Ready to tap your equity for cash? Your interest rate makes a significant difference in what you pay for a home equity loan. According to our analysis of 11 top lenders, the average home equity loan rate is around 7.60% as of February 2026.
Current interest rates on home equity loans have largely been on a downward trend since 2024. Home equity loan rates could dip further, depending on how the Federal Reserve handles monetary policy in the coming months. If you’re wondering who has the best home equity loan rates now, we’ll help you compare lenders.
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Average home equity loan rates now
The average home equity loan rate was 7.60% as of February 2026. That figure represents the average of the lowest home equity loan rates offered by 11 top lenders. Home equity loan rates vary by lender and term; some lenders also tier rates by loan amount.
For example, Third Federal offers some of the lowest home equity loan rates, with the lowest rates applied to the shortest terms. In addition to your lender, term, and loan amount, these factors affect the home equity interest rates you pay:
- Credit scores. Lenders use credit scores to measure risk. The best home equity loan rates are usually reserved for borrowers with the highest credit scores.
- Loan-to-value (LTV). Your LTV ratio measures your total debt, including your original mortgage and home equity loan, against your home’s value. Generally, an LTV of 80% or below can translate to a lower home equity loan rate.
- Debt-to-income (DTI). DTI measures the percentage of your gross pay that goes toward debt repayment each month. A DTI below 36% can improve your odds of getting a lower home equity loan rate.
The overall rate environment also matters. Home equity loan rates are typically tied to a benchmark rate, like the prime rate. The prime rate is the lowest rate banks offer to their most creditworthy customers.
The prime rate is influenced by the federal funds rate, which is the rate at which banks lend to one another overnight. The Federal Reserve directs movements in the federal funds rate. Changes in the federal funds rate can affect the prime rate, which in turn can change home equity loan rates.
Are home equity loan rates going down?
Home equity loan rates have largely been on a downward trend since 2024, which is good news for homeowners who are hoping to leverage their equity. Whether rates will go even lower depends on the Fed.
FedWatch, a tracking tool developed by CME Group, puts the probability of easing at 61% by June 2026. “Easing” means the Fed loosens monetary policy, often through interest rate cuts. So, how much could you potentially save if home equity loan rates drop?
Let’s assume that the Fed cuts rates by 0.25% and the average home equity loan rate dips to 7.30% in response. That may not seem like a huge decrease, but let’s look at how that change could affect what you pay for a $100,000 home equity loan with a 15-year term.
| Home equity loan #1 | Home equity loan #2 | |
| APR | 7.40% | 7.25% |
| Monthly payment | $921.34 | $912.86 |
| Interest paid | $65,840.99 | $64,315.32 |
| Total cost | $165,840.99 | $164,315.32 |
A difference of 0.16% in your home equity loan rate saves you around $10 monthly and $1,525.67 in interest. This example assumes you qualify for the lowest home equity loan rates, but it illustrates how even small differences in rates can affect what you pay to borrow.
What if you chose a 30-year home equity loan instead? The gap in interest payments widens.
| Home equity loan #1 | Home equity loan #2 | |
| APR | 7.40% | 7.25% |
| Monthly payment | $692.38 | $682.18 |
| Interest paid | $149,256.73 | $145,583.46 |
| Total cost | $249,256.73 | $245,583.46 |
Now you’re saving $3,673 instead. So, when will an interest rate drop come? FedWatch has the probability of easing close to 90% by the end of 2026, which could signal that the cheapest home equity loan rates could be on the way.
Home equity loan rates vs. HELOC rates
A home equity loan and a home equity line of credit (HELOC) sound the same, but they offer two different ways to borrow.
- Home equity loans offer a lump sum at closing. It’s typical to get a fixed-rate home equity loan, which means your rate (and payment) don’t change over the life of the loan.
- A HELOC is most often a flexible line of credit that you can draw against as needed. HELOCs may have fixed or variable rates, which can go up or down with movements in an underlying benchmark rate.
When you compare home equity loan rates to HELOC rates, HELOC rates may look lower at first glance. However, you have to consider the details of how your rate works.
HELOC lenders may offer low, introductory APRs for the first six or 12 months. Once that intro rate expires, your HELOC rate increases. It can increase again if you have a variable-rate line of credit.
Home equity loan rates may be slightly higher than introductory HELOC rates, but you get the reassurance of predictability. It’s easier to budget for home equity loan payments when those payments are guaranteed to stay the same because your interest rate is fixed.
If rates are going up, a home equity loan may be better because it has fixed rates, whereas a variable-rate HELOC is better in a declining rate environment because your interest rate will drop at times.
How to get the lowest home equity loan rates
Getting the lowest home equity loan rates requires some research and planning. Ultimately, the best home equity loan rate is the one that you qualify for, based on your credit profile, debt, income, and equity.
With that in mind, here are some tips for getting the best home equity loan rates.
- Choose your loan term carefully. Home equity loan rates may be more favorable for some loan terms than others. For example, you might get a lower APR on a 15-year home equity loan versus a 20- or 30-year term. Just remember that a shorter loan term can also mean higher monthly payments.
- Check your credit. Understanding your credit scores can give you an idea of what home equity loan rate range you might land in. You can check your credit for free through FICO or Experian.
- Get multiple quotes. Getting rate quotes or prequalification from at least three lenders gives you something to compare. When obtaining quotes, make sure they’re for the same loan term and amount.
- Consider a smaller loan. Borrowing a smaller amount of money may help you qualify for a lower rate. A smaller loan means less risk to the lender, which could translate to better rates.
- Wait. If you don’t have a financial emergency that requires cash right away, you may delay your application for a home equity loan. The likelihood of a rate cut happening in late 2026 or early 2027 is growing, which could bring better home equity loan rates with it. Waiting also gives you time to improve your credit scores, which could set you up for lower rates.
Today, there is so much information online that can help you determine if you are getting a good rate. I do often recommend looking at a few different banks for loan brokers to evaluate the market. Also, credit unions will often provide some really good rates for their customers, so that is a great options for those that it is available to.
Find your home equity loan rate today
Many lenders list home equity loan rates online and offer free rate quotes with no impact on your credit. Even if you’re not ready to borrow just yet, you may be curious about what you’ll qualify for. Learn more about the best home equity loans, how to apply, and what you’ll need to get approved.
Article sources
At LendEDU, our writers and editors rely on primary sources, such as government data and websites, industry reports and whitepapers, and interviews with experts and company representatives. We also reference reputable company websites and research from established publishers. This approach allows us to produce content that is accurate, unbiased, and supported by reliable evidence. Read more about our editorial standards.
- SoFi, Home Equity Loans and HELOCs
- Flagstar, Home Equity Loan (HELOAN)
- RBFCU, Home Equity Loans/HELOC
- Third Federal Bank, Home Equity Loan Products
- U.S. Bank, Home Equity Loan
- SpringEQ, Home Equity Loan
- Navy Federal Credit Union, Home Equity Loans
- BMO, Home Equity Loans
- Connexus Credit Union, Home Equity Loan Rates
- Regions Bank, Home Equity Loan (HELOAN)
- TD Bank, Home Equity Loan
- Fifth Third Bank, Home Equity Loan Rates
- Board of Governors of the Federal Reserve, What Is the Prime Rate, and Does the Federal Reserve Set the Prime Rate?
- Board of Governors of the Federal Reserve, Economy at a Glance – Policy Rate
- CME Group, FedWatch
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About our contributors
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Written by Rebecca Lake, CEPF®Rebecca Lake is a certified educator in personal finance (CEPF®) and freelance writer specializing in finance.
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Edited by Amanda HankelAmanda Hankel is a managing editor at LendEDU. She has more than seven years of experience covering various finance-related topics and has worked for more than 15 years overall in writing, editing, and publishing.
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Reviewed by Rand Millwood, CFP®Rand Millwood, CFP®, CIMA®, AIF®, is a partner at Guardian Wealth Partners in Raleigh, North Carolina. His firm assists clients of all ages and areas of life (with a strong background in the medical and legal fields) in planning, investing, and preparing for retirement and other financial goals.