Track how HELOC rates are set and how to compare lenders on your home equity line of credit.
How HELOC Rates Work
HELOC rates are variable and tied to the prime rate, which moves with the Federal Reserve’s benchmark rate. Your rate is the prime rate plus or minus a margin the lender chooses. The margin depends on your credit score, equity position and the lender, so this page doesn’t list a rate for each credit tier: lenders publish their own margins and introductory offers, and those change often.
As of October 13, 2026, the prime rate was 7.00% (Federal Reserve Bank of St. Louis, FRED series DPRIME). The Fed’s target range for the federal funds rate is 3.75%-4.00% following the September 2026 meeting, and prime moves with it.
| Component | Value |
|---|---|
| Prime rate (October 13, 2026) | 7.00% |
| Margin | Set by the lender, can be below or above zero |
| Your HELOC rate | Prime + margin |
How Your Rate Is Calculated
Your HELOC rate = Prime Rate + Margin. For example, at today’s 7.00% prime rate:
| Example margin | Calculation | Rate |
|---|---|---|
| 0.00% | 7.00% + 0.00% | 7.00% |
| 0.50% | 7.00% + 0.50% | 7.50% |
| 1.00% | 7.00% + 1.00% | 8.00% |
Margins above are examples to show the arithmetic, not offers or averages. A lender’s introductory rate may differ from its rate after the introductory period.
Comparing Lender Types
Credit unions, online lenders, national banks and regional banks all price HELOCs differently, and the same lender can price two borrowers differently. Get the margin, the introductory rate (if any), the rate cap and the fees in writing from at least three lenders, including a credit union if you are eligible, and compare them on the same loan amount.
HELOC vs Home Equity Loan Rates
The choice between a HELOC and a home equity loan comes down to flexibility versus predictability. A HELOC lets you draw funds as needed and typically starts with lower interest-only payments, but the variable rate means your costs can rise. A home equity loan provides a fixed rate and fixed payments from day one, which is easier to budget around for one-time expenses like a major renovation.
| Feature | HELOC | Home Equity Loan |
|---|---|---|
| Rate | Prime + margin | Set when the loan is made |
| Rate Type | Usually variable | Usually fixed |
| Borrowing | Draw as needed | Lump sum |
| Payment | Interest-only option | P&I from start |
| Best For | Ongoing needs | One-time expense |
How Much Can You Borrow?
Most lenders cap your combined loan-to-value ratio at 80-85%, meaning your existing mortgage plus the HELOC can’t exceed that threshold. The more equity you’ve built — through mortgage payments and home price appreciation — the more borrowing capacity you have.
The table below uses an 80% combined LTV:
| Home Value | Mortgage Balance | Available Equity (80% LTV) |
|---|---|---|
| $400,000 | $250,000 | $70,000 |
| $500,000 | $300,000 | $100,000 |
| $600,000 | $350,000 | $130,000 |
| $750,000 | $400,000 | $200,000 |
| $1,000,000 | $500,000 | $300,000 |
Formula: (Home Value × 80%) - Mortgage Balance = Available HELOC
Monthly Payment Examples
HELOC payments change dramatically depending on whether you’re in the draw period or repayment period. During the draw period, many lenders allow interest-only payments, which keeps costs low but doesn’t reduce your balance. Once the repayment period begins, payments jump significantly as you start paying down principal.
The examples below use 7.00%, the prime rate as of October 13, 2026, as an illustration (a zero margin). A variable rate will change these payments.
Interest-only payments during draw period:
| Amount Borrowed | Rate | Monthly Interest |
|---|---|---|
| $25,000 | 7.00% | $146 |
| $50,000 | 7.00% | $292 |
| $75,000 | 7.00% | $438 |
| $100,000 | 7.00% | $583 |
| $150,000 | 7.00% | $875 |
During repayment period (P&I, 15-year term):
| Amount | Rate | Monthly P&I |
|---|---|---|
| $50,000 | 7.00% | $449 |
| $75,000 | 7.00% | $674 |
| $100,000 | 7.00% | $899 |
HELOC Rate Factors
Several factors influence the margin your lender adds to the prime rate. Credit score is usually the most important, and a higher score generally earns a lower margin. A lower loan-to-value ratio and signing up for autopay can further reduce your rate at lenders that offer those discounts.
| Factor | Impact on Rate |
|---|---|
| Credit score | Higher score, lower margin |
| Loan-to-value | Lower LTV = lower rate |
| Debt-to-income | Lower DTI = lower rate |
| Property type | Primary residence is usually priced best |
| Autopay | Some lenders discount for autopay |
HELOC Terms to Understand
| Term | What It Means |
|---|---|
| Draw period | When you can borrow |
| Repayment period | When you must repay |
| Interest-only | Draw period option: pay only interest, not principal |
| Variable rate | Rate changes with prime |
| Rate cap | Maximum the rate can rise; ask the lender |
| Minimum draw | Smallest amount you can borrow at once; ask the lender |
Getting the Best HELOC Rate
Before You Apply
| Action | Why it helps |
|---|---|
| Raise your credit score | Lenders generally give lower margins to higher scores |
| Lower DTI | Better approval odds |
| Increase home equity | Better LTV ratio |
| Pay down first mortgage | More available equity |
When Shopping
| Strategy | Why |
|---|---|
| Compare 3-5 lenders | Find the lowest margin |
| Check credit unions | Some price HELOCs below banks |
| Ask about discounts | Autopay, relationship |
| Negotiate fees | Some lenders waive closing costs |
| Ask about introductory rates | Find out what the rate becomes afterward |
HELOC Fees to Watch
Ask each lender for its fee schedule before you apply. Fees that commonly come up include an application fee, an appraisal, an origination fee, an annual fee, closing costs and an early-termination fee. Some lenders waive some of these, so the total varies widely between lenders.
Fixed-Rate HELOC Options
Some lenders let you convert part of a HELOC balance to a fixed rate:
| Feature | Details |
|---|---|
| How it works | Convert part of the balance to a fixed rate |
| Rate and fees | Set by the lender; ask for the fixed rate and any conversion fee |
| Best for | Large, predictable expenses |
HELOC Rate Outlook
| Factor | Impact on Future Rates |
|---|---|
| Federal Reserve policy | Most direct impact |
| Inflation trends | Affects Fed decisions |
| Economic growth | Stronger = higher rates |
| Housing market | Affects lender risk appetite |
Because a HELOC rate follows prime, it can rise or fall whenever the Fed changes its target range. This page doesn’t forecast the direction.
Qualification Requirements
Lenders evaluate four key areas when approving a HELOC: credit score, available equity, debt-to-income ratio, and income stability. Meeting the minimums gets you approved, but exceeding them — particularly on credit score and equity — usually earns a better margin. Minimums differ by lender, so ask each one.
| Requirement | What lenders look at |
|---|---|
| Credit score | Lender sets a minimum; higher scores get better margins |
| Home equity | Most lenders require some equity to remain after the HELOC |
| Debt-to-income | Lender sets a maximum |
| Income proof | Documented, stable |
| Property type | Primary residence is easiest to qualify |
Related: HELOC Guide | Home Equity Loan Rates | Home Equity Calculator
Sources
- Federal Reserve Bank of St. Louis, FRED. “Bank Prime Loan Rate (DPRIME).” fred.stlouisfed.org/series/DPRIME
- Board of Governors of the Federal Reserve System. “Open Market Operations: Policy Rate Changes.” federalreserve.gov/monetarypolicy/openmarket.htm
- Freddie Mac. “Primary Mortgage Market Survey.” freddiemac.com/pmms
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