Current home equity loan rates for May 2026

Although home equity loan rates typically run higher than traditional mortgage rates, they’re influenced by many of the same economic and financial factors. Home equity loan rates can also change daily, so it’s worth monitoring them regularly to track trends and ensure you’re ready to lock in a rate when you see a good deal.

More than 43% of mortgaged homes are equity-rich, meaning loan balances are less than half their market value, according to a recent report from Attom, a real estate data company. If you’re one of those homeowners and need to cover a large expense, a home equity loan could be worth considering.

Also known as a second mortgage, a home equity loan is a type of financing that allows you to borrow money by leveraging the equity you’ve built in your home over time. Because your property serves as collateral for the loan, home equity loan rates are typically lower than rates on unsecured borrowing options such as personal loans and credit cards, which usually carry more risk for lenders because they’re typically not backed by an asset.

You can use home equity loan funds for any type of expense, including the following common expenses:

A typical home equity loan has a fixed annual interest rate, making for predicable monthly payments for the duration of the loan. Plus, if you use your home equity loan for home renovations, you may be eligible for a tax deduction on the loan interest.

Simply put, home equity is the portion of your home that you own. For instance, if you purchased a $450,000 home and put down $90,000, you’d start out with 20% equity in the property. Over time, your equity grows as you pay down your mortgage and your property value increases.

While home equity isn’t cash you can access on demand, it can represent a significant source of wealth for homeowners. Depending on how much equity you’ve built, you may be able to tap into it with a home equity loan or other loan options, such as a cash-out refinance or home equity line of credit (HELOC).

Home equity loan lenders allow homeowners to borrow up to a certain amount of their home equity, with funds typically distributed as a lump sum. How much you can borrow depends on the lender’s requirements and your financial profile, including factors such as your credit score, income and existing debt.

Lenders generally limit how much you can borrow against your home based on a loan-to-value (LTV) ratio limit. For instance, if a lender allows up to a 90% LTV ratio, you may be able to qualify to borrow up to 90% of your equity. However, many lenders prefer borrowers to have at least 20% equity in the home (80% LTV ratio) to reduce lending risk.

The amount you can borrow against your home follows a general calculation: multiply your current appraised home value by the LTV ratio allowed, then subtract your outstanding mortgage balance and any other remaining debts secured by the property. What’s left is the maximum you can borrow. Here’s an example of how much you may be able to borrow If your home is worth $550,000, you still owe $150,000 on your mortgage and your lender allows borrowing up to 80% of your available home equity:

Below is a rundown of the primary features of home equity loans. Getting familiar with the key characteristics of these loans — from borrowing limits to repayment timelines — can help you figure out if a home equity loan is the right fit for your situation.

Home equity loan pros and cons

Like any financing option, home equity loans come with benefits and risks. Before borrowing against your home, it’s vital to weigh both the advantages and drawbacks.

Home equity loan rates are shaped by a mix of economic conditions, lender policies and individual borrower factors.

On the economic side, signals from the Federal Reserve about raising or lowering its benchmark interest rate can influence overall borrowing costs. Lenders also tend to closely track the 10-year Treasury yield, a benchmark for long-term fixed-rate home loans. Broader economic trends and geopolitical events can also play a role in rate movements.

Additionally, rates can vary from lender to lender based on how each prices risk strategies, their operating costs and their capacity to fund and process new loans.

While some rate factors are outside your control, others come down to your financial profile, the loan term you select and other borrower-driven factors.

For instance, Wendy Morrell, head of relationship retail and home equity strategist at U.S. Bank, said that having substantial equity will generally help you qualify for better rates. “That said, factors beyond equity — for example, credit score and history — can also impact the interest rate,” Morrell said.

While both home equity loans and home equity lines of credit (HELOCs) allow homeowners to tap their home equity, these two products work very differently.

For starters, a home equity loan provides a lump sum upfront with a fixed interest rate and predictable monthly payments. A HELOC, on the other hand, works more like a credit card, giving you a revolving line of credit you can draw as you need it, when you need it during a set timeframe called the draw period.

Another major difference is how HELOC rates work is that HELOCs often begin with an introductory fixed interest rate, but when that period ends, they shift to variable rates that can rise or fall over time based on market conditions.

During the HELOC draw period, borrowers are usually only required to make interest-only payments on the money they’ve borrowed. However, once the repayment period begins, monthly payments typically spike because they start including both principal and interest for the remainder of the loan.

As with home equity loans, you may be able to deduct your HELOC interest from your taxes if you use the money for qualified home improvements or renovations.

If a home equity loan isn’t quite the right fit but you still need access to cash, you have a few alternatives to tap your home equity or borrow funds in other ways.

As mentioned, a home equity line of credit (HELOC) functions like a credit card that’s backed by your home and offers the flexibility of drawing cash when you need it as you need it, rather than in a single large sum. HELOCs come with repayment uncertainty since interest rates could rise during the adjustable-rate period.

A cash-out refinance replaces your existing mortgage with a new, larger loan — allowing you to pocket the difference in cash. For example, if your home is appraised at $450,000 and you still owe $100,000 on your mortgage, you’d have $350,000 in equity. If a lender allows you to borrow 80% of your home’s value, you could take out a new loan of $360,000. After paying off your $100,000 mortgage balance, you’d receive about $260,000 in cash before closing costs and fees.

If you need funds but don’t have enough equity — or want to avoid the risk of borrowing against your home — a credit card with a 0% introductory rate can be a useful alternative for smaller expenses. These cards offer quick access to funds without interest during the introductory period. Just be sure to pay off the balance before that period ends because rates can jump into the double digits afterward.

Personal loans typically come with higher interest rates than home equity products, especially if you don’t have strong credit. The upside? You won’t risk losing your home if you fall behind on payments. Personal loans also tend to have a simpler qualification process, a speedier approval timeline and don’t require an appraisal or closing costs. Additionally, most personal loans come with fixed rates, which means predictable monthly payments.

How we evaluate mortgage lenders and rates

According to CNN Underscored’s mortgages and loans methodology, we evaluate mortgage lenders based on a 100-point scoring system. Based on their internal scoring results in each category, lenders rank in one of our weighted lender tiers:

Sure, a low interest rate is important, but the lowest advertised rates are typically reserved for borrowers with the strongest financial profiles. That’s why we dig into not only how competitive lenders rates appear on the surface but how accessible their loan products are for a broad range of borrowers.

We consider how accessible lenders are through their customer support channels, the quality of the digital experience they offer and how quickly a borrower can expect to typically close on a loan. We also evaluate if lenders provide reasonably attainable rate or fee discounts that can help reduce borrower costs.

For this article we consulted the following expert to gain their professional insights:

CNN Underscored’s Money team is guided by a transparent methodology, independent editorial judgment and a commitment to helping readers understand which home loan products genuinely deserve their consideration. Our mortgage rate and lending coverage is grounded in analysis of mortgage rate trends, lender offerings and borrower priorities, with the goal of helping readers navigate an often complex borrowing landscape with clear, practical guidance.

For this article, CNN Underscored money writer Robin Rothstein shares what you need to know about home equity loans in the current lending climate. With over five years of experience writing about housing market trends and home affordability, she regularly tracks mortgage rates, lender offerings and economic trends to help readers cut through the noise and better understand how changing conditions impact borrowing costs.