Best HELOC Lenders of July 2026
A home equity line of credit, or HELOC, is a form of revolving credit that is secured by your home and can be used for just about anything, from home improvements to debt consolidation.
You can borrow against the credit line as needed up to a set limit, which depends on the amount of equity you have in your home and the lender’s maximum combined loan-to-value ratio. When you use the HELOC, you pay interest on the balance you borrowed. As you pay the balance down, more of your credit line opens back up, similar to a credit card.
Importantly, since HELOCs are secured by your home, you run the risk of foreclosure if you don’t repay what you owe.
HELOC Draw Periods
Unlike credit cards, HELOCs have what’s known as a draw period. This is the time when you’re allowed to spend against your credit limit and are only required to make minimum or interest-only payments. A HELOC draw period typically lasts between five and 15 years, but terms can vary from one lender to the next.
When the draw period ends, you’ll enter the repayment period, which can last up to 20 years. During repayment, you can no longer take out money from your HELOC, and you’ll be required to make full principal and interest payments.
The average rate for a $30,000 HELOC is at 7.43% as of July 15. This average is based on a FICO score of 700 and a combined loan-to-value ratio of 80% for primary single-family detached homes.
This analysis is powered by Bankrate, which gathers data from applicants who prequalify for HELOCs through its website and affiliates.
Rates on HELOCs and other variable-rate financial products tend to move in tandem with the federal funds rate, determined by the Federal Reserve. In 2025 as the Fed voted for a series of consecutive rate cuts, HELOC rates also declined – which is good news for American homeowners looking to tap into record amounts of equity.
If the central bank cuts rates in 2026 and 2027 as expected, it could eventually send HELOC rates lower.
How to Get the Best HELOC Rate
Just as you can shop for a mortgage, you can shop for a HELOC to get the best possible rate for your financial situation.
To improve your chances of getting a low HELOC rate, first work on building your credit score and paying down your debts. Lenders typically reserve their lowest HELOC rates for borrowers with strong credit histories. You’ll want a very good (740-799) or exceptional FICO credit score (800 or higher) in order to qualify for the best rates available.
You should apply with at least three lenders to compare not just the interest rate but the annual percentage rate, which is the interest rate plus fees. Since rates vary from one lender to the next, this is a smart way to cut costs. Ideally, you’ll want to keep your rate shopping within a two-week window to minimize the impact to your credit score.
Tip: Keep in mind that some lenders offer ultra-low “teaser rates” that are valid for the first six to 12 billing months. After that, the rate resets to the standard variable APR, which is usually much higher. While these promotional offers can be a good way to save money at the beginning of your HELOC, be sure to consider which lender will cost you the least amount of money over time using the APR that’s in effect once the low rate expires.
Pros
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HELOCs have lower interest rates than unsecured borrowing products, like credit cards or personal loans.
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With any line of credit, you only pay interest on what you borrow. In contrast, when you borrow a loan, you pay interest on the entire balance.
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HELOC interest may be tax deductible. If you use your HELOC funds to substantially improve your home, you may be able to write off the interest on your taxes.
Cons
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Your property serves as collateral for a HELOC. If you have trouble making payments once the draw period is up, your home could eventually be at risk of foreclosure.
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When you borrow against your line of credit, you decrease the equity in your home. If you decide to sell, you’ll see a smaller profit since you’ll also need to pay off your HELOC. And if home values drop, you could owe more on your house than it’s worth.
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Interest rates on HELOCs are variable. While there’s a chance your rate could go down, it could also increase – driving your monthly payments higher.
Home equity loans and lines of credit each allow you to borrow against the equity in your home. However, there are some key differences.
Disbursement: A home equity loan is disbursed as one lump sum that you pay back in fixed installments over time. On the other hand, a HELOC allows you to borrow as much or as little as you need up to the maximum credit limit during a specified draw period.
Interest accrual: With a HELOC, you pay interest only on the amount you borrow. This makes a HELOC a good choice if your borrowing needs fluctuate, such as with a home renovation with unpredictable total costs. With a home equity loan, you pay interest on the entire balance, making it better for fixed expenses, like paying off $10,000 worth of high-interest debt at a lower rate.
Interest type: HELOC interest rates are often variable, meaning they can adjust up or down over time, while home equity loan rates are usually fixed. Depending on the economic climate, HELOCs may have lower rates than home equity loans, or vice versa.
- Cash-out refinancing. Another way to access your home’s equity for cash is through cash-out refinancing. This involves taking out a new mortgage worth more than you currently owe and pocketing the difference to put toward another expense. This can be particularly beneficial if you can qualify for a lower mortgage rate, but it may not be worthwhile if prevailing rates are higher than your current loan’s rate.
- Credit cards. Some credit cards offer a 0% annual percentage rate to new users for an introductory period that typically lasts 12 to 21 months. If you go this route, pay off your balance before the introductory period is up. Otherwise, you could rack up interest charges quickly when the rate adjusts.
- Personal loans. Though they usually come with higher interest rates than HELOCs, personal loans can be a less expensive borrowing option than credit cards. Plus, you don’t have to use your home as collateral, which means it’s not at risk of foreclosure if you fall behind on payments.
Exact credit score requirements vary by lender. You may be able to qualify for a HELOC with a score in the mid-600s, though some lenders require a higher score. Better credit can also help you secure lower rates and more competitive terms.
HELOCs are limited to the equity you have in your home, which is your property’s value, minus any liens on the property, such as your mortgage. Total debts secured by your property, including your first mortgage and your HELOC, usually may not exceed 80% or 85% of your home’s appraised value.
Lenders typically require an appraisal when you apply for a HELOC in order to get an accurate property valuation. This is because the value of your home, your mortgage balance and creditworthiness determine whether you qualify. It also helps figure out the amount you can borrow against your home.
