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Just above the 6% range.
That’s where the average home equity line of credit (HELOC) interest rate declined this week, the latest in a series of declines that have now brought rates here to their lowest level since 2022, according to Bankrate data. At an average of just 7.04% right now, qualified homebuyers may be able to find a rate that’s comfortably in the 6% range by shopping around. That allows HELOCs to maintain their status as not only the cheapest way to borrow home equity in today’s economy but also one of the most affordable ways to borrow money overall. With personal loan interest rates over 12%, on average, and credit card rates over 20%, then, this is one of the more viable options to consider, especially for those looking to borrow a five-figure amount, such as $20,000 currently.
And that should be a relatively achievable goal for home equity borrowers, considering that, according to a new report, there’s around $11 trillion in tappable equity in the country right now. So borrowing $20,000 should be simple for many, and it will leave a comfortable equity cushion in the home for future borrowing needs. Still, your home will function as collateral in this exchange, as it would with a home equity loanso it’s critical that you can afford to make the repayments as agreed to.
But how much will a $20,000 HELOC cost monthly now that rates have declined once again? Below, we’ll crunch the numbers that homeowners need to know.
Start by seeing how much home equity you’d be eligible to borrow here.
How much will a $20,000 HELOC cost monthly right now?
Calculating prospective HELOC costs always requires a bit of speculative math as the product has a variable interest rate that will change monthly based on market conditions. But with rates here consistently declining over the past 18 monthsthis presents itself as one of the better variable rate borrowing products to consider right now.
Here’s how much a $20,000 HELOC will cost monthly at today’s average rate, assuming the full line of credit is repaid immediately and the interest rate remains constant:
- 10-year $20,000 HELOC at 7.04%: $232.63 per month
- 15-year $20,000 HELOC at 7.04%: $180.21 per month
For context, here’s what a HELOC of this same size cost monthly last springwhen rates were considerably higher:
- 10-year $20,000 HELOC at 7.94%: $242.02 per month
- 15-year $20,000 HELOC at 7.94%: $190.44 per month
And here’s what it cost in October 2024right after the Federal Reserve issued its first interest rate cut in multiple years:
- 10-year $20,000 HELOC at 8.94%: $252.70 per month
- 15-year $20,000 HELOC at 8.94%: $202.14 per month
Not only are interest rates down almost two full percentage points, but payments each month are down considerably as a result. And if you were an existing HELOC borrower, you would have realized these savings independently without having to refinance to one of today’s lower rates and without having to pay refinancing fees to secure one of today’s lower rates.
Still, a product whose rate moves downward with ease can also move upward without issue, either. It’s critical, then, to calculate costs here in both directions to better ensure both short and long-term affordability.
Learn more about your HELOC options online today.
The bottom line
With HELOC rates quickly approaching the 6% interest rate range, it’s now cheaper to borrow $20,000 worth of home equity with a HELOC than it has been in many years. With payments here ranging from $180 to $233, approximately, this could be the smart and cost-effective way to borrow this much money, assuming you price in some short-term and long-term volatility. Remember, too, that many lenders will mandate just interest-only payments during the HELOC’s draw periodmeaning that these payments, at least to start, could be even cheaper should you elect to utilize that repayment structure instead.
Have more questions? Review your current home equity borrowing options with a lender now.