Our evaluations and opinions are not influenced by our advertising relationships, but we may earn a commission from our partners’ links. This content is created independently from TIME’s editorial staff. Learn more.
A home equity line of credit (HELOC) can be a great way to borrow cash by accessing the equity you already have in your home. This cash can then be used for pretty much any purpose, whether you want to consolidate debt, cover a big purchase, tackle home renovation projects, or just have a financial safety net at the ready.
Choosing the right HELOC for you involves looking at the lender’s borrowing limits, repayment terms, and of course, the interest rates you’ll be offered. Here’s a look at some of the best HELOC rates for 2023 and how to find the lowest APR on your next home equity line of credit.
Our Top Picks for HELOC Lenders for 2023
- Best for locking in fixed rates: Bank of America
- Best for low HELOC rates: Fifth Third Bank
- Best for flexible repayment terms: U.S. Bank
- Best for high loan-to-value ratio: Signature Federal Credit Union
Best for locking in fixed rates: Bank of America
A nationwide lender, Bank of America offers a variety of financial products and services, including home equity lines of credit and loans. A HELOC from Bank of America has no application fees, no annual fees, and no closing costs on lines of credit up to $1 million.
Bank of America also offers introductory interest rates for the first six months, as well as the ability to lock in the rate on a HELOC draw at any point. This means that you can withdraw funds shortly after opening your line of credit then lock in that borrowed amount at a lower interest rate. There are also discounts for initial withdrawals, preferred bank members and autopay. Interest rates vary depending on the state in which you live, from a low of 9.050% variable in Iowa to a high of 10.590% in Hawaii and New Mexico.
Best for low HELOC rates: Fifth Third Bank
With a Home Equity Flexline from Fifth Third Bank, you can borrow as much as $500,000 against your home’s current value with a term of up to 30 years. This HELOC product is offered on primary, secondary, and non-owner-occupied properties, such as rentals and investment homes.
The interest rate offered on a Fifth Third Home Equity Flexline may vary according to where the property is located and the value of the line of credit. The minimum APR will never go below 2.74%*, and the maximum APR will never go above 25%*.
For example, you could pay as low as 0.53%* below prime, with no closing costs and interest-only payments for the length of the draw period. Rates on withdrawals can also be locked in for a $95 fee, and later unlocked as needed.
Best for flexible repayment terms: U.S. Bank
As long as you have a credit score of at least 660, you may be eligible for a HELOC from U.S. Bank. You can borrow as little as $15,000 or up to $750,000 (up to $1 million for properties in California).
Interest rates are 8.95% to 13.10% variable. You’re able to have as many as three locked rates at a given time, and U.S. Bank also offers interest-only repayment to those who qualify. There are no application fees or closing costs, either, and the $75 annual fee can be waived for checking account customers.
Best for high loan-to-value ratio (LTV): Signature Federal Credit Union
For homeowners in all states except Hawaii and Alaska, a HELOC from Signature Federal Credit Union can give you access to as much as 100% of your property’s equity. While most other lenders cap their loan-to-value ratio (LTV) limit at between 75% and 85%, SFCU offers:
- Between 80.01% to 100% LTV to those borrowing $200,000 or less
- Up to 80% LTV to those borrowing up to $350,000
You can take out a HELOC on a primary, secondary, or even rental (investment) home, though your maximum LTV may vary based on the property type. There are no origination fees or prepayment penalties when taking out a HELOC from SFCU, but there is a $250 processing fee.
The draw period includes the first 10 years, followed by a repayment term of 15 years. In order to apply, you’ll need to first become a member of SFCU.
How are HELOC rates set?
The interest rate charged on most loans and credit products, such as home equity lines of credit, is based on the prime rate. This underlying index is used as a benchmark rate by many banks and financial institutions, and may change according to market conditions and the federal funds rate (set by the Federal Reserve).
Many banks will set their HELOC interest rate at a specific level above prime. For example, a bank could say that HELOC rates range from prime minus 0.50% to prime plus 5.00%. This way, you at least have a general idea of the spread of their rates, even if you cannot predict exactly what the prime rate will do moving forward.
What is a good HELOC rate?
As with all credit products, there’s no way to truly predict what HELOC interest rates will do in the future. And the rates that you’re offered can vary wildly based not only on the prime rate, but also your:
- Credit score.
- Home’s value.
- HELOC limit.
- Loan-to-value ratio (LTV).
- Property use (primary home, secondary home and investment property).
Since HELOCs are secured by the equity in your home, however, rates may be lower on average than with unsecured forms of debt, such as credit cards or personal loans. It may also be easier to qualify for a HELOC, for this same reason.
As of this writing, a good HELOC rate is one that’s in the single digits. The closer you can get to 7% variable APR, the better off you’ll be.
How to compare multiple HELOC offers
If you’re shopping around for a new HELOC, it can be tricky to compare all of the options and lenders available to you. So, how can you best choose?
First, you’ll want to evaluate your HELOC needs, and what you really want to get out of your line of credit. This means asking yourself the following questions:
- How much equity do I have in my home?
- How much of that equity do I want to borrow?
- What is my current credit score?
- How long do I need to repay any borrowed funds?
- Can I afford to make full payments on my HELOC immediately, or would I prefer interest-only payments during the draw period?
This will help you narrow your search. For example, if you’re looking to borrow 85% of your home’s value or take out a HELOC worth $400,000, you’ll want to eliminate lenders with a maximum LTV of 80% or borrowing limits that cap out at $250,000.
Next, consider how you plan to use the HELOC and when you’ll likely withdraw funds. If you know you’ll take out most of the money upfront, opting for a line of credit with an introductory interest rate or the ability to lock in a fixed rate on withdrawals might be beneficial. On the other hand, if you are mainly looking for a financial safety net, a HELOC with no annual fee might serve you better.
Be sure to consider all costs involved — from application and origination fees to withdrawal limits, interest rates, annual fees, and prepayment penalties — before choosing the HELOC that’s right for you.
What experts are saying about HELOCs in 2023
Interest rates have been increasing all around since the start of 2023, and HELOCs are not excluded from that trend. HELOC rates ebb and flow along with the prime rate, which has steadily increased from a low of 3.25% in March 2020 to the current 8.50%, as of December 2023.
While even the experts aren’t sure where rates will go from here, most agree that this is an expensive time to borrow against your home’s equity. Some HELOC rates have hit all-time highs this year, and with the Fed signaling its plan to continue increasing rates throughout 2023, this is unlikely to change trajectories anytime soon.
With that said: HELOCs tend to have variable interest rates throughout the draw period. If and when rates drop again, the variable rate will likely follow suit. This means that you may be able to lock in a lower rate on future HELOC withdrawals. While this doesn’t help borrowers who need to tap into their home’s equity right now, it can be encouraging for those who plan to utilize their home equity down the line.
Frequently asked questions (FAQs)
HELOC vs. home equity loan
Both HELOCs and home equity loans use your home’s owned value (equity) as collateral to secure a debt. Both are offered by financial institutions such as banks, mortgage lenders, and credit unions and both are limited by your home’s loan-to-value ratio (LTV) among other factors.
The difference is that a HELOC is a revolving line of credit that you can tap into as needed, at any time during the draw period. If you never need to borrow money, you never have anything to repay. A home equity loan, however, is disbursed in a single lump sum and then repaid with monthly payments over a set period of time. You can’t come back and request more money with a home equity loan, the way you can with a HELOC.
HELOC vs. cash-out refinance
A HELOC is a revolving line of credit based on the equity in your home, or how much of your home’s value you own after deducting any liens, such as a mortgage loan. When you take out a HELOC, it’s a separate financial product and doesn’t change anything about your existing mortgage loan or interest rate.
A cash-out refinance, however, involves replacing your current mortgage loan with a new loan, while also withdrawing cash from your home’s equity. This new loan may have a different interest rate, repayment term, and monthly payment requirement, and will be used to pay off (and fully satisfy) any mortgage balance you still have.
How do rising interest rates affect HELOCs?
HELOC lenders typically base their rates on the Prime rate, which is a benchmark index. As this rate rises, so do interest rates overall… including those on home equity loans and lines of credit. Since HELOCs often have variable interest rates that can change over time, borrowers need to be aware that the HELOC they open today could be more costly in the months and years to come.
The Federal Reserve has indicated that it will continue raising rates throughout 2023, so homeowners can expect that their HELOC rates will also continue to rise.
*APRs are current as of Dec. 2, 2023. Interest rates change frequently, so ask your loan provider for the most current rate.
The information presented here is created independently from the TIME editorial staff. To learn more, see our About page.