Home equity loans are best for large one-time expenses: home renovations, debt consolidation, college tuition, or medical bills where you know the exact amount needed upfront.

As of May 2026, the national average fixed home equity loan rate is 7.36% APR, matching the 2026 low observed in mid-March, according to Curinos. This is based on borrowers with a 780+ credit score and CLTV of 70% or less. Borrowers with lower credit scores or higher CLTV will see higher rates — typically 8.00%–10.00% for credit scores in the 680–719 range.

A home equity loan gives you all the money at once at a fixed rate. Your payment is the same every month. A HELOC (Home Equity Line of Credit) is a revolving line you draw from as needed, at a variable rate. Key differences:

• Home equity loan: fixed rate, predictable payment, lump sum
• HELOC: variable rate, flexible draws, interest-only during draw period
• Home equity loan wins when you want payment certainty
• HELOC wins when you need flexibility or aren’t sure of total costs

If your current mortgage rate is below 5.5%, a home equity loan is almost certainly better than a cash-out refinance. Cash-out refinancing replaces your entire first mortgage at today’s rates (~6.58%), dramatically increasing your monthly payment. A home equity loan only adds a second payment while leaving your low-rate first mortgage intact. The math is clear: don’t give up a 3–4% first mortgage to borrow at 7.36% on everything.

Home equity loan closing costs typically range from 2–5% of the loan amount — lower than a first mortgage. Many lenders offer “no-closing-cost” home equity loans where fees are either waived or rolled into a slightly higher rate. On a $50,000 loan, expect $500–$2,500 in closing costs unless you negotiate a no-cost option.