Home Equity Line of Credit (HELOC)

WHAT IS A HELOC

A Home Equity Line of Credit (HELOC) is a revolving line of credit that lets you borrow against the equity in your home. Instead of receiving a lump sum, you can draw funds as needed, repay, and borrow again—similar to a credit card, but with much lower rates. A HELOC is ideal for homeowners who want flexibility and ongoing access to funds.

LEARN HOW A HELOC WORKS

A HELOC has two phases: the draw period and the repayment period. During the draw period, you can borrow funds as needed and often make interest-only payments. Once the repayment period begins, you can no longer draw funds and must pay back the remaining balance over time. This structure gives you flexibility early on and predictable repayment later.

SEE HOW HELOC PAYMENTS WORK

HELOC payments depend on how much you borrow and whether you choose interest-only or full principal-and-interest payments. During the draw period, many borrowers choose interest-only payments to keep monthly costs low. Once the repayment period begins, payments increase because you’re paying back both principal and interest.

UNDERSTAND HELOC RATES

HELOC interest rates are typically variable and tied to the prime rate. This means your rate can move up or down based on market conditions. Some lenders offer the option to lock in a fixed rate on portions of your balance, giving you more control and stability.

SEE HOW RATES ARE SET

Lenders start with the prime rate and add a margin based on your credit score, income, debt levels, and overall financial profile. Borrowers with strong credit and low debt typically receive the most competitive margins. Understanding how rates are set can help you prepare before applying.

HELOC CREDIT REQUIREMENTS

Lenders review your credit profile to determine your eligibility and rate. Strong credit scores usually qualify for better terms, while lower scores may limit your borrowing amount or increase your rate. Most lenders look at your credit score, debt-to-income ratio, payment history, and financial stability.

CHECK CREDIT REQUIREMENTS

HELOC FEES AND COSTS

HELOCs may include appraisal fees, title fees, annual fees, and early termination fees. Some lenders offer no-closing-cost HELOCs, but these may come with higher rates or repayment requirements. Reviewing fees upfront helps you avoid surprises later.

REVIEW HELOC FEES

HELOC VS. CASH-OUT REFINANCE

A HELOC is ideal when you want flexibility and don’t want to replace your existing mortgage. A cash-out refinance may be better if you want a fixed rate, a single payment, or to change your mortgage terms. Each option has different benefits depending on your goals.

COMPARE HELOC VS. REFI

COMMON USES FOR A HELOC

Homeowners often use HELOCs for home improvements, debt consolidation, emergency expenses, education costs, or major purchases. Because you only pay interest on what you borrow, a HELOC can be a cost-effective way to access funds when needed.

EXPLORE HELOC USES

TAX CONSIDERATIONS

Interest on a HELOC may be tax-deductible when used for qualified home improvements. Other uses—such as debt consolidation or personal expenses—typically do not qualify. Always consult a tax professional to understand how the rules apply to your situation.

LEARN ABOUT HELOC TAX RULES

HOW TO APPLY FOR A HELOC

Applying for a HELOC is simple. You’ll provide basic financial information, verify income, and complete a home valuation. Once approved, you’ll receive access to your line of credit and can begin drawing funds immediately.

START YOUR HELOC REQUEST