HELOC vs. home equity loan
Both let you borrow against your equity, but a HELOC is a variable-rate revolving line and a home equity loan is a fixed lump sum. Compare the payments below.
HELOC
Draw period (interest-only)
$531.25/mo
Then repayment (P + I)
$738.55/mo
Home equity loan
Fixed payment, whole term
$716.74/mo
Same every month — no payment jump, no rate surprises.
A HELOC starts cheaper (interest-only) but the payment jumps when repayment begins and the rate can move. A home equity loan costs more up front but is fully predictable.
How to compare offers→HELOC vs. home equity loan, side by side
| HELOC | Home equity loan | |
|---|---|---|
| Rate type | Variable (can change) | Fixed for the whole term |
| Payout | Revolving line, draw as needed | One-time lump sum |
| Draw-period payment | Interest-only (lower) | Principal + interest |
| Payment after draw | Jumps to principal + interest | Same as before |
| Predictability | Lower — payment can move | High — payment is fixed |
| Best for | Ongoing or uncertain needs | A known, one-time expense |
How to compare HELOC & home equity loan offers
Whichever you pick, the rate drives the cost. Comparing multiple lenders is the single biggest factor in what you’ll actually pay.
What to compare before you sign
- Look at the ongoing rate, not the teaser. Many HELOCs advertise a low intro APR for 6–12 months, then switch to a variable rate (the prime rate plus a margin). Compare the margin and the lifetime rate cap — that's what you'll pay for years.
- Check the draw and repayment terms. How long you can borrow (the draw period, often 10 years) and how long you have to repay it. Interest-only draws keep early payments low but raise them sharply later.
- Add up every fee. Annual fees, closing costs, appraisal fees and early-closure penalties vary widely. A slightly higher rate with no fees can beat a low rate loaded with costs.
- Get at least three quotes. Rates and CLTV limits differ by lender and by state. Comparing several offers is the single biggest factor in what a HELOC actually costs you.
Free, unbiased basics: CFPB: comparing home equity options.
Frequently asked questions
Is a HELOC or a home equity loan better?+
Neither is universally better. A HELOC suits ongoing or uncertain needs and starts with low interest-only payments, but its rate is variable and the payment jumps after the draw period. A home equity loan suits a single known expense and locks in a fixed payment for the full term.
Which has a lower monthly payment?+
During the draw period a HELOC is usually cheaper because you pay interest only. Once the HELOC enters repayment, its payment can match or exceed a home equity loan — especially if the variable rate has risen. The calculator above shows both phases side by side.
Do both use the same amount of equity?+
Yes. Both are second mortgages limited by the same combined loan-to-value cap, typically 80–90% of your home's value minus your existing mortgage, so the maximum you can borrow is similar.
Can I switch from a HELOC to a fixed rate later?+
Some lenders offer a fixed-rate conversion option that lets you lock part of your HELOC balance at a fixed rate. Terms vary, so confirm availability and fees with your lender.
More home equity calculators
How Much HELOC Can I Get?
→See your borrowing power from home value minus your mortgage.
HELOC Calculator by State
→Estimate your HELOC with your state's typical home value.
HELOC Payment Calculator
→Interest-only draw payment vs. principal + interest repayment.
Home Equity Loan Calculator
→Fixed monthly payment on a lump-sum home equity loan.
Cash-Out Refinance Calculator
→New loan, new payment and cash out from a refinance.
Refinance Break-Even Calculator
→Months to recoup closing costs after a refinance.
HELOC vs. Cash-Out Refinance
→Side-by-side: second lien vs. replacing your mortgage.