Best HELOC lenders of July 2024
Updated 10:15 a.m. UTC July 9, 2024
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A home equity line of credit (HELOC) allows you to tap into your home equity and use the funds to cover emergency expenses, home improvement costs, high-interest debt and more.
In 2024, the best HELOC lenders don’t just offer low rates, they also have extra perks like introductory annual percentage rates (APRs) for a promotional period, the option to switch from a variable rate to a fixed rate and more. Here are our top picks to help you find the right HELOC.
New American Funding
Best HELOC lenders
- Bank of America: Best overall.
- Connexus Credit Union: Best for low introductory rates.
- Flagstar: Best for closing discounts.
- PenFed: Best for discounted closing costs.
Compare the best HELOC lenders
INTEREST RATES | 30-YEAR LOAN TERMS (YEARS) | FIXED-RATE OPTION AVAILABLE | ||||||
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Bank of America | Below national average (introductory rate) | Draw period: 10 Repayment period: 20 | Yes | |||||
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Connexus Credit Union | Below national average (introductory rate) | Draw period: 15 Repayment period: 15 | No | |||||
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Flagstar | Above national average | Draw period: 10 Repayment period: 20 | No | |||||
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PenFed | Below national average | Draw period: 10 Repayment period: 20 | Yes | |||||
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Methodology
Our expert writers and editors have reviewed and researched multiple lenders to help you find the best HELOC. Out of all the lenders considered, the four that made our list excelled in areas across the following categories (with weightings): loan details (20%), loan cost (40%), eligibility and accessibility (20%) and customer experience (20%).
Within each major category, we considered several characteristics, including APR, maximum combined loan-to-value (CLTV) ratio and whether the lender offers a promotional introductory rate. We also evaluated each provider’s customer support options, borrower perks and more.
Why some lenders didn’t make the cut
Of the HELOC lenders that we reviewed, only a few didn’t make the cut. The lenders that didn’t have high enough scores to be included received lower ratings mostly due to a lack of transparency around eligibility details.
Current HELOC rates
Like with other types of mortgages, rates on HELOCs regularly fluctuate according to market conditions. Here are the current average rates for a $100,000 HELOC, based on loan-to-value (LTV) ratios of 60%, 80% and 90%.
HELOC alternatives
If a HELOC isn’t the right solution for you, here are other options you could consider:
- Home equity loan: This could be a good alternative if you know how much you need to borrow and want to get it in one lump sum. Home equity loans typically come with fixed interest rates, so you’ll know exactly how much you owe each month and over the life of your loan.
- Personal loan: If you need to cover a smaller expense with a set amount, a personal loan could be a good option — though you can borrow up to $100,000 with some lenders. They also come with fixed interest rates and generally have faster funding compared to HELOCs or home equity loans.
Unlike HELOCs, both home equity loans and personal loans come with fixed rates, which can be helpful if you need predictable payments. HELOCs, on the other hand, can come with variable rates that might start out lower but could increase as they fluctuate over time. The good news is, most HELOC lenders will cap variable rates at 18%.
The downside to getting a personal loan or home equity loan over a HELOC is that they both tend to come with higher interest rates than a variable HELOC.
Frequently asked questions (FAQs)
During the COVID-19 pandemic when there was more uncertainty surrounding the economy, many banks stopped offering HELOCs to customers. But now many banks are offering them again, including the banks on this list.
Some lenders might offer you a relationship discount if you already hold an account with them. If this is the case, it’s worth asking your current lender if they offer HELOCs first. However, it’s always best to compare rates, fees and terms with multiple lenders first before making a decision.
Typically, you’ll need to have good credit to qualify for a HELOC. Some lenders will want to see a score of at least 680, though some might have stricter requirements and look for scores of 700 or higher.
If your score isn’t high enough, it’s a good idea to work on improving your credit before applying for a HELOC. This can help to ensure you qualify and also possibly get you a better rate.
Yes, you can apply with multiple lenders. Ideally, you should compare the rates and terms of at least three lenders to help you find the right HELOC for your situation and your budget.
While a hard credit check can have a slight but temporary impact on your credit score, keep in mind that if you apply with multiple lenders within a 45-day period, your credit score won’t be impacted with each application. Instead, it will only count as one credit inquiry.
As of May 2, average HELOC rates sit between 6.49% and 8.89%. But the lower the rate, the better — and to qualify for the lowest rate, you’ll need good to excellent credit and sufficient income.
Keep in mind that HELOC rates usually go up when the Federal Reserve raises rates.
An appraisal is usually necessary to get a HELOC so the lender can get a precise valuation of your home. The lender will use this to see if you qualify for a HELOC and, if so, how much you qualify for.
Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.
Blueprint has an advertiser disclosure policy. The opinions, analyses, reviews or recommendations expressed in this article are those of the Blueprint editorial staff alone. Blueprint adheres to strict editorial integrity standards. The information is accurate as of the publish date, but always check the provider’s website for the most current information.