The two products differ mainly in how funds are delivered: A home equity loan provides one upfront lump sum, while a HELOC offers a renewable credit line available for repeated use. To determine if this is an opportune time to borrow against your equity, we’ve compiled current nationwide averages from the Mortgage Research Center.

Fortune reviewed the latest data available from MRC as of July 29, 2026. These rates are national averages based on an owner-occupied, single-family home with an 80% loan-to-value ratio, a $350,000 loan ($850,000 for non-conforming loans), and a 30- to 60-day rate lock. They assume FICO scores of 620 or higher.

Your unique rate will depend on factors such as your credit profile, the amount of equity you have in your home, your debt-to-income ratio, the loan amount and term you choose, and the type of property you’re borrowing against. Also, if your home is worth less than what you owe, or if you’re borrowing against a second home or investment property, expect your rate to run higher than these averages.

How home equity loans work

A home equity loan represents a type of secured borrowing. Through years of mortgage payments, plus any home improvements you’ve undertaken, you’ve generated equity in your property, and a home equity loan lets you draw against part of it.

Your lender transfers a single lump sum directly to your bank account, giving you full discretion over how it’s spent, whether toward paying off high-rate credit cards, installing a backyard pool, or acquiring additional real estate. You’ll then repay the balance in fixed monthly installments over a period that can run up to 30 years.

How HELOCs work

Functionally comparable to a standard home equity loan, a HELOC also lets you borrow against equity you’ve accumulated—except rather than a lump-sum deposit, you receive a revolving line of credit.

The mechanics resemble a credit card, as you borrow only the amount you need and keep the remainder available on your line. Interest applies only to the funds you’ve actually used.

A HELOC is generally divided into two separate stages:

1. The “draw” period – This phase begins as soon as your loan closes and can last up to 10 years depending on the lender’s policy. You’re free to borrow and repay repeatedly against your credit line throughout this time.
2. The “repayment” period – Once the borrowing stage concludes, additional borrowing is no longer possible, and you’re required to pay down any remaining balance.

What is the advantage of borrowing from your home equity?

Tapping into your home’s equity comes with a number of potential upsides.

To begin with, home equity loans usually carry lower interest rates than unsecured personal loans, since secured debt is priced more attractively by lenders. Opting for equity-based borrowing over a personal loan could meaningfully reduce the interest you pay.

You’ll also likely have access to considerably larger loan amounts. Personal loans are commonly capped at around $100,000, while home equity loans or HELOCs may be approved for far larger sums depending on the equity available.

What are the risks associated with borrowing from your home equity?

Despite several advantages, borrowing against your home isn’t always the right call. It’s considered one of the riskier forms of financing, since defaulting could result in losing your property entirely.

Your home effectively becomes collateral once you borrow against its equity. Extended missed payments give lenders the ability to sell your home to recover their funds, potentially leaving you without a residence and still owing money if the sale doesn’t fully cover your debt. Your credit would also suffer significantly, complicating future borrowing.

These loans also come with upfront costs. Fees tied to loan setup, credit checks, property appraisals, and documentation typically total 2% to 5% of the loan’s overall value.

The takeaway

For those seeking affordable financing—especially to build wealth or eliminate costly debt—borrowing against home equity can be a sound financial decision. Regularly monitoring home equity loan and HELOC rates helps identify a favorable time to apply.

It’s important to remain mindful of the serious risks tied to missed payments: your home could be lost, and you might still owe money after foreclosure if proceeds don’t cover the full balance.

With a realistic understanding of your financial situation and a solid repayment plan in place, a home equity loan or HELOC can prove to be a genuinely useful resource.

Frequently asked questions