A home equity line of credit allows you to leverage the equity in your home at a relatively low interest rate. Whether you want to fund renovations to increase your home’s value, put a child through college or consolidate high-interest debt, a home equity line of credit can provide the financing you need.

But before you commit to a HELOC, it’s important to learn how the loan works and what you need to qualify.

U.S. News has selected top HELOC lenders that you can consider to meet your borrowing needs.

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Pentagon Federal Credit Union, widely known as PenFed, offers borrowers access to many types of mortgages: conventional, adjustable rate, jumbo and Department of Veterans Affairs, plus refinancing loans and home equity lines of credit. The financial institution, which serves 2.5 million members, was established in 1935 and is based in McLean, Virginia.

North American Savings Bank, or NASB, is a Missouri-based bank and lender founded in 1927 that offers home mortgages nationally. NASB provides a variety of mortgage options, including conventional, Federal Housing Administration and Department of Veterans Affairs loans, and products for borrowers who might otherwise have trouble getting a mortgage.

Headquartered in Charlotte, North Carolina, Truist Bank was formed in 2019 after SunTrust and BB&T banks merged. Truist Bank offers a variety of mortgage products, including refinancing and home equity lines of credit.

Chase, one of the world’s largest banks, was founded in 1799 in New York and offers fixed-rate, refinance and other mortgage loans.

Simmons Bank was founded in Arkansas in 1903 and can now be found across six states. It offers mortgage products such as conventional and jumbo loans, federal-government-backed loans and state-approved down payment assistance programs.

PNC Bank is one of the largest banks in the United States, serving more than 9 million customers in all 50 states. A full-service mortgage lender, PNC offers most mortgage loan product types.

CMG Financial, a trade name of CMG Mortgage Inc., is a privately-held mortgage banking firm operating nationwide and based in San Ramon, California. Founded in 1993, the lender offers a range of products, including conventional, government and specialty mortgages, like jumbo loans.

Alliant Credit Union is a not-for-profit financial cooperative that serves customers in all 50 states. Alliant offers products such as conventional, jumbo, refinancing and home equity line of credit loans, but specific mortgage products may not be available in certain states.

The average HELOC rate for loans with a 10-year repayment period is currently at 7.37%, which is up 0.12 percentage points from last week. The rate on a 20-year HELOC is at 7.92%, up 0.12 percentage points from last week. On a 30-year HELOC, the rate is 6.94%, up 0.15 percentage points from last week.

This analysis is powered by Bankrate, which gathers data from applicants who prequalify for HELOCs through its website and affiliates.

A home equity line of credit is a form of revolving credit that is secured by your home. Similar to a credit card, you can borrow against the credit line as needed – up to the limit. When you do so, you pay interest on the balance. As you pay the balance down, more of your credit line opens back up.

Unlike a credit card, however, HELOCs have what’s known as a draw period. This is the time when you’re allowed to spend against your credit limit and are only required to make minimum or interest-only payments. Typically, the draw period lasts 10 years and the repayment period lasts 20 years.

Home equity loans and lines of credit each allow you to borrow against the equity in your home. However, there are some key differences. A home equity loan is dispersed as one lump sum that you pay back in fixed installments over time. A HELOC allows you to borrow as much or as little as you need, when you need it, up to the maximum credit limit. Once the draw period is over, you enter the repayment period. HELOC interest rates are often variable rates, meaning they can adjust up or down over time.

Most lenders won’t issue a HELOC unless your combined loan-to-value ratio is at most 85%, according to Bank of America. Exact credit score requirements vary by lender. You may be able to qualify for a HELOC with a score of 660, according to Credit Union of Southern California, though some lenders ask for a higher score. A higher score can also help you secure better rates and terms. A lower debt-to-income ratio will leave you in a better position to get a loan.

HELOCs often have lower rates than home equity loans. Plus, if your borrowing needs change month to month, a HELOC is a great way to ensure you have access to credit when you need it.

Another perk is that HELOC interest may be tax deductible. If you use your HELOC funds to substantially improve your home, you may be able to write off the interest on your taxes.

On the downside, your property serves as the collateral for a HELOC. That means if you have trouble making payments once the draw period is up, your home could eventually be at risk of foreclosure. In addition, when you borrow against your line of credit, you decrease the equity in your home. If you decide to sell, you’ll see a smaller profit since you’ll also need to pay off your HELOC. And if home values drop, you could owe more on your house than it’s worth.

Also consider that unlike installment loans, the interest rates on HELOCs are variable. While there’s a chance your rate could go down, it’s more likely that it will increase.

  • Home equity loan. If you don’t anticipate any ongoing borrowing needs and only need to finance a specific expense, you may prefer to take out a home equity loan. This allows you to receive the cash you need up front and then pay it off in fixed monthly installments over five to 30 years.
  • Refinance. Another way to access your home’s equity for cash is through cash-out refinancing. This involves taking out a new mortgage loan for more than you currently owe and pocketing the difference to put toward another expense. This can be particularly beneficial if you can qualify for a lower mortgage rate.
  • 0% APR credit card. Some credit cards offer a 0% annual percentage rate to new users for an introductory period that typically lasts 12 to 21 months. If you go this route, it’s important to pay off your balance before the introductory period is up. Otherwise, you could rack up interest charges quickly when the rate adjusts.
  • Personal loan. Though they usually come with higher interest rates than HELOCs, personal loans can be a less expensive borrowing option than credit cards. Plus, you don’t have to use your home as collateral, which means it’s not at risk of foreclosure if you fall behind on payments.

To recap, here are the picks:

Best HELOC Lenders of 2023

Bank of America serves roughly 67 million customers in all 50 states. The lender offers conventional, Federal Housing Administration, Department of Veterans Affairs and jumbo loans as well as home equity lines of credit and mortgage refinancing.

Guaranteed Rate, founded in 2000 and based in Chicago, offers mortgage options including conventional loans, Federal Housing Administration loans, jumbo loans and interest-only loans to customers in all 50 states and Washington, D.C. Borrowers can take advantage of specialized loan products and Guaranteed Rate’s online application, documentation and loan payment options.

U.S. Bank is a national bank based in Minneapolis that provides various banking products and services as well as a handful of mortgage options. The lender offers conventional loans, Federal Housing Administration loans, Department of Veterans Affairs loans, jumbo loans and more.

Spring EQ, founded in 2016, is a Philadelphia-based mortgage lender that specializes in home equity loans and operates in 39 states and Washington, D.C. The technology-based loan originator, which plans to expand into more states, also provides home purchase, rate-and-term refinance, and cash-out refinance loans. Spring EQ’s digital process can streamline borrowing and help people get their money in as little as 11 days.

Flagstar offers banking and loan products to borrowers in all 50 states. Borrowers can obtain mortgage and home equity products including conventional loans, Federal Housing Administration loans, Veterans Affairs loans, U.S. Department of Agriculture loans, adjustable-rate mortgages, and home equity loans and lines of credit.

Advertising Disclosure: Some of the loan offers on this site are from companies
who are advertising clients of U.S. News. Advertising considerations may impact
where offers appear on the site but do not affect any editorial decisions,
such as which loan products we write about and how we evaluate them. This site
does not include all loan companies or all loan offers available in the marketplace.



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