Best Fixed-Rate HELOCs
Fixed rate HELOCs offer predictability with payments but it's important to find the right lender. Compare options to find the best fixed HELOC rates.
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A home equity line of credit (HELOC) is a convenient way to turn your home equity into cash when you need extra money. A HELOC allows you to borrow against your investment in your house, using the house as collateral.
HELOCs can have variable or fixed interest rates. You might prefer a fixed-rate HELOC if predictable monthly payments are a priority. Comparing HELOC fixed rates across lenders can help you find the best borrowing option for your needs and budget.
In this guide:
- 4 of the best lenders for fixed-rate HELOCs
- What’s the difference between a variable-rate and fixed-rate HELOC?
- Is a fixed-rate HELOC better than a variable-rate HELOC?
- When using a fixed-rate HELOC makes sense
- When you should avoid using a fixed-rate HELOC
- How to convert your variable-rate HELOC to a fixed-rate HELOC
4 of the best lenders for fixed-rate HELOCs
Not every lender offers fixed-rate HELOCs, but the four we’ve listed below do. Most lenders base fixed-rate eligibility on factors such as your credit score and loan-to-value ratio (LTV).
Your LTV is the loan amount divided by the home’s value. For example, if you’re borrowing $100,000 and the house is worth $200,000, your LTV is 50%.
Typically, a lower LTV makes it easier to qualify for a HELOC.
Figure
- Prequalify for a fixed-rate HELOC with no impact to your credit
- Get approved in as little as 5 minutes, with funding in as few as 5 days
- Borrow up to $400K with the option to redraw up to 100%
Figure is an online HELOC provider that offers funding in as little as five days. Other lenders can take weeks to provide you with funds.
Figure lets you apply for a fixed-rate HELOC right away. You don’t have to get a variable-rate HELOC and convert it to fixed. When you apply, Figure will give you multiple term and interest-rate options so you can choose the best one for your needs.
A perk of working with Figure is the ease of verifying your income and assets. You can link your financial accounts from the Figure app or website to allow the company access to your financial information. That lets Figure offer same-day approval for many of its loans.
- Fixed rates on new lines: Yes
- Convert variable to fixed: No
- Minimum credit score: 640
- Maximum LTV: 85%
- Draw period & repayment: Draw period of 5 years. Repayment period of 5, 10, 15, or 30 years
- Discounts: Borrowers can receive a 0.75% discount by taking advantage of the 0.25% discount for enrolling in automatic payments and the 0.50% discount for opening a Quorum account.
- Fees: An origination fee of up to 4.99%
>> Learn more about Figure’s fixed-rate HELOC on its website.
M&T Bank
- Choose to lock in up to 3 fixed-rate loans within your line of credit
- Doesn’t allow you to lock in a fixed-rate from the start
M&T Bank is a major bank that lets you turn portions of your HELOC balance into fixed-rate loans.
Once you’ve tapped the CHOICEquity HELOC for money, you can turn a portion of your balance into a fixed-rate loan. M&T lets you create up to three fixed-rate loans out of your HELOC balance.
When you convert your balance to a fixed-rate loan, you have two options: make full payments, or continue interest-only payments until the draw period for your HELOC ends. This gives you flexibility in your monthly budget.
- Fixed rates on new lines: No
- Convert variable to fixed: Yes
- Minimum credit score: Not disclosed
- Maximum LTV: 85.99% for HELOCs of $15,000 to $500,000
- Draw period & repayment: Draw period of 10 years. Repayment period up to 20 years
- Discounts: 0.25% to 0.40% with an eligible M&T Bank checking account at the time of application
- Fees: No annual, application, or closing cost fees
>> Learn more about M&T Bank’s HELOC on its website.
Regions
- Ability to convert your variable-rate HELOC to a fixed-rate HELOC
- There are no annual or closing costs
Based in the Southern and Midwestern United States, Regions Bank offers variable-rate HELOCs with the option to convert to fixed-rate loans. You can create up to 10 fixed-rate loans out of your HELOC, each with a balance as low as $5,000.
- Fixed rates on new lines: No
- Convert variable to fixed: Yes
- Intro APR: 0.99% for 6 months
- Minimum credit score: Not disclosed
- Maximum LTV: 80%
- Draw period & repayment: Draw period of 10 years. Repayment period up to 20 years.
- Discounts: 0.25% for automatic payments and 0.25% for having a bank account with Regions
- Fees: 5% late fee ($29 minimum, $100 maximum) and a $100 fee to convert a variable-rate balance to a fixed-rate loan
>> Learn more about Regions’ HELOC on its website.
Truist
- Maximum of 5 fixed-rate draws can be opened at a one time
- Assigned a dedicated loan officer to answer all your questions
Truist is an Atlanta-based bank that offers variable-rate HELOCs with the option to convert to a fixed rate.
When you take a fixed-rate draw from your HELOC, you can choose from one of four repayment terms: 5, 10, 15, or 20 years.
- Fixed rates on new lines: No
- Convert variable to fixed: Yes
- Minimum credit score: Not disclosed
- Maximum LTV: 70%
- Draw period & repayment: Draw period of 10 years. Repayment period up to 20 years
- Discounts: 0.25% automatic payment discount
- Fees: $15 fee for each fixed-rate draw
>> Learn more about Truist’s HELOC on its website.
To compare other options, check out our guide to the best HELOCs.
What’s the difference between a variable-rate and fixed-rate HELOC?
Variable-rate HELOCs have an interest rate tied to a benchmark rate, often the prime rate, to which lenders add percentage points to establish a rate range. For example, the lowest variable rate could be prime + 1.5%, and the highest could be prime + 7.0%. The rate helps determine the monthly payment.
Variable rates can benefit borrowers when interest rates are low and remain so. When interest rates rise, however, the variable rate for a HELOC can increase. As the rate increases, so does the monthly payment due on the HELOC, which could strain your budget.
The U.S. Federal Reserve can raise the federal funds rate to manage economic conditions. The federal funds rate is the rate at which banks lend money to one another overnight. When the Fed institutes a rate hike, that can cause increases in other benchmark rates, including the prime rate.
With a fixed-rate HELOC, the rate remains the same for the entire repayment term. That means monthly payments are predictable, and it’s easy to calculate how much interest you’ll pay. Few lenders offer a fixed-rate HELOC or the option to convert a variable-rate HELOC to a fixed rate.
Is a fixed-rate HELOC better than a variable-rate HELOC?
Whether a fixed-rate HELOC is better than a variable-rate HELOC depends on your situation. In general, fixed-rate HELOCs can be appealing to borrowers who:
- Want predictable monthly payments without having to worry about interest rate increases
- Would like to be able to calculate how much interest they’ll pay upfront
- Can qualify for the lowest fixed rates based on creditworthiness
Those are the main pros or advantages that a fixed-rate HELOC can offer. But the main drawbacks of choosing a HELOC with a fixed rate include:
- Rates may be higher overall compared to variable-rate HELOCs, meaning you pay more in interest.
- You won’t save money or reduce your monthly payments if rates drop.
- Additional fees may apply to a fixed-rate HELOC
Assess your budget and the current interest rate environment. If the consensus is that rates will rise, locking in a fixed-rate HELOC could be the better choice to minimize interest charges and cap payments. But if a rate drop seems likely, you may benefit from choosing a variable rate option instead.
When using a fixed-rate HELOC makes sense
Scenarios when using a fixed-rate HELOC instead of a variable-rate one makes sense include the following four.
Long-term projects
A fixed-rate loan can reduce stress if you have a project that you expect to take a while, such as a home improvement.
With a variable-rate loan, you can feel like you’re racing to finish your project and pay it off before interest rates rise. You don’t have to worry about rates—and your monthly payment—increasing if you have a fixed-rate HELOC. That gives you more time to finish the project.
Large HELOCs
The more you need to borrow, the longer you can expect to need to pay off the HELOC. Large HELOCs are more sensitive to interest-rate increases because even a slight increase can raise your payments.
If you’re borrowing a large amount of money, a fixed rate can help protect you from the effects of interest-rate changes, which are more likely the longer you take to repay the HELOC.
Economic uncertainty
Variable rates are desirable when you’re financially secure and can weather changes in the interest rate or monthly payment. If you’re in an uncertain position—for example, if you just lost a source of income—a fixed rate’s predictability is valuable.
If you’re in a less-than-stable financial position, a fixed-rate HELOC can provide consistency in your loan payment.
Early repayment
When you get a traditional variable-rate HELOC, you can make interest-only payments during the draw period then pay the interest and principal once the draw period ends.
If you want to repay the amount you borrowed before your draw period ends, converting that portion of the HELOC to a fixed-rate loan can make it easier to manage your payments.
When you should avoid using a fixed-rate HELOC
These are two scenarios in which it might be better to stick with the variable rate.
Short-term borrowing
Most variable-rate HELOCs have lower interest rates because the lender has to compensate customers for the uncertainty. For instance, if you expect to repay the money you borrow in a year, you may save money sticking with a variable-rate HELOC.
But this depends on the rate forecast. If you anticipate rates rising in the next 18 to 24 months, consider whether you could repay the loan in that time frame. Otherwise, you might face a much higher rate and monthly payment if the Fe raises rates.
If you can’t pay a HELOC within a year, you could refinance it into a new fixed-rate loan. However, that only makes sense if the new HELOC rate is lower than your current rate. You’d also have to consider your net savings if you’re paying fees to refinance.
When interest rates are high
Sometimes rates are high, and sometimes they’re low. You can’t predict the future, but a variable-rate loan can let you take advantage of a future rate reduction if you feel rates are about to drop.
If you lock in a fixed-rate HELOC when rates are high, you’re stuck with that rate for the life of the HELOC. If you use a variable-rate HELOC and market interest rates decrease, you can save money and reduce your monthly payment.
How to convert your variable-rate HELOC to a fixed-rate HELOC
If your lender allows conversions from variable-rate HELOCs to fixed-rate HELOCs, the best thing to do is contact them to ask about the process and eligibility requirements. Each lender has a different set of steps that you must follow to complete the conversion.
Standard requirements include:
- LTV of 80% or better
- Meet a minimum loan amount ($5,000 – $15,000 with most lenders)
- Pay processing fees or closing costs
If your HELOC lender doesn’t offer the chance to convert your line of credit to a fixed-rate HELOC, you still have options. You can refinance your HELOC with a lender that offers home equity loans or fixed-rate HELOCs to get the fixed interest rate you desire.