How to Shop for a HELOC: 17 Expert Tips to Get the Best Rate in January 2025

Shopping for a HELOC is your chance to unlock your home’s equity at the best possible rate. The right loan can help you fund renovations, consolidate debt, or cover major expenses—all while saving money on interest. Use these 17 expert-backed tips to find a HELOC that fits your budget and financial goals.

1. Compare three HELOC lenders (at least)

Don’t stop at the first home equity line of credit offer you get. It might seem good, but you won’t know unless you compare it to other HELOC lenders.

Tip

Request quotes from at least three lenders. Use a comparison tool like LendingTree to line up offers side by side. The more quotes you get, the better your chances of finding the best HELOC.

2. Improve your credit score before shopping for a HELOC

Your credit score directly determines the HELOC rate you’ll be offered. Having a higher credit score will lead to a lower interest rate. And the lower your interest rate, the more money you’ll save.

Tip

Check your credit score through a free service like AnnualCreditReport.com. If your score could use a boost, focus on paying down credit card balances, making on-time payments, and avoiding new credit applications before applying. 

3. Use all available rate discounts

Lenders offer more rate discounts than you might think. You could score a lower HELOC rate just by enrolling in automatic payments, setting up a checking account with the same bank, or qualifying for a loyalty bonus as an existing customer. These small savings can add up fast.

Tip

Ask every lender about potential rate discounts before signing your loan agreement. Look for offers like automatic payment reductions (often 0.25% to 0.50%) or loyalty perks. In some cases, you can even stack multiple discounts for extra savings.

4. Watch out for fees and closing costs

HELOCs can come with extra costs like application fees, annual fees, and even prepayment penalties if you pay off your loan too early. These charges can add up fast, making a seemingly great offer much more expensive.

Tip

Ask lenders for a full breakdown of all potential fees before committing. Some lenders advertise no-closing-cost HELOCs and no-fee HELOCs—but read the fine print. These perks might have special rules attached, like requiring you to keep your HELOC open for several years. 

5. Keep your loan-to-value (LTV) ratio low

Lenders use your loan-to-value (LTV) ratio to measure how much equity you have in your home. A lower LTV means you owe less compared to your home’s value, which lenders see as less risky. Staying under 80% can help you qualify for better HELOC rates.

Tip

Use our home equity loan calculator to estimate your LTV. For instance, if your home is worth $400,000 and you owe $200,000 on your mortgage, your LTV is 50%. Borrowing an extra $100,000 would raise your LTV to 75%. Staying below 80% can unlock lower interest rates.

6. Look for introductory HELOC rates

Some lenders offer low introductory rates, often called “teaser rates,” for the first six to 12 months of your HELOC. These rates can be much lower than the standard variable rate. They’re usually locked in, too, so your APR won’t change for the entire introductory period. 

Tip

If you plan to borrow a large amount upfront—for home renovations or major purchases—look for lenders with the best HELOC introductory rates. Ask how long the lower rate lasts and what your new rate will be afterward. This can help you budget and avoid payment surprises later.

7. Consider locking your HELOC rate

Most HELOCs have variable interest rates, so your monthly payment could climb if market rates rise. Some lenders let you lock in a fixed rate on part or all of your balance to avoid these hikes.

Tip

Ask lenders if they offer rate lock options and what it costs. Some, like Upstart, provide fully fixed-rate HELOCs. Locking your rate can stabilize your monthly payments and reduce the risk of budget surprises down the line.

8. Monitor market trends

HELOC rates often change after the Federal Reserve’s Federal Open Market Committee (FOMC) meetings, held about eight times a year. During these meetings, the Fed announces whether it will raise, cut, or keep interest rates the same. If rates go up, HELOC rates typically increase too.

Tip

Check the FOMC meeting schedule and set calendar alerts. After each meeting, look for the Fed’s press release announcing its decision. If a rate increase is announced, consider applying for a HELOC immediately if it makes sense financially—or ask your lender about locking in a fixed rate to avoid future increases.

9. Shop for a HELOC when your finances are strong

Lenders want to see that you’re financially ready before approving a HELOC. A steady income, low debt-to-income (DTI) ratio, and strong credit score are the three biggest things they look for. If these are in tip-top shape, it will make shopping for a HELOC a much more enjoyable experience.

Tip

If your finances are looking shaky, hit pause on your application. Use the time to pay down debt or boost your savings to show lenders you can handle future payments. The stronger your financial profile, the better the terms you’ll qualify for.

Read More

Wondering how much income you need for a HELOC? Check out this guide to see what lenders typically expect and how you can strengthen your application.

10. Add a creditworthy co-borrower

If your credit score or income isn’t where it needs to be, bringing a creditworthy co-borrower on board could help you get a better HELOC rate. Lenders see less risk when two people share the responsibility for the loan, especially if one has a high credit score and a steady income.

However, you will both be equally responsible for monthly payments, so make sure your co-borrower is fully committed to sharing that financial responsibility with you.

Tip

Talk to a trusted family member or partner with excellent credit and consistent income. Discuss the loan details upfront to confirm if they’re comfortable with the commitment before applying together. 

11. Look for rate-match guarantees when shopping for a HELOC

Some lenders offer rate-match guarantees, meaning they’ll match or beat a competitor’s HELOC rate if you show proof of a better offer. This can save you the hassle of negotiating while still securing a competitive rate.

But be sure to check the fine print—lenders may only match rates from direct competitors or require the same loan terms to match.

Tip

Ask lenders if they offer a rate-match guarantee. If you find a better offer elsewhere but prefer to work with a specific lender, use the competing offer to request a lower rate.

12. Consider other financing options

A HELOC isn’t the only way to tap into your home’s equity. Depending on your goals, another loan type could be a better fit. 

For example, a home equity loan could work better if you want to keep the same monthly payment forever or get a one-time lump sum of cash. Likewise, a cash-out refinance might work if mortgage rates have dropped and you want to refinance. 

Tip

Compare these HELOC alternatives side by side to see which works best for your financial goals.

Read More

See how much you could get with a cash-out refinance using our calculator.

13. Don’t rule out credit unions

Many borrowers skip credit unions when shopping for a HELOC, but that could be a costly mistake. Credit unions often offer lower rates, reduced fees, and more personalized service. You’ll likely need to become a member, which might involve a small fee or meeting certain eligibility criteria—but the savings could be worth it.

Tip

Get a HELOC quote from at least one credit union. Compare its rates and terms against online lenders and banks to see how much you could save.

14. Match draw and repayment periods to your needs

Not all HELOCs have the same draw and repayment terms, so pick one that fits your financial goals. The draw period is when you can borrow money. It usually lasts five to 10 years. The repayment period is when you pay off the balance over 10 to 20 years.

Tip

If you only need funds for a short-term project, avoid paying for a long draw period. But if you expect multiple expenses over a longer period of time, opt for a lengthier one.

15. Watch for minimum draw requirements

Some HELOC lenders require you to borrow a minimum amount when opening your account—sometimes as much as $10,000 or even the entire loan limit. Others let you borrow only what you need with no minimum draw.

Tip

If you only need a small initial amount, choose a lender with no or low minimum draw requirements. Otherwise, you could pay interest on money you never intended to use.

16. Check HELOC funding speeds

Need cash fast? HELOC funding times can vary widely—some lenders take weeks, while others process loans in days. If timing matters for urgent home repairs or expenses, ask lenders about their average funding speed before applying. Also, check out our list of the fastest HELOCs.

Tip

Consider online lenders like Figure, which can fund HELOCs in as little as five days, or Aven, which funds in as little as three days. Traditional banks may take longer, so compare timelines if you’re in a hurry.

17. Know how you can access HELOC funds

Accessing your HELOC funds should be simple, but methods vary by lender. Some offer a debit card, checks, or online transfers, while others may only offer checks.

Tip

Ask lenders how you’ll access funds before signing. Choosing a lender with various options will make using your HELOC much easier.

When shopping for a HELOC, it is important to first understand your reason for needing the HELOC funds—is it a want or need, or does it help you reach an important life goal (even if it is not a necessity)? 

Subsequently, weigh the pros and cons, focusing on your projected budget that includes the additional payment. 

From that point, assess variable vs. fixed interest rates based on the current and anticipated interest rate environment. Now you’re ready to make an educated decision and move forward in shopping for loan options.

Erin Kinkade, CFP®

Learning how to shop for a HELOC is about being strategic, not settling for the first offer. Focus on comparing lenders, asking the right questions, and ensuring the loan terms fit your financial goals. 

A little preparation now can mean a better rate, lower fees, and more borrowing flexibility down the road. Use these tips to confidently navigate the HELOC process and secure a loan that works for you.