The difference between the current home equity loan (HEL) rate and the average HELOC rate is 33 basis points, according to real estate data analytics company Curinos. When rates are this far apart, choosing the right option isn’t just about the lower rate. How you plan to use your funds will determine the loan product that is best for you.
HELOC and home equity loan rates: Monday, September 21, 2026
The average HELOC adjustable rate is 7.09%, a new 2026 low, according to real estate data analytics company Curinos.
The national average rate on a fixed-rate home equity loan is 7.42%, up from its 2026 low of 7.31% in late June.
Both rates are based on applicants with a minimum credit score of 780 and a maximum combined loan-to-value ratio (CLTV) of less than 70%.
How do HELOC interest rates work?
Most HELOCs are variable-rate products, meaning their interest rates are tied to an external interest rate. When that rate rises or falls, the rate on your HELOC generally follows suit.
HELOCs are typically tied to the prime rate, the baseline rate banks currently charge their most creditworthy customers.
The best HELOC lenders will assess the risk any borrower presents and add a margin to protect themselves. Riskier borrowers will have larger margins, while those considered less risky will receive smaller ones. Factors such as your credit score, debt-to-income ratio (DTI), and loan-to-value ratio (LTV) will all be considered in this assessment.
How do home equity loan interest rates work?
A home equity loan and its interest rate work like a HELOC in some ways and like a traditional primary mortgage in others.
As with a HELOC, the prime rate usually impacts your home equity loan rates, and home equity loan lenders incorporate a margin into your rate. Both HELOC and home equity loan rates are loosely influenced by the Federal Reserve’s federal funds rate and broader economic conditions.
However, like many first mortgages, home equity loans are typically fixed-rate products, meaning you’ll have the same interest rate for the entire term. Fixed-rate HELOCs exist, but they’re much less common.
How to qualify for a HELOC or home equity loan
Specific loan requirements vary by lender, but generally, home equity loans and HELOCs require a borrower to:
- Have a FICO credit score of 680 or higher
- Show a history of good credit and proof of sufficient monthly income
- Obtain an appraisal to determine the current market value of the home
- Have at least 15% to 20% equity in the house
- Have a debt-to-income ratio of 43% or less
- Show proof of in-force homeowners insurance
Lenders may charge origination fees and other closing costs on a HELOC or home equity loan. When shopping for yours, make sure to ask about all possible application fees, annual charges, early account closure fees, and other one-time or ongoing expenses. Shop multiple lenders to find the lowest interest rate and the fewest fees.
The main difference is how funds are disbursed and how interest is charged. A HELOC (Home Equity Line of Credit) works like a credit card with a revolving credit line and a variable interest rate, allowing you to borrow and repay funds as needed during a draw period. A home equity loan (HEL) delivers a lump-sum payment upfront with a fixed interest rate and fixed monthly payments over the life of the loan.
As of September 2026, the national average rate for a variable-rate HELOC is 7.09%, while the average fixed rate for a home equity loan is 7.42%. This creates a 33-basis-point difference favoring the HELOC. However, because HELOC rates are variable, your interest rate could increase or decrease in the future based on market shifts, whereas a home equity loan locks in your rate for the entire term.
Both rates are loosely influenced by the Federal Reserve’s federal funds rate and broader economic trends. Lenders typically start with a baseline index (usually the Prime Rate) and add an extra percentage called a margin. Your specific rate and margin depend on risk factors such as your FICO credit score, debt-to-income ratio (DTI), and combined loan-to-value ratio (CLTV). Lower-risk applicants receive smaller margins and better rates.
While exact lender criteria vary, standard requirements generally include:
A FICO credit score of 680 or higher (rates in the article reflect applicants with $780+$ scores).
At least 15% to 20% equity in your home.
A Combined Loan-to-Value (CLTV) ratio under 70% to 80%.
A Debt-to-Income (DTI) ratio of 43% or less.
Proof of steady income, good credit history, an official home appraisal, and in-force homeowners insurance.
Your decision should depend on how and when you plan to spend the money:
Choose a HELOC if you have unpredictable, ongoing, or phased expenses (such as multi-stage home renovation projects or an emergency fund buffer) and want the flexibility to pay interest only on what you draw.
Choose a Home Equity Loan if you need a specific, one-time lump sum (such as for debt consolidation or a single major purchase) and want predictable, fixed monthly payments that won’t change if market rates rise.
Manoj Sharma is a Senior Writer on the banking team at Tax Assistant. He provides information on budgeting, bank accounts, the banking industry, and other related topics. Using original data and methodologies, he helps you identify the best financial institutions, accounts, and products tailored to your needs. Manoj holds a degree in Journalism and Political Science from Syracuse University. All articles are strictly reviewed and fact-checked by our panel of expert Chartered Accountants, including CA Devendra Saini, CA Nikhil Khunteta, and CA Ankit Goyal
