Homeowners can now access a variety of loan options to tap into their property value as of April 28, 2026.

This information is critical for homeowners seeking to consolidate debt, fund renovations, or manage expenses during a period of fluctuating interest rates. Understanding the distinction between a Home Equity Line of Credit (HELOC) and a home equity loan is essential for long-term financial planning.

According to Forbes Advisor, a home equity loan is a fixed-rate, lump-sum loan that allows homeowners to borrow up to 85% of their home's value [3] and pay that amount back in monthly installments. This structure provides a predictable payment schedule—a key difference from the flexible nature of a HELOC.

Recent data shows that interest rates for these products vary. A $30,000 home equity line dipped one basis point to 7.17% [2], while the average interest rate on a 30-year fixed purchase mortgage was 6.352% [1]. This gap between purchase rates and equity-based loans highlights the fact that equity loans are often viewed as higher risk by lenders because they are second liens on a property.

Homeowners are encouraged to review their current equity levels and credit scores before applying for either product. Lenders typically require a specific loan-to-value ratio to ensure the owner can repay the loan. Because HELOCs often feature variable rates, homeowners must be aware of the winnings and risks associated with changing market conditions.

Forbes Advisor said a home equity loan is a fixed-rate, lump-sum loan that allows homeowners to borrow up to 85% of their home's value and pay that amount back in monthly installments.

“A home equity loan is a fixed-rate, lump-sum loan that allows homeowners to borrow up to 85% of their home's value.”

The divergence between purchase mortgage rates and home equity rates reflects the lender's risk profile. Because home equity loans and HELOCs are second mortgages, they typically carry higher interest rates than a primary mortgage. Homeowners should weigh the same-month variable rate of a HELOC against the fixed stability of a home equity loan based on their specific cash flow needs.