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Best HELOC lenders of 2023

Compare features, discounts and fees to find the best home equity line of credit for you.

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By

Heather Petty

Edited by

Kelly Suzan Waggoner

Reviewed by

Anna Serio

Updated

Fact checked

You may have seen a big increase in your home’s equity last year. Most saw an average of 15.8% year over year from 2021 to 2022, according to a quarterly industry report. If you have at least 15% to 20% equity in your home, a home equity line of credit (HELOC) can be an affordable way to borrow.

HELOCs are revolving lines of credit often used for home improvements, debt consolidation or unexpected bills. The best offer competitive rates, low fees and flexible repayment options, though there is always the risk of foreclosure if you default on repayments.

HELOC rates vary widely, because they depend on the prime rate and your personal financial situation. Even if you get a low rate, HELOCs rates are variable, meaning they increase and decrease with the prime rate, typically quarterly. When you’re comparing lenders, consider the capped rate offered, which is typically 18%, depending on the state where you live.

7 best HELOCs

Best HELOC lender overall: U.S. Bank

U.S. Bank

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When you apply for a HELOC with U.S. Bank, it considers your full credit history, not just your credit score. This makes it a good choice for people building or rebuilding credit. It also has a relatively low maximum rate of 18% APR with no closing costs. Rates range from 8.8% to 12.55% APR for U.S. Bank customers with credit scores of 730 or higher. When you factor in discounts, rates can be as low as 3.25% APR.

Lines start at $15,000 and go up to $350,000, sometimes higher. There's a 10-year draw period, during which you're able to select a minimum monthly payment of 1% to 2% of the outstanding balance, or make interest-only payments. You don't have to pay closing costs, but if you close the line within the first 30 months, you'll pay an early closure fee as high as $500. U.S Bank also charges an annual fee of $90 after the first year.

Best for fast turnaround: Figure

Figure

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Figure's digital application process uses blockchain technology, which is how it can fund your HELOC in as little as five days from approval. By comparison, most HELOC lenders have a turnaround of two to six weeks. You can get as much as $400,000 with a fixed interest rate, and you can choose your repayment period from 5 to 30 years. The lender doesn't charge any prepayment penalties or annual fees, and you can get an interest rate discount if you become a member with its partner credit union and sign up for autopay.

But you're required to draw the full amount you're approved for at origination and the draw period available only after you pay off the initial amount. It's also one of the few HELOC lenders that may charge an origination fee based on your creditworthiness. If you have excellent credit, your fee could be 0%, but a fair-credit borrower can expect to pay up to 4.99%.

Best HELOC marketplace: LendingTree

LendingTree

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LendingTree isn't a lender — it's an online marketplace that partners with a range of HELOC and home equity loan lenders across the country. You complete an application, and LendingTree pairs you with a list of lenders you might qualify with, along with an estimate of the rates and terms you might receive. You save time, get several offers and may even get a lower rate than you could on your own, since lenders are competing for your business. But by using this service, you must agree to share your information with a wide range of lenders, which can lead to a flood of marketing calls and emails well after you've closed on your HELOC.

Best for low fees: Bethpage Federal Credit Union

Bethpage Federal Credit Union

Bethpage Federal Credit Union (BFCU) charges relatively low fees on its HELOC: There are no closing costs on lines of up to $500,000 — as long as you keep it open for three years. There are also no application, origination or appraisal fees. And while BFCU offers a wide range of lines, from $10,000 to $1 million, it requires a minimum draw of only $100.

It also offers relatively favorable rates, with a floor APR of 3.25% and a maximum APR of 18%, which is the cap for HELOC rates in most states. HELOCs start with a 7.24% fixed introductory rate for 12 months, followed by a variable rate based on the prime rate, starting at 7.75%. The rate you receive after the first year is based on your credit, minimum draw amount and LTV, with the lowest rates available to those who initially withdraw $25,000 or more. And while there's an option to convert your outstanding balance to a fixed-rate loan, that's only available to balances of $10,000 or higher.

Best for a fluctuating market: PNC Bank

PNC Bank

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PNC Bank allows you to lock balances of $5,000 or more into a fixed-rate account with a term of 5 to 30 years for a $100 balance transfer fee. This means you can watch the market and transfer to a fixed rate when interest rates are down — and you can switch the balance from fixed back for another $100 fee.

The minimum rate is 2.25% APR, and the maximum rate is 24% APR. PNC charges an annual fee of $50, but waives closing costs as long as you keep the credit line open for at least 36 months.

Best for flexible terms: BMO Harris Bank

BMO

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BMO Harris Bank offers HELOCs with credit limits ranging from $25,000 to $150,000. Minimum rates can never be lower than the floor rate in your loan agreement or higher than 18% (or higher than the maximum APR allowed by law, whichever is less). There's a 0.50% autopay discount if you have a BMO checking account.

APRs vary by term, with lower rates offered to longer terms, and rates also vary by loan amount. For variable rate 20-year terms, rates range from 8.93% APR ($25,000) to 7.69% APR ($150,000). For fixed rate 20-year terms, rates range from 8.33% APR ($25,000) to 6.89% APR ($150,000).

Best for relationship discounts: Bank of America

Bank of America

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This Big Four bank has a strong HELOC program with multiple rate discounts. Automatic payments from your Bank of America checking or savings account reduce your rate by 0.25%. Preferred Rewards members can cut their rate by 0.125% to 0.375%. The lowest HELOC rate is 1.99% (including autopay discount and initial draw discount), which is lower than most competitors. But the maximum rate is 24%, which is higher than most other lenders of its size.

Bank of America offers an initial draw discount of 0.1% for every $10,000 withdrawn and a 0.25% discount for HELOCs in the first lien position. HELOC limits range from $25,000 to $1 million. And you can convert up to 90% of your line into the fixed-rate option with no fee.

Methodology: How we choose the best HELOC lenders

Finder’s lending experts analyze more than 25 HELOC lenders to choose and update our top picks for HELOC lenders.

Each lender is weighed across 10 key metrics:

  • Annual fee
  • Credit limits
  • Minimum and maximum APR
  • Introductory rates
  • Discounts
  • Closing costs
  • Customer reviews
  • Requirements
  • Turnaround
  • Regional footprint

We also factor in extra features like the ability to lock in a fixed rate and the willingness to lend against second homes.

We regularly update our best picks as HELOC products change, disappear or emerge in the market and to reflect the most competitive products available.

What is a HELOC?

A HELOC is a revolving line of credit that allows you to borrow against your home’s equity. Your credit limit is based on the value of your home, minus the amount you owe on your mortgage, if you have one.

HELOCs are similar to home equity loans with one main difference: Home equity loans give you a lump sum of money, while a HELOC allows you a line of credit to spend what you need, as you need it. That means you repay only what you draw from the account.

Because a HELOC is secured by your home, using your home as collateral, HELOC interest rates are typically lower than the rates you’ll find on a credit card or personal loan. But if you default on the loan, you can lose your home.

How a HELOC works

The terms and features of your HELOC may vary by lender, but typical HELOCs offer you a 10-year draw period to use your credit line and a 20-year term to repay the loan. During the draw period, you’re only required to make interest payments, though you can repay as much as you like. During the repayment period, your payments are made up of principal and interest and are amortized — which means your principal and interest are spread out into fixed payments, with more of your payment going to interest at the start of your loan.

How HELOC rates work

HELOC rates are almost always variable, meaning your actual rate can change in reaction to the lending market, typically every month or quarter. Lenders usually calculate variable rates by adding a fixed interest rate — called a margin rate — to the prime rate. The margin rate you receive is based on factors like your credit score, the amount of your credit line, your initial draw and the LTV of your home.

For example, if the prime rate is 6% and the margin is 1.25%, your HELOC rate is 7.25%. But if the prime rate rises to 7%, your rate rises to 8.25%.

HELOC introductory rates

Introductory rates are low, fixed rates that lenders charge during the first 6 to 12 months of the HELOC to entice borrowers. But they come with some restrictions.

For example, some lenders offer introductory rates only to borrowers who are willing to draw a large chunk of their credit limit right away. Any discounts you’ve earned, such as existing customer or auto-pay discounts, won’t start until the introductory rate is over. And after the introductory period ends, a variable rate applies to your outstanding balance as long as you keep the line open.

How high can my HELOC rate increase?

Most lenders cap how high your rate can increase — usually at the legal maximum, which is 18% for most states. Most lenders also have a floor rate on HELOCs, which is the lowest rate it can be, often around 3% to 3.25%, depending on the lender and the rate you qualify for.

This means that even if the prime rate reaches 20%, your rate will never top 18%. It also means that you get a rate lower than 3% or 3.25%, even if you qualify for a 0% margin rate and the prime rate is 2%.

To protect yourself against high interest rate shocks, talk to your lender about instituting a lower rate cap. You can also ask about fixing the rate on your outstanding balance. While you’ll likely pay a slightly higher rate on a fixed line, your payments are more predictable.

Fixed-rate HELOC options

To help you avoid rate fluctuations, many lenders allow you to roll over portions of what you have drawn into a fixed-rate HELOC. For example, If you’ve drawn $15,000 of your credit line, you can roll over $10,000 into a fixed-rate account and start making regular payments on the amount immediately. This allows you to lock in an interest rate that will not change, even if the prime rate changes.

Most lenders charge a fee for fixed-rate options and have a limit on the number of accounts you can open. You may also get to choose between several loan terms for the account — from 5 to 30 years, depending on the program.

Who a HELOC is best for

A HELOC may be a good financing option if you have more than 20% equity in your home, a good credit score of at least 680 and enough available income to repay the loan.

Lenders may create stricter requirements during an economic downturn, such as a higher credit score or income requirements. It means you may have a more difficult time qualifying, or may receive a higher margin rate than you’d get otherwise.

If you take out a HELOC while your home’s value is up and rates are high, keep in mind that you typically have a 10-year draw period and are not obligated to borrow right away. You could tap into your home’s current equity but choose to borrow later when rates are lower. You’ll pay interest only on what you borrow.

When a HELOC might not be a good idea

If your credit score is low and interest rates are high, it might not be the time to take out a credit line. While some lenders allow borrowers to have FICO scores as low as 620, that score will be reflected in a higher interest rate.

In addition to closing costs and annual fees, a higher rate could make a HELOC more expensive than HELOC alternatives. At the very least, be sure to read the fine print before applying, and be sure to ask about potential fees and contingencies. If you’re concerned about closing costs or tapping into home equity, consider a personal line of credit instead.

See your HELOC rates as of 2023

Use our tool to see estimated rates from top lenders based on your location and financial details. Select whether you’re looking for a home equity loan, HELOC or cash-out refinance.

Enter your ZIP code, credit score and information about your current home to see your personalized rates.

7 ways to get a low rate on your HELOC

  • Compare multiple lenders. Don’t limit your search to major banks. Look to credit unions and online lenders to see what rates and relationship discounts are available.
  • Maintain a good credit score. The lowest rates are reserved for borrowers with a FICO score of 740 or higher. Avoid raising financial red flags before you apply for a HELOC, like closing or opening credit cards.
  • Lower your DTI. Most lenders prefer a debt-to-income ratio of 47% or lower to open a HELOC. The lower your DTI, the better your chance of approval.
  • Open a larger line. The lowest rates are reserved for borrowers who open lines of $25,000 to $100,000 or more and take a set minimum draw. Do this only if it makes financial sense, since you’re paying interest with a higher balance.
  • Look for relationship discounts. Lenders like Bank of America offer relationship discounts that can lower your HELOC rate by 0.25%, 0.50% or more. But compare offers, as 7% APR minus 0.5% (6.5% APR) is still higher than 6% APR with no discount.
  • Scout rate caps. Unless you have a fixed-rate HELOC, your rate fluctuates with the market. Compare rate caps across lenders to make sure you’re paying the lowest rate possible if rates rise.
  • Pay off your existing mortgage. Lenders can offer lower rates on HELOCs when they’re the lender in the first lien position. If you have a mortgage, they’re in the second lien position, which increases their risk if the home goes into foreclosure.

HELOC vs. home equity loan

HELOCs and home equity loans differ in how you get your money.

HELOCs offer you a pool of money to draw from whenever you need it, whereas you get all your money in one sum when you take out a home equity loan.

Interest and repayments also differ. A HELOC’s variable rate allows you to make interest-only payments during the draw period, but your repayments after that may vary as your interest rate changes. Home equity loans have fixed rates, which means you’ll have the same rates and payments over the full loan term.

  1. Homeowner Equity Insights – Q3 2022, CoreLogic, 9 December 2022

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