ratio
Your debt-to-income ratio measures your monthly debt payments relative to your gross monthly income.
Many lenders prefer a DTI around 43% or lower, although requirements vary.
A lower DTI can improve both your approval chances and potential loan terms.
Amount of Equity
Many lenders expect homeowners to keep about 15% to 20% equity after borrowing.
More remaining equity generally reduces lender risk.
Loan Term
Shorter repayment terms may come with lower rates.
A 10-year loan, for example, may offer a lower rate than a longer-term loan, although the monthly payment will usually be higher.
Loan Amount
Rates can also vary by loan size.
Some lenders reserve their lowest advertised rates for specific loan amounts or balance ranges.
Property Type
Pricing can differ depending on whether the property is:
- A primary residence
- A second home
- A vacation property
- An investment property
Primary residences often receive more favorable underwriting.
Income and Employment
Lenders generally want proof that you have enough reliable income to manage the new payment.
Documents may include:
- Pay statements
- W-2 forms
- Tax returns
- Bank statements
- Business income records
Broader Interest-Rate Conditions
Market conditions also influence what is the interest rate on a home equity loan at any given time.
Rates can move with lender funding costs, bond markets, inflation expectations, competition, economic conditions, and Federal Reserve policy.
For example, the five-year national average increased from 8.39% on September 23 to 8.46% on September 30, 2026.
That is why current rate information should always be considered together with the date it was published.
Why Are Home Equity Loan Rates Higher Than First Mortgage Rates?
When comparing what is the interest rate on a home equity loan with a traditional first mortgage, home equity loan rates are often higher because of lien priority.
If you already have a mortgage, a home equity loan usually becomes a second mortgage or junior lien. If the borrower defaults and the property is sold, the first mortgage lender generally gets repaid before the home equity lender.
Because the second lender faces a greater risk of not recovering the full balance, it may charge a higher interest rate.
If you own your home outright, a new home equity loan may instead become the first lien on the property.
How Much Equity Can You Borrow?
Suppose your home is worth $500,000 and a lender allows a maximum CLTV of 80%.
The maximum total debt secured by the property would be:
$500,000 × 80% = $400,000
If your existing mortgage balance is $300,000:
$400,000 − $300,000 = $100,000
That gives you an estimated maximum borrowing amount of $100,000.
However, approval for the full amount is not guaranteed. Your final borrowing limit may also depend on:
- Credit score
- Income
- DTI
- Property type
- Employment
- Loan purpose
- Lender guidelines
Loan size can also influence what is the interest rate on a home equity loan, since some lenders price different borrowing amounts differently.
How Much Are Home Equity Loan Closing Costs?
The interest rate is not the only cost to consider. Home equity loans may also include:
- Origination fees
- Appraisal costs
- Credit-report fees
- Title searches
- Title insurance
- Legal costs
- Recording or filing fees
- Other lender charges
Closing costs for home equity loans and HELOCs can generally range from about 1% to 5% of the loan amount, although actual costs vary by lender and transaction.
For example, 3% closing costs on a $50,000 loan would equal:
$50,000 × 3% = $1,500
Some lenders advertise no-closing-cost options, but those costs may be offset through a higher rate or other loan terms.
When comparing what is the interest rate on a home equity loan, also review closing costs and total borrowing expenses before choosing an offer.
Interest Rate vs APR on a Home Equity Loan
Borrowers researching what is the interest rate on a home equity loan should also understand how the interest rate differs from APR. Both help explain borrowing costs, but they measure different things.
Interest Rate
The interest rate determines how much interest is charged on your outstanding loan balance.
APR
APR provides a broader measure of borrowing cost because it includes the interest rate plus certain finance charges.
Consider two hypothetical offers:
| Offer | Interest Rate | APR |
|---|---|---|
| Lender A | 7.50% | 8.15% |
| Lender B | 7.75% | 7.90% |
Lender A has the lower interest rate, while Lender B has the lower APR. Depending on the loan terms, fees, and closing costs, Lender B could therefore have a lower overall borrowing cost.
When comparing offers, review:
- Interest rate
- APR
- Closing costs
- Origination fees
- Monthly payment
- Repayment term
- Total interest
- Prepayment provisions
The lender advertising the lowest interest rate does not always provide the lowest total loan cost.
Can a Home Equity Loan Rate Change Before Closing?
Yes. Your quoted rate can change before closing if it has not been locked.
A rate lock generally protects your interest rate for a specified period, provided you close on time and your application does not materially change.
Rate locks commonly last 30, 45, or 60 days, although lender policies vary.
Before proceeding, ask:
- Is my rate locked?
- How long does the lock last?
- Is there a fee to lock the rate?
- What happens if closing is delayed?
- How much does a rate-lock extension cost?
- Can my rate change if my credit profile changes?
- What happens if market rates fall?
Your Loan Estimate should indicate whether the rate is locked.
This is important when comparing what is the interest rate on a home equity loan, because an initial quote may change before closing unless the lender has locked the rate.
Are Home Equity Loan Rates Fixed or Variable?
Traditional home equity loans commonly use fixed interest rates, which means the principal-and-interest payment usually remains predictable throughout the repayment term.
A HELOC generally works differently. HELOC rates are typically variable and may change based on an underlying index plus or minus the lender’s margin.
This distinction matters when comparing what is the interest rate on a home equity loan, because a fixed rate offers more payment certainty while a variable HELOC rate can rise or fall over time.
Home Equity Loan vs HELOC
Home equity loans and HELOCs both let homeowners borrow against their equity, but they work differently.
| Feature | Home Equity Loan | HELOC |
|---|---|---|
| Funds | Lump sum | Draw as needed |
| Common rate | Fixed | Usually variable |
| Monthly payment | More predictable | Can change |
| Reusable credit | No | Usually yes |
| Best for | Known one-time expense | Ongoing or uncertain expenses |
| Existing mortgage | Usually remains | Usually remains |
As of September 23, 2026, Bankrate reported an average HELOC rate of 7.28%, compared with an overall home equity loan average of 8.39%.
A lower starting HELOC rate does not automatically make it cheaper over time because HELOC rates are usually variable and may rise or fall.
When comparing what is the interest rate on a home equity loan with a HELOC rate, also consider whether you prefer the predictability of a fixed rate or the flexibility of a variable credit line.
Home Equity Loan vs Cash-Out Refinance
A cash-out refinance is another way to access home equity, but it works differently from a home equity loan because it replaces your existing mortgage.
| Feature | Home Equity Loan | Cash-Out Refinance |
|---|---|---|
| Existing mortgage | Usually remains | Replaced |
| New borrowing | Separate loan | Larger replacement mortgage |
| Typical rate | Often fixed | Often fixed |
| Monthly loans | Usually two | Usually one |
| Existing mortgage rate | Preserved | Replaced |
| Closing costs | Based on equity loan | Apply to the new refinance |
A cash-out refinance replaces your current mortgage with a larger loan and provides part of the difference in cash. A home equity loan generally leaves your first mortgage unchanged.
This distinction can matter if your existing mortgage has a low rate. For example, replacing a 3.5% mortgage with a significantly higher new rate could increase borrowing costs across your entire remaining mortgage balance.
A home equity loan, by comparison, applies its new rate only to the additional amount borrowed.
When comparing what is the interest rate on a home equity loan with a cash-out refinance rate, review the total borrowing cost, closing costs, and impact on your existing mortgage rather than focusing only on the headline rate.
How to Get a Lower Home Equity Loan Rate
Several factors can help you qualify for a more competitive rate. Improving your credit profile, reducing debt, and comparing lenders can all influence what is the interest rate on a home equity loan for your situation.
Improve Your Credit Score
Review your credit reports before applying. Correct legitimate errors and consider paying down revolving balances to reduce credit utilization.
Pay Bills on Time
A strong payment history can support a better credit profile. Avoid new late payments before submitting your application.
Lower Existing Debt
Reducing debt can improve your DTI and leave more income available for the new monthly payment.
Reduce Your CLTV
Borrowing less against your available home equity can reduce lender risk and may improve your loan terms.
Compare Multiple Lenders
Do not assume your current mortgage lender will automatically offer the best rate. Compare:
- Banks
- Credit unions
- Online lenders
- Other qualified home equity lenders
Rates and fees can vary noticeably between lenders even for the same borrower.
Ask About Relationship Discounts
Some lenders offer rate discounts to borrowers who maintain qualifying accounts or set up automatic payments.
Consider a Shorter Loan Term
A shorter repayment term may come with a lower rate and reduce total interest costs. However, the monthly payment will usually be higher, so make sure it fits comfortably within your budget.
Does Shopping for Home Equity Loan Rates Hurt Your Credit?
A formal home equity loan application can result in a hard credit inquiry, which may have a small temporary effect on your credit score.
However, credit-scoring models generally account for rate shopping. Depending on the FICO version used, qualifying mortgage-related inquiries made within a 14- to 45-day period may be grouped and treated as a single inquiry for scoring purposes.
Because lenders may use different scoring models, completing your rate shopping within a relatively short period can help limit unnecessary credit impact.
Before submitting a full application, ask whether the lender can provide preliminary rates or pricing without a hard credit inquiry.
This can help you compare what is the interest rate on a home equity loan across several lenders before choosing where to apply.
Is a Home Equity Loan Interest Rate Negotiable?
Sometimes. Borrowers may have more room to negotiate when they have:
- Excellent credit
- Low CLTV
- Substantial home equity
- Low DTI
- Stable income
- Competing lender offers
- An established banking relationship
Negotiation can involve more than the headline rate. You can also ask whether the lender will:
- Reduce origination fees
- Waive certain closing costs
- Match a competing APR
- Offer an autopay discount
- Lower appraisal or administrative costs
The lowest advertised rate does not always mean the lowest overall borrowing cost.
When comparing what is the interest rate on a home equity loan, review the complete financing package, including APR, fees, discounts, closing costs, and repayment terms.
Can You Get a Home Equity Loan With Bad Credit?
Possibly, but lender options generally become more limited as credit scores decline.
Many lenders prefer credit scores around 680 or higher, although some may consider borrowers with lower scores when they have substantial home equity, strong income, or a low DTI.
Borrowers with weaker credit may face:
- Higher interest rates
- Lower maximum loan amounts
- Lower maximum CLTV
- Stricter DTI requirements
- Additional documentation
For borrowers with weaker credit, what is the interest rate on a home equity loan will often be higher because lenders may charge more to offset additional perceived risk.
Because the loan is secured by your home, carefully consider whether the higher borrowing cost fits your budget and is worth the added risk.
Is Home Equity Loan Interest Tax Deductible in 2026?
Yes, in some situations. Home equity loan or HELOC interest may be deductible when the borrowed money is used to buy, build, or substantially improve the home securing the loan, subject to applicable mortgage-interest limits.
When considering what is the interest rate on a home equity loan, remember that potential tax treatment can also affect the overall cost of borrowing.
To claim qualifying home mortgage interest, homeowners generally need to itemize deductions rather than take the standard deduction.
Interest usually does not qualify when the loan proceeds are used for personal expenses such as credit-card debt, vacations, or everyday purchases.
Because tax rules and individual circumstances can vary, review current IRS guidance or consult a qualified tax professional before claiming a deduction.
Can You Cancel a Home Equity Loan After Closing?
For many home equity loans secured by your principal residence, federal law provides a three-business-day right of rescission, allowing you to cancel the transaction after closing.
The three-day period generally begins only after all required events have occurred, including:
- Signing the credit agreement
- Receiving the required Truth in Lending disclosures
- Receiving the notice explaining your right to cancel
For rescission purposes, Saturdays generally count as business days, while Sundays and legal public holidays do not.
The right does not apply to every transaction, including certain home-purchase loans and some refinances with the same creditor.
If you decide to cancel, follow the written rescission instructions provided by your lender and submit the notice within the required period.
When Does a Home Equity Loan Make Sense?
A home equity loan may make sense when you know how much money you need and prefer predictable payments over a fixed repayment period.
Common uses include:
- Major home renovations
- Planned repairs
- Education expenses
- Medical expenses
- Debt consolidation
- Other large one-time expenses
However, using home equity to pay off unsecured debt changes the level of risk. Credit-card debt is generally unsecured, while a home equity loan is secured by your property.
That means failing to repay could ultimately put your home at risk.
Knowing what is the interest rate on a home equity loan is therefore only one part of the decision. You should also consider affordability, repayment terms, total borrowing costs, and the risk of using your home as collateral.
What Is Considered a Good Home Equity Loan Rate?
When evaluating what is the interest rate on a home equity loan, a good rate is one that compares favorably with current market rates for borrowers with a similar financial profile.
Your rate can depend on:
Credit score + CLTV + DTI + loan amount + term + property + lender + current market
As of September 30, 2026, national averages were:
- 8.46% for a five-year home equity loan
- 8.56% for a 10-year home equity loan
- 8.56% for a 15-year home equity loan
These benchmarks are based on a borrower profile that includes a 700 FICO score and 80% CLTV.
An offer below the appropriate market average may be competitive, especially for borrowers with strong credit and substantial equity. However, the interest rate alone does not determine whether the loan is a good deal.
Always compare APR, closing costs, fees, repayment term, and total interest. A lower rate with high fees can ultimately cost more than a slightly higher rate with lower upfront expenses.
Common Mistakes When Comparing Home Equity Loan Rates
Avoiding common mistakes can help you compare offers more accurately and understand the true cost of borrowing. When evaluating what is the interest rate on a home equity loan, look beyond the advertised percentage and review the full loan package.
Focusing Only on the Interest Rate
The interest rate does not show every borrowing expense.
Also compare:
- APR
- Closing costs
- Origination fees
- Total interest
- Repayment term
Assuming Advertised Rates Apply to Everyone
The lowest advertised rate may require:
- Excellent credit
- Low LTV or CLTV
- A specific loan amount
- Automatic payments
- A qualifying property or location
Your personalized offer may be higher or lower depending on your financial profile.
Ignoring Closing Costs
A small rate advantage can be offset by expensive upfront fees.
Compare total borrowing costs rather than choosing a lender based only on the advertised rate.
Borrowing the Maximum Available
The maximum amount a lender approves is not necessarily the amount you should borrow.
Choose a loan amount that fits comfortably within your monthly budget and long-term repayment plan.
Ignoring Your Existing Mortgage Rate
Before choosing a cash-out refinance, consider whether replacing your current first-mortgage rate could increase costs across your entire remaining mortgage balance.
Assuming Credit Score Determines Everything
Credit score matters, but CLTV, DTI, home equity, income, loan amount, repayment term, property, and lender pricing also help determine what is the interest rate on a home equity loan for a specific borrower.
Conclusion
So, what is the interest rate on a home equity loan? As of September 30, 2026, the national average was approximately 8.46%, with five-year loans averaging 8.46% and 10- and 15-year loans averaging 8.56%. Your actual rate may be higher or lower depending on your credit score, CLTV, DTI, loan amount, repayment term, property, location, lender, and current market conditions.
Ultimately, what is the interest rate on a home equity loan depends on both the market and your financial profile. Compare personalized quotes carefully and review the interest rate, APR, closing costs, monthly payment, rate lock, repayment term, and total interest. Since a home equity loan uses your property as collateral, choose an offer with affordable payments and reasonable overall borrowing costs.
What Is the Interest Rate on a Home Equity Loan FAQs
1. Does a home appraisal affect my home equity loan rate?
Yes, indirectly. When researching what is the interest rate on a home equity loan, remember that the appraised home value affects your CLTV, which can influence loan eligibility, borrowing limits, and pricing.
2. Can discount points lower a home equity loan rate?
Some lenders may allow borrowers to pay points or similar upfront charges for a lower interest rate. Compare the upfront cost with the potential long-term interest savings before choosing this option.
3. Do self-employed borrowers pay higher home equity loan rates?
Not automatically. When determining what is the interest rate on a home equity loan, lenders generally consider the complete credit and financial profile, although self-employed borrowers may need additional income documentation.
4. Can I refinance a home equity loan to get a lower rate?
Potentially. If market rates fall or your credit profile improves, refinancing may reduce your rate, but any new fees or closing costs should be compared with the expected savings.
5. Does the Federal Reserve directly set home equity loan rates?
No. The Federal Reserve does not directly set individual home equity loan rates. Its monetary policy can influence broader borrowing conditions, while lenders set their own rates based on markets, credit risk, loan terms, and other factors.
Disclaimer
Rates and lender requirements can change. This content is for educational purposes only and is not financial, tax, legal, or lending advice.
