Home equity loan rates in February 2026 tell a story of dramatic market recovery and opportunity. After peaking above 10% in early 2024, rates have declined to 7.90-8.15% APR for fixed-rate home equity loans and 7.25-7.63% APR for variable-rate HELOCs, according to comprehensive industry surveys. For the 85 million American homeowners sitting on record-high equity levels, understanding current rates and qualification strategies has never been more financially consequential.

Critical Market Context: The Federal Reserve implemented three rate cuts in late 2025, reducing the federal funds rate from 5.50% to 4.50%. This drove home equity rates down significantly, creating a refinancing opportunity for borrowers with loans originated at 9-10%+ rates in 2023-2024. Current rates remain elevated compared to the 3-5% environment of 2020-2021 but represent the most favorable borrowing conditions since early 2023.

How to Find Great Home Equity Loan Rates Online

rates on home equity loans

As a mortgage lending professional with nearly three decades of experience originating home equity loans and HELOCs, I’ve guided thousands of homeowners through rate environments ranging from the 3% lows of the pandemic era to the 10%+ peaks of 2024.

In this comprehensive report, I’ll break down exactly what home equity loan rates look like today, how they compare across product types and credit tiers, what factors determine your individual rate, and strategic timing considerations for taking out a 2nd-mortgage in 2026.

Current Home Equity Loan & HELOC Rates: February 2026

Based on comprehensive rate surveys from Bankrate and Mortgage News Daily, here are today’s average rates for qualified borrowers (700+ credit score, 70-80% combined loan-to-value ratio, $30,000-50,000 loan amount):

Fixed-Rate Home Equity Loan

7.90-8.15%
National average APR
5-year to 30-year terms

Variable-Rate HELOC

7.25-7.63%
National average APR
Prime rate + margin

Excellent Credit (760+)

6.38-7.50%
Best available rates
Low LTV required

Fair Credit (660-699)

8.50-10.50%
Higher risk pricing
Limited lender options

Source: Bankrate Home Equity Rate Survey & Mortgage News Daily Market Data (February 2026). Home equity rates shown represent national averages and vary by individual lender, borrower qualifications, and geographic market.

Understanding the Rate Environment: Where We’ve Been and Where We’re Going

To appreciate today’s rates, context matters. Home equity loan rates have experienced extraordinary volatility over the past four years:

2020-2021 (Historic Lows): Fixed home equity loans averaged 3.5-5.0% APR, with HELOCs as low as 3.0-4.5% APR. The Federal Reserve’s pandemic response pushed rates to generational lows, creating a refinancing boom.

2022-2023 (Rapid Ascent): As the Fed raised rates aggressively to combat inflation, home equity rates climbed steadily. By mid-2023, fixed home equity loans reached 8-9% APR, with HELOCs exceeding 9% APR for the first time since 2008.

2024 (Peak Rates): Home equity rates peaked in Q1 2024 at 9.5-10.5% APR for fixed loans and 10.16% APR average for HELOCs. Applications plummeted as homeowners with existing low-rate mortgages avoided tapping equity at punitive rates.

2025-2026 (Recovery): Three Fed rate cuts in late 2025 reduced home equity rates to current 7.90-8.15% levels for fixed loans and 7.25-7.63% for HELOCs. While still elevated historically, rates are 2-3% lower than 2024 peaks, reigniting borrower interest.

Market Outlook: The Mortgage Bankers Association forecasts home equity rates will decline modestly to 7.30-7.80% APR by Q4 2026, assuming the Federal Reserve implements 1-2 additional small rate cuts. However, rates are unlikely to return to sub-5% levels seen in 2020-2021 within the next 2-3 years.

Fixed-Rate Home Equity Loans vs. Variable-Rate HELOCs: Rate Comparison

The choice between a fixed-rate home equity loan and a variable-rate HELOC extends beyond simple rate comparison. Each product serves different financial needs and risk tolerances. For a deeper dive into this decision, see our comprehensive guide on HELOC vs Home Equity Loan comparisons.

Feature Fixed-Rate Home Equity Loan Variable-Rate HELOC
Current Rate (Feb 2026) 7.90-8.15% APR average 7.25-7.63% APR average
Rate Structure Fixed for entire term (never changes) Variable, tied to prime rate (currently 6.75%)
Monthly Payment Consistent principal + interest Interest-only during draw period, then P+I
Payment Predictability Complete — same payment every month Unpredictable — adjusts with rate changes
Loan Term 5-30 years (typically 10-20 years) Draw period (5-10 yrs) + Repayment (10-20 yrs)
Fund Disbursement Lump sum at closing Revolving credit line — borrow as needed
Best For One-time expenses, debt consolidation, predictable budgets Ongoing expenses, renovations, emergency reserves
Rate Risk None — locked for life of loan High — rates can increase significantly
Closing Costs 2-5% of loan amount ($2,000-5,000 typical) $0-500 (often waived or minimal)

When to Choose a Fixed-Rate Home Equity Loan: Choose a fixed-rate loan when you need a lump sum for a specific purpose (debt consolidation, major renovation, college tuition), want absolute payment predictability, believe interest rates will rise, or are uncomfortable with payment volatility. The slightly higher initial rate buys you peace of mind and protection against future rate increases.

When to Choose a Variable-Rate HELOC: Select a HELOC when you need flexible access to funds over time, expect to need capital for ongoing or phased projects, believe rates will decline or remain stable, can tolerate payment fluctuations, or want to use it as an emergency fund backup. The lower initial rate and revolving structure provide maximum flexibility.

✅ Expert Strategy: Many sophisticated borrowers use both products simultaneously. They maintain a zero-balance HELOC as an emergency backup (costing virtually nothing) while using a fixed-rate home equity loan for planned, lump-sum expenses. This “dual approach” maximizes flexibility while controlling costs.

7 Factors That Determine Your Home Equity Loan Rate

While national averages provide context, your individual rate depends heavily on these qualification factors:

Credit Score (Largest Impact): 760+ scores qualify for best rates (6.38-7.50% range). Each 20-point decrease adds approximately 0.25-0.50% to your rate. Scores below 680 face 2-3% higher rates with limited lender options.

Combined Loan-to-Value Ratio (CLTV): Lower CLTV means less risk for lenders. Maintaining 65-70% CLTV (30-35% equity) qualifies for preferential pricing. Every 10% increase in CLTV above 70% adds approximately 0.125-0.25% to your rate.

Debt-to-Income Ratio (DTI): Lenders prefer DTI below 43%. Strong DTI ratios (below 36%) may qualify for rate discounts of 0.125-0.25%. DTI above 45% typically results in higher rates or denial.

Loan Amount: Larger loans ($100,000+) often receive better equity loan rates than smaller loans ($25,000 or less) because lenders earn more on larger balances. The rate difference is typically 0.25-0.50%.

Loan Term: Shorter terms (5-10 years) carry lower home equity rates than longer terms (20-30 years) because lenders face less interest rate risk. Expect 0.25-0.50% rate improvement choosing 10 years vs 20 years.

Lender Type: Credit unions typically offer rates 0.25-0.75% lower than major banks for members. Online lenders are highly competitive but may have stricter approval criteria. Local community banks often match online rates for relationship customers.

Geographic Market: Rates vary by state and region based on local competition, regulatory environment, and market conditions. California, Texas, and Florida typically see the most competitive rates due to dense lender competition.

How to Qualify for the Lowest Home Equity Loan Rates

Securing top-tier rates requires strategic preparation. Here’s the proven roadmap I’ve used to help clients save thousands on their home equity loans:

Step 1: Optimize Your Credit Score (6-12 Months Before Applying)

Credit score improvement is the single highest-return investment you can make before applying. Pay down credit card balances to below 10% utilization, dispute any errors on your credit report, avoid new credit inquiries, and ensure all bills are paid on time. Even modest improvements from 680 to 720 can save 0.5% in rate — worth $40-60/month on a $50,000 loan.

Step 2: Build Maximum Equity

The more equity you maintain after the loan, the better your rate. If you’re close to a CLTV threshold (75%, 70%, 65%), consider borrowing slightly less to stay under that threshold for better pricing. A 5% lower CLTV can save 0.25-0.50% in rate.

Step 3: Lower Your Debt-to-Income Ratio

Pay down high-interest debt before applying. Reducing DTI from 45% to 38% can improve your rate and significantly increase approval likelihood. Even if debt consolidation is your goal, paying down some debt first paradoxically makes the home equity loan cheaper.

Step 4: Shop Aggressively Across Lender Types

Obtain written rate quotes from at least 5 lenders: 2 traditional banks, 1-2 credit unions, and 1-2 online lenders. Rates can vary 0.5-1.0% for identical borrower profiles. Use competing offers as leverage to negotiate. To find competitive options, explore our curated list of best HELOC lenders.

Step 5: Consider Shorter Loan Terms

If your budget allows, choose a 10-year term instead of 20 years. The 0.25-0.50% rate savings compounds to thousands in interest costs over the loan’s life. On a $75,000 loan, a 10-year term at 7.5% costs $889/month vs. a 20-year at 8.0% costing $627/month — but the 10-year saves $49,000 in total interest.

Step 6: Leverage Existing Relationships

Banks and credit unions often offer relationship discounts of 0.25-0.50% for customers with checking accounts, mortgages, or significant deposit balances. Ask explicitly about relationship pricing when obtaining quotes.

Step 7: Time Your Application Strategically

Monitor Federal Reserve policy announcements and rate trends. Apply when rates are declining or stable rather than rising. Use resources like our guide to getting the best HELOC rates for market timing insights.

⚠️ Common Mistake to Avoid: Don’t apply simultaneously with 10+ lenders thinking it will help you compare. While rate shopping within a 14-45 day window counts as a single inquiry for credit scoring, excessive applications signal desperation to underwriters and may result in denials. Target 5-7 carefully selected lenders maximum.

Geographic Rate Variations Across the United States

Home equity loan rates aren’t uniform nationwide. Regional variations reflect local market competition, state regulations, property value trends, and lender density:

Lowest-Rate Regions (February 2026):

  • California: 7.50-7.90% APR average — intense lender competition and high property values drive competitive pricing
  • Texas: 7.60-8.00% APR average — robust credit union presence and no state income tax attract lenders
  • Florida: 7.65-8.05% APR average — growing population and strong housing market support competitive rates
  • Colorado: 7.70-8.10% APR average — affluent demographics and high homeownership rates

Highest-Rate Regions (February 2026):

  • Rural States (Montana, Wyoming, Dakotas): 8.25-9.00% APR average — limited lender competition and smaller loan volumes
  • Hawaii: 8.50-9.25% APR average — geographic isolation and unique market dynamics
  • Alaska: 8.40-9.00% APR average — limited banking infrastructure and higher operational costs

These regional differences can add up to significant cost variations. A $75,000 home equity loan at 7.50% APR costs $593/month over 15 years, while the same loan at 9.00% costs $761/month — a difference of $168/month and $30,240 in total interest over the loan term. Find more home equity rates by state.

Rate Lock Strategies: Timing Your Application in 2026

Unlike primary mortgages where rate locks are standard practice, home equity loans and HELOCs handle rate locks differently. Understanding these mechanics can save you thousands.

Fixed-Rate Home Equity Loans: Most lenders allow rate locks for 30-60 days once you’ve submitted a complete application. Longer locks (75-90 days) may be available but typically cost 0.125-0.25% in rate or upfront fees. Lock your rate when you have a clear timeline to closing and are satisfied with current market conditions.

Variable-Rate HELOCs: Since HELOC rates adjust throughout the loan term, “locking” means securing today’s margin over prime rate. Your rate will still fluctuate with prime rate changes, but your margin remains fixed. Some lenders offer fixed-rate conversion options after the HELOC is established, letting you lock in a fixed rate on all or part of your balance if rates become favorable.

2026 Rate Lock Recommendations:

If You’re Refinancing a 2023-2024 High-Rate Loan: Lock immediately. Current rates represent 2-3% savings from 2024 peaks. Even if rates decline another 0.25-0.50% by year-end, the savings from refinancing now dwarf the potential benefit of waiting.

If You’re Opening a New Home Equity Loan: Monitor Federal Reserve policy. If additional rate cuts are signaled within 3-6 months, consider waiting if your need for funds isn’t urgent. However, don’t let “rate paralysis” prevent you from accessing equity for high-value uses like home remodeling projects that increase property value.

If You’re Considering a HELOC as Emergency Backup: Open it now while rates are relatively favorable. Even if you keep the balance at zero, having the line established at today’s margin protects you if rates rise before you need to draw funds. Most HELOCs have minimal or no annual fees when unused.

Insider Tip: Some lenders offer “float-down” provisions during the rate lock period, letting you capture lower rates if they drop before closing. This typically costs an extra 0.125% in rate or a small upfront fee but provides downside protection in declining rate environments. Ask explicitly about this option when comparing lenders.

Should You Refinance Your Existing High-Rate Home Equity Loan?

If you originated a home equity loan or HELOC in 2023-2024 at rates above 9%, refinancing now could deliver substantial savings. The break-even analysis is straightforward:

Calculate Your Savings: Determine the rate reduction you’ll achieve. Multiply your current loan balance by the rate difference to find annual savings. For example, refinancing a $60,000 balance from 9.5% to 7.75% saves 1.75% annually, or $1,050 per year ($87.50/month).

Estimate Refinancing Costs: Home equity loan refinancing typically costs 2-5% of the loan amount ($1,200-3,000 on a $60,000 loan). Get exact quotes from lenders including appraisal fees, origination fees, and closing costs.

Determine Break-Even Timeline: Divide refinancing costs by monthly savings. Using the example above, $2,400 in closing costs ÷ $87.50 monthly savings = 27.4 months to break even. If you plan to keep the loan longer than 27 months, refinancing makes financial sense.

Additional Considerations: Check for prepayment penalties on your existing loan. Some lenders impose penalties (typically 1-2% of balance or 6-12 months interest) if you pay off the loan within the first 2-3 years. Factor these costs into your break-even calculation.

✅ Refinancing Opportunity 2026: Borrowers with home equity loans originated at 9-10%+ rates in 2023-2024 should strongly consider refinancing now. The 2-3% rate reduction on a $75,000 loan saves $125-190/month and $45,000-68,000 in total interest over a 20-year term — easily justifying $2,000-4,000 in refinancing costs.

Where Are Home Equity Loan Rates Headed in 2026?

While no one can predict interest rates with certainty, economic indicators and Federal Reserve policy signals provide directional guidance:

Bullish Scenario (Lower Rates): If inflation continues moderating and unemployment rises, the Fed may implement 2-3 additional rate cuts in 2026, potentially pushing home equity loan rates to 7.00-7.50% by year-end. This scenario represents approximately 0.50-0.75% decline from current levels.

Base Case Scenario (Stable Rates): If inflation stabilizes around the Fed’s 2% target and economic growth remains moderate, rates likely stay relatively flat at 7.50-8.00% throughout 2026, with modest volatility. This is the MBA’s consensus forecast.

Bearish Scenario (Higher Rates): If inflation reaccelerates or economic growth exceeds expectations, the Fed may pause rate cuts or even reverse course, pushing home equity rates back toward 8.50-9.00% by late 2026. This scenario is considered less likely but possible.

The prudent approach: don’t try to time the market perfectly. If you need to access equity for high-value purposes, today’s rates at 7.90-8.15% are significantly better than the 10%+ peaks of 2024 and unlikely to drop dramatically below 7.00% in the near term. Act on your financial needs rather than speculating on rate movements.

Home Equity Loan Rates FAQ

Are home equity loan rates higher than HELOC rates?

Currently in February 2026, fixed-rate home equity loans (7.90-8.15% APR) are slightly higher than variable-rate HELOCs (7.25-7.63% APR). However, this comparison is nuanced. HELOCs offer lower initial rates because they’re variable and tied to prime rate, which can increase over time. Home equity loans provide rate stability with fixed payments for the entire term. The best choice depends on rate expectations and your risk tolerance. If you believe rates will rise, a fixed home equity loan protects you. If rates are expected to fall, a HELOC lets you benefit from decreases.

What credit score do I need for the best home equity loan rates?

To qualify for the best home equity loan rates (6.38-7.50% APR range), you need a credit score of 740 or higher. Borrowers with 700-739 scores receive rates approximately 0.25-0.50% higher. Scores of 680-699 add another 0.25-0.50% to the rate. Most lenders require a minimum credit score of 620-680 for home equity loan approval, though rates at this tier are 2-3% higher than top-tier pricing. Beyond credit score, lenders also evaluate your debt-to-income ratio (preferring below 43%), combined loan-to-value ratio (typically capping at 80-85%), and income stability when determining your rate.

How do I get the lowest home equity loan rate?

To get the lowest home equity loan rate: (1) Improve your credit score to 740+ before applying, (2) Maintain high equity — keep combined LTV below 70% for best pricing, (3) Lower your debt-to-income ratio under 36% if possible, (4) Shop at least 5 lenders including banks, credit unions, and online lenders as rates vary 0.5-1.0%, (5) Consider a shorter loan term (10 years vs 20 years) for lower rates, (6) Ask about rate discounts for autopay enrollment (typically 0.25%), (7) Compare both home equity loans and HELOCs to see which offers better terms for your situation, and (8) Time your application when rates are favorable — monitor Federal Reserve policy and rate trends.

Will home equity loan rates go down in 2026?

Home equity loan rates are expected to decline modestly throughout 2026, potentially reaching 7.30-7.80% APR by year-end according to Mortgage Bankers Association forecasts. The Federal Reserve implemented three rate cuts in late 2025, reducing the federal funds rate and driving home equity rates down from 10%+ peaks in 2024 to current 7.90-8.15% levels. Further modest rate cuts are anticipated in 2026 if inflation continues moderating. However, rates are unlikely to return to the sub-4% levels seen in 2020-2021. Borrowers with existing high-rate home equity loans originated in 2023-2024 should monitor refinancing opportunities as rates decline.

What’s the difference between a home equity loan rate and a HELOC rate?

Home equity loans have fixed interest rates (currently 7.90-8.15% APR) that never change, with consistent monthly payments over the loan term of 5-30 years. HELOCs have variable rates (currently 7.25-7.63% APR) that adjust based on the prime rate, which changes with Federal Reserve policy. HELOCs feature a draw period (5-10 years) with interest-only payments, followed by a repayment period (10-20 years) with principal and interest payments. This two-phase structure means HELOC payments can increase significantly when the repayment period begins. Home equity loans provide predictability, while HELOCs offer initial flexibility and potentially lower starting rates.

Can I negotiate my home equity loan rate?

Yes, home equity loan rates are often negotiable. Lenders may lower rates by 0.125-0.50% to earn your business, especially if you have competing written offers from other institutions. Effective negotiation strategies include: obtaining quotes from multiple lenders and presenting them as leverage, demonstrating strong financial credentials (high credit score, low LTV, stable income), considering relationship discounts if you have existing accounts with the bank, asking about autopay discounts (typically 0.25% rate reduction), and timing discussions when applying with substantial equity (below 65% LTV). Credit unions are often most flexible on rates for members. Don’t accept the first rate quoted — negotiation is expected and can save thousands over the loan term.

References

Federal Reserve Bank of St. Louis. (2026). Home equity loan interest rate trends. 

Yahoo Finance. (2026, January). HELOC and home equity loan interest rates today. 

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