A home equity line of credit (HELOC) enables homeowners to access the equity in their property through a revolving credit line, similar to a credit card.

A decent HELOC interest rate is one that is lower than the current average HELOC rates. That benchmark can change depending on the present economic situation. In October 2023, a good HELOC interest rate could be between 7% and 9%. Lenders may also offer reduced starting interest rates to entice more borrowers.

If you’re thinking about acquiring a home equity line of credit, here’s how to tell if the rate you’re offered is reasonable.

In October 2023, the average HELOC interest rate was around 9%, with some lenders offering rates in the 7% to 9% range.

Some lenders may offer rates lower than that, but you’ll want to read the fine print to determine whether it’s an introductory rate or a standard rate. If it’s introductory, you may only get that rate for a handful of months. Once the introductory period ends, your rate will change to the lender’s standard rate.

Keep in mind, that you’ll usually need good credit to qualify for the best HELOC rates. Minimum credit score requirements vary by lender, but most want to see a credit score above 680, and some may require a score of 720 or higher for their best interest rates. If your credit is in less-than-stellar shape, the best HELOC rate for you will depend on the rates lenders are willing to offer you.

A good HELOC rate can vary depending on when you look. Because the rates are usually variable―but not always―they’re largely dependent on the prime rate. When the Federal Reserve raises or lowers its federal funds rate, lenders typically follow by raising or lowering their prime rate.

Lenders also add a fixed margin on top of the prime rate when calculating your interest rate. For instance, if your lender attaches a 1% margin on top of the prime rate, your HELOC rate is considered “prime plus 1%.”

Naturally, your creditworthiness, including your credit score and payment history, plays a significant role in calculating your interest rate. Lenders also consider your employment status, the amount of money you’re requesting for the line of credit, how your debt obligations compare to your income and other criteria.

How to Get a Good HELOC Rate

HELOC interest rates depend on a variety of factors, so it’s important to consider what you can do to ensure you get the best offer available to you.

Shop Around

One of the best things you can do to qualify for a lower rate is to compare offers from multiple lenders. Each lender has its own criteria for determining its rates, so even though your creditworthiness remains the same, you may get a wide range of offers.

Improve Your Credit

You’ll likely need a credit score of 680 or higher to qualify for HELOC, although a higher credit score could improve your approval odds and interest rate.

Before you apply, review your credit score and credit report to get an idea of where you stand, whether you need to make improvements and which areas you can address to increase your credit score. By improving your credit, you might secure a lower interest rate and potentially save thousands of dollars in interest.

Reduce Your Debt-to-Income Ratio

The percentage of your gross monthly income that goes toward debt payments is another crucial factor lenders consider when calculating interest rates. Your debt-to-income ratio (DTI) should generally be below 43%, but the lower it is, the better. The primary ways to reduce your DTI are paying down debt and increasing your income.

Increase Your Home Equity

Having sufficient equity is critical to securing a good HELOC rate, which lenders determine by reviewing your combined loan-to-value (CLTV) ratio. This ratio compares the value of your home with the combined total of the loans it secures, including the HELOC you’re applying for. Generally, lenders look for a CLTV of 85% or lower, although some lenders allow for higher ratios.

Regardless of your borrowing limit, you may be more at risk of being underwater on your loans if you’re borrowing enough to get close to the lender’s maximum. To compensate for that risk, lenders may charge a higher interest rate. In contrast, if you have a lot of equity and you’re borrowing well below the lender’s CLTV limit, it could help you secure a lower rate.

Review Fees and Rate Caps

As you compare interest rates from various lenders, pay special attention to their closing fees. Typically, closing costs range from 2% to 5% of the line of credit amount, but not every lender charges closing costs.

Remember, the interest rate your lender quotes you when you are shopping for a loan is an introductory rate that is only good for a short period. After that, your HELOC will typically switch to a variable rate that adjusts—usually upward.

Read Also: Understanding Your HELOCs Credit Limit: Factors That Affect it

Each lender will have different caps on how much the interest rate can go up over time, something to consider when comparing HELOC offers. Lenders with lower rate caps can help you limit your costs regardless of the current interest rate.

Best HELOC Introductory Rates

A home equity line of credit (HELOC) is a loan available to homeowners. It lets you to tap into the equity in your house and use it as security for a revolving line of credit. You may be eligible to borrow up to 90% of the value of your property (excluding any outstanding mortgage balance).

The greatest HELOC introductory rates can result in big savings, so shop around and compare offers from multiple lenders. We’ve looked into the greatest HELOC introductory rates and how to take advantage of them.

HELOCs offer two types of interest rates: variable or fixed. Variable rates are tied to an index rate that fluctuates with the market, while fixed rates remain constant over the life of the loan. 

If you choose a variable-rate HELOC, it’s essential you understand the following:

• How the rate is determined—often a published base rate, such as the prime rate The Wall Street Journal publishes, plus a factor the lender sets
• How and when the variable rate can change

Many banks incentivize customers by offering home equity loans and HELOC promotions. These introductory rates are lower than the current market rate. However, they’re often available for a limited time, such as six months to one year. The market rate kicks in after they expire. 

How likely you are to qualify for the lowest introductory HELOC rate depends on your creditworthiness, home equity, and other factors. Rates change over time, so comparing the introductory and current rates will help you choose the best loan.

Here are the five lenders we found with the best introductory HELOC rates. You can click the lender’s name in the table for the details on its introductory rates—or keep reading to find out more about all five.

Lender	Intro rate (APR) & length	What to know
Bethpage FCU	6.99% fixed, 12 mos.	The lowest rates may require an initial draw of 100% of the credit line (minus fees)
Connexus	5.99%^ fixed, 6 mos.*	No required initial draw
Bank of America	6.99% variable, 6 mos.	No required initial draw
BMO Harris	6.99% variable, 6 mos.*	The lowest rates may require initial draw of 100% of the credit line (minus fees)
$25,000 initial draw required for the intro rate	7.65% fixed, 2 yrs.*	Only available in Hawaii

Bethpage Federal Credit Union

Bethpage FCU is an established credit union that has provided financial services to its members since 1941. In addition to its HELOC, its products and services include checking accounts, savings accounts, credit cards, and auto loans.

One standout feature of Bethpage’s HELOC is its fixed introductory rate, which won’t change for the first year of account opening. Bethpage also covers closing costs, so you’ll pay nothing for application, origination, or appraisal. You must draw $25,000 from your credit line at closing to qualify for the intro rate.

You must become a member to take advantage of Bethpage’s best HELOC introductory rates. Join Bethpage by opening a Share Savings account with a minimum $5 deposit. Then you can apply for a HELOC.

Key features:

• Introductory rates (APR): 6.99% fixed for VantageScores of 720 and up¹
• Length of introductory term: 12 months
• Interest rates (APR) after the introductory term ends: Variable; Starting at 8.50%
• Minimum credit score: 670
• Maximum LTV: 75% to qualify for the introductory rate
• Draw period: 10 years
• Repayment period: 20 years
• Fees: No application, origination, or appraisal fees. No closing costs on lines up to $500,000.
• Availability: Not available in Texas

Connexus

Connexus Credit Union is a member-owned financial cooperative founded in 1935. The credit union offers various products and services, including mortgages and HELOCs. 

The Connexus HELOC is popular for homeowners who want to access home equity for home improvements, debt consolidation, or unexpected expenses. 

It has a $5,000 minimum loan amount and an introductory APR you can lock in until April 1, 2025. (If you want the lowest intro rate, 5.99%, it expires on October 1, 2024. You can also choose a 6.49% rate until April 1, 2025.) Another reason we’re fans of Connexus is it has no initial draw requirement on your credit line.

Connexus is a credit union, but anyone can join by making a one-time $5 donation to the Connexus Association. 

Key features:

• Introductory rates (APR): 5.99% – 6.49% fixed (in March 2024)
• Length of introductory term: 6 – 12 months (depending on which rate you select)
• Interest rates (APR) after introductory term ends: Variable; starting at 8.74%
• Maximum LTV: 90%
• Draw period: 15 years
• Repayment period: 15 years
• Fees: Closing costs
• Availability: Not available in Maryland, Texas, Hawaii, or Alaska

Bank of America

Bank of America (BoA) offers a range of products and services to consumers and businesses. 

The Bank of America HELOC provides a flexible financing option to draw funds as needed—no initial draw is required—with the added benefit of interest-rate discounts for automatic payments, initial withdrawals, and Preferred Rewards members. 

Bank of America’s HELOC introductory rate has a variable APR for six months. This makes it a competitive option for those looking to tap into their home equity. But keep in mind BoA’s introductory HELOC rate is variable, not fixed. So it could change based on the prime rate.

Key features:

• Introductory rates (APR): 6.99% variable
• Length of introductory term: 6 months
• Interest rates (APR) after introductory term ends: Variable; starting at 8.90%
• Maximum LTV: 80%
• Draw period: 10 years
• Repayment period: 20 years
• Discounts: 0.25% automatic payment discount; Interest rate discounts of up to 1.50% for initial withdrawals; Up to 0.625% for BoA Preferred Rewards members
• Fees: BoA covers closing costs; $450 early closure fee applies if closed within 36 months of opening
• Availability: Available in all 50 states and the District of Columbia

BMO Harris

BMO Harris is a leading bank that offers financial products including home equity lines of credit. The BMO Harris HELOC offers flexible access to funds, with two variable introductory rate options depending on your needs. 

The bank has competitive HELOC introductory rates for six or 12 months. After the introductory period ends, the standard rate is competitive. We couldn’t confirm whether BMO Harris requires an initial draw for its HELOC, but its loan assumptions and disclosures indicate that borrowers draw 100% of the credit line to get the lowest rates.

The bank also offers low to no closing costs, and you can lock in your rate up to three times, with the first lock fee-free and additional locks costing $75 each.

Key features:

• Introductory rates (APR): 6.99% variable for 6 months or 7.24% variable for 12 months
• Interest rates (APR) after introductory term ends: Variable; starting at 8.34%
• Minimum credit score: 650 
• Maximum LTV: 70%
• Draw period: 10 years
• Repayment period: 20 years
• Discounts: 0.50% autopay
• Fees: $75 annual fee; $75 rate-lock fee; $100 remote closing fee; Early closure fee
• Availability: All 50 states

Central Pacific Bank

Central Pacific Bank is a Hawaii-based lender that offers various banking and financial services. Its HELOC is only available for properties in Hawaii, but the fixed introductory APR is too generous not to include it on this list. 

If you live in Hawaii and qualify for a Central Pacific Bank HELOC, you can lock in a fixed introductory APR for two to five years. As you can see from our other top HELOC introductory rates, most others last six to 12 months. The fixed intro rate requires a $10,000 initial draw.

Central Pacific Bank’s quick loan approval process and easy automatic payments further streamline the borrowing experience. The Express HELOC offers even faster processing times and requires no appraisal for loans up to $75,000.

• Introductory rates (APR): 7.65% fixed
• Length of introductory term: 2 – 5 years
• Interest rates (APR) after introductory term ends: Variable; starting at 8.00%
• Draw period: 10 years
• Repayment period: 20 years
• Fees: No annual fee. Closing costs may apply, but borrowers can get a credit of up to $500 to help cover these fees.
• Availability: Hawaii only

A good introductory rate for a HELOC is often a low APR that lasts for at least six months. However, the lowest interest rate may not be the best deal if you could maximize your savings by choosing a higher rate with an extended introductory period. 

For example, a HELOC with a 6.50% introductory rate that lasts for 12 months could be a better deal than a HELOC with a 5.50% introductory rate that lasts for six months, depending on your situation.

In addition to the introductory APR and length, consider the following:

• Long-term interest rate
• Repayment terms
• Fees
• Potential Penalties

For instance, a HELOC with a lower introductory rate but higher fees or a higher long-term APR might be more expensive in the long run.

A low HELOC introductory rate is essential when selecting a loan because it can lower your initial monthly payments. However, consider other factors, such as: 

• How long the introductory period lasts
• APR after the introductory period ends
• Fees 

Comparing HELOC rates from different lenders can help you find the best deal. Once you choose a lender, you’ll fill out an application and provide documentation, such as proof of income and bank statements. 

The lender will then review your application and approve or deny you for a HELOC. If approved, you’ll finalize details, such as the loan amount, introductory HELOC rate, and repayment terms.

Should You Get a HELOC Now?

According to a study of anonymized Experian credit data, many homeowners looking to tap into their home equity are turning from cash-out refinances toward home equity loans and HELOCs. The trend suggests now may be a good time to open a line of credit, compared to the recent past.

Until mortgage rates started to rise in early 2022, cash-out refinances were a popular home equity tool because homeowners could replace their mortgage with a new one with a mortgage rate similar to or below their current rate—usually below 4%. But as mortgage rates climbed significantly in 2022, most homeowners wanted to avoid refinancing into new mortgages with substantially higher rates.

As a result, homeowners began turning to HELOCs and other options to access cash from their homes. HELOC originations spiked from 213,000 in September 2021 to almost 302,000 in September 2022.

Getting a HELOC now may be beneficial in some situations, such as:

• When you want to consolidate high-interest debt: You may save money on interest by using a HELOC to consolidate credit card balances and other high-interest debt. For example, the average interest rate on credit cards was 22.77% as of August 2023, according to the Federal Reserve. By contrast, HELOC interest rates average around 9%, providing you with a substantially cheaper option that could save you money.
• When you want to make substantial repairs or upgrades to your home: A HELOC can help fund a major home improvement project or renovations, which often run into the tens of thousands of dollars. A HELOC may be especially beneficial if the improvements boost your home’s value. According to the IRS, you may be eligible to deduct the interest you paid “if the borrowed funds are used to buy, build or substantially improve the taxpayer’s home that secures the loan,” among other requirements.
• When you need to cover emergency expenses: Most financial experts advise their clients to build an emergency fund that covers three to six months’ worth of living expenses. However, that’s not feasible for many. If you don’t have emergency backup funds, a HELOC could help you pay for a large unexpected expense such as a major car repair or medical bills. Remember, however, that while a HELOC could help you stay afloat temporarily, it could also be risky and lead to serious debt, so make sure you have a solid plan to repay it.

Finally

Lenders offer the best HELOC introductory rates to attract new borrowers and compete with other lenders. An attractive introductory HELOC rate can be an effective way to entice borrowers looking for a low-cost loan.

The best HELOC introductory rates may be temporary, but they can help lenders establish long-term relationships with borrowers, resulting in steady business for years.