Home Equity Line of Credit (HELOC)
A home equity line of credit is a revolving credit line secured by your home. You borrow what you need during a draw period, pay interest on the amount outstanding, and then repay the balance over a set repayment period. The rate is usually variable.
Get Your HELOC RateHELOC loans by the numbers
| What | Figure | Source |
|---|---|---|
| How the plan is structured | A draw period, followed by a repayment period | CFPB, home equity line of credit brochure |
| Interest rate type | Variable in most plans | CFPB |
| What secures the line | Your home | CFPB |
Last reviewed 2026-10-05
Key Features
- ✓A credit limit based on your home equity
- ✓Borrow, repay and borrow again during the draw period
- ✓Interest charged only on the amount you have drawn
- ✓A variable rate in most plans
- ✓Your existing first mortgage and its rate stay in place
Who Is a HELOC Loan a Good Fit For?
- Homeowners with a low first-mortgage rate they want to keep
- Projects with costs spread over time, such as renovations
- Borrowers who want a reserve they may not fully use
- Homeowners comparing against a cash-out refinance
Requirements
Credit Score
Set by each lender.
Down Payment
Not applicable; the lender caps your combined mortgage balances as a share of the home’s value.
Debt-to-Income
Set by each lender, counting the new line’s payment.
Pros and Cons
Advantages
- +Keeps your current first mortgage untouched
- +Pay interest only on what you use
- +Lower closing costs than a full refinance in many cases
- +Flexible access to funds
Considerations
- -A variable rate means the payment can rise
- -Payments can jump when the draw period ends and repayment begins
- -Your home is the collateral
- -The lender can freeze or reduce the line in some circumstances
The Questions Everyone Asks
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