Home equity loan rates average 8.5% in September 2026

The national average interest rate for a home equity loan stands at 8.5% as of September 10, 2026. This figure reflects data from the Mortgage Research Center. It applies to owner-occupied single-family homes with an 80% loan-to-value ratio. The benchmark assumes a FICO score of 620 or higher. These rates are generally lower than unsecured personal loan rates.

Home equity lines of credit offer a revolving credit structure. Borrowers draw funds as needed rather than receiving a lump sum. Interest accrues only on the outstanding balance. The average rate for a HELOC is typically slightly lower than a fixed home equity loan. Both products allow access to property value built through mortgage payments or cash purchases.

Fixed Loans Deliver Single Payments

A home equity loan provides the full amount in one deposit. Borrowers repay this sum through fixed monthly payments. The repayment term can extend to 30 years. This structure suits large, one-time expenses like debt consolidation or home improvements. The interest rate remains constant for the life of the loan.

HELOCs Feature Draw and Repay Phases

HELOCs operate in two distinct stages. The draw period lasts up to ten years. Borrowers can access and repay funds during this time. After the draw period ends, the repayment phase begins. No new borrowing is allowed. The remaining balance must be paid off via monthly installments or a lump sum.

Secured Borrowing Carries Foreclosure Risks

Using home equity as collateral puts the property at risk. Failure to make payments can lead to foreclosure. Lenders may sell the property to recover losses. Closing costs for these loans range from 2% to 5% of the total amount. These fees include appraisals and credit checks. Borrowers must weigh lower interest rates against the potential loss of housing.