Best HELOC Rates in 2023

Best HELOC Rates in 2023 – Lately, the prices of homes are at an all-time high, and it might be the right time to take your home equity and use the money for other purchases such as a house upgrade or even debt consolidation. Through a HELOC, or home equity line of credit, you will be able to borrow against your home value and then repay the money along with interest.

Best HELOC Rates in 2023

The best HELOC rates are low when compared to the national average, with several lenders offering additional perks such as rate discounts, introductory annual percentage rates, and the option to convert from a variable-rate to a fixed-rate HELOC.

What Is a Home Equity Line of Credit?

A home equity line of credit, also known as HELOC, is a type of loan that enables homeowners to borrow against the equity they have in their home. Home equity lines of credit offer homeowners a line of credit rather than a huge sum of money. You can also get access to your line of credit during the draw period, which is mostly 10 years. During this time, you can pay back only the interest on the money that you have withdrawn, which means that you can borrow a huge sum of money for a long period of time while you are making monthly payments.

As soon as you have around 15% to 20% equity in your home, you can use a HELOC to help finance large expenses, from a life emergency to a home renovation to even adding a solar panel. Furthermore, HELOC has lower rates than personal loans, credit cards, and home equity loans.

 However, HELOCs are high-risk because they are secured loans that require collateral to get financing. . One of the drawbacks of a HELOC is that your home will be used as collateral for the loan, which means that if you are not able to pay the debt, you might lose your home.

How Does HELOC work?

HELOCs are revolving credit lines, which mean that you can use the exact amount that you need, repay it, and then use it again. This will take place during the draw period, and it will last at least 10 years. During the draw period, you will have to make monthly payments; however, they are mostly interest-only.

However, as soon as the draw period is over, you are not allowed to use the line of credit, and you need to start repaying the balance, which includes principal and interest. The repayment periods mostly last 20 years, and they can vary by lender.

However, if you are unable to repay the loan, you will risk losing your home. Furthermore, HELOCs provide flexibility, and they can be a very useful financial tool for homeowners who need funds for different purposes.

The Best HELOC Rates in 2023

This segment of this write-up will provide a list of some of the best HELOC rates

U.S Bank

U.S. Bank provides both home equity loans and HELOCs in over 47 states, along with the option of interest-only HELOCs available to eligible borrowers. You also have the option to lock part or all of your outstanding HELOC balance into a fixed-rate option during the draw period. You can also apply for a home equity loan through an online application or by phone.


Pentagon Federal Credit Union was created in 1935, and it has more than $36.6 billion in assets. It has more than 2.8 million customers, and it is one of the largest federal credit unions in the United States. The membership is also open to everyone. PenFed provides borrowers with the flexibility to switch from a variable to a fixed-rate HELOC. It will also cover most of the closing costs that are linked to your HELOC. The PenFed closing cost is around 2% to 5% of your total loan, and this is important based on how much you borrow.


Truist has a competitive HELOC that offers features such as quick closings and a fair interest rate. Although several other lenders aren’t open about how long it takes to close on the HELOC, Truist indicates that it takes around 30 to 35 days to close the HELOCs. Based on the lender that you work with, you might not reach the closing table for two months.

Bank of America

Bank of America provides the convenience of accessibility, irrespective of where you live. There is always a branch of this bank for you to access. Bank of America has no closing cost on its HELOCs, and there is also no charge for the application fee, and there aren’t any annual HELCO fees. Furthermore, there are multiple ways you can earn rate discounts on your HELOC; however, you will need to have a checking account with the Bank of America.

Connexus Credit Union

Connexus Credit Union provides home equity loans and HELOCs in more than 46 states. This credit union also provides an interest-only HELOC. The products are only available to members. However, membership eligibility is available to most people, and you need to be a member of at least one of the Connexus partner groups. If you want to apply for a home equity loan, then you can fill out the three-step application, which takes place online.

How To Qualify For a HELOC

To qualify for a HELOC, you need to meet the necessary eligibility requirements. The requirement varies by lender; however, here are the typical requirements:

You Must have a minimum Credit Score of 620

Most lenders use credit scores to determine the likelihood that the borrower will repay the loan on time. If you have a strong credit score of at least 700, you will be able to qualify for a lower interest rate and favorable loan terms.

A Debt-to-income ratio of 43% or Less

You can divide your total monthly debts by your gross monthly income to be able to get your DTI. The DTI will help the lender know the borrower’s capacity to make constant payments towards your loan.

Adequate Income and Stable Employment:

Your proof of income is a standard requirement to be eligible for a HELCO. You need to check your lender’s website to see what forms and paperwork you will need to submit with your loan application.

At least 15% to 20% equity built up in your home:

Home equity is the amount of the home that you own, depending on how much you have paid towards your mortgage. You can deduct what you owe on your mortgage as well as other loans from the current appraised value of your home to know your home equity number.

The above-mentioned are the eligibility requirements you need to meet to be able to qualify for a HELOC.

How Can I Get the Lowest HELOC Rate?

There are lots of factors that affect your HELOC rate, and some of them include your credit score, the current prime rate, your debt-to-income ratio, and your combined loan-to-value rate. Borrowers who have a credit score of 620 will qualify for lower rates.

Usually, all of your debts combined, which includes the cost of housing, should not exceed 36% of your income to be able to get the best rate offers. Most lenders enable you to get 80% of your equity. Another way to get the best HELOC rate is to shop around for lenders, as this will enable you to compare HELOC rate offers and check the one that gives you the best rate.


How Long Does It Take to Get a HELOC?

The HELOC underwriting process usually takes from 2 to 6 weeks, and you can start making withdrawals 4 business days after the closing. The lender might also require a minimum initial withdrawal.

Are HELOC rates fixed?

Just like credit cards, home equity lines of credit have variable interest rates, which mean that the rate you will initially receive might increase or decrease during your draw period and repayment period. However, most lenders have started offering the option to convert all or even part of your variable-rate HELOC into a fixed-rate HELOC.

How much HELOC can I get?

The amount of money you can borrow with a HELOC will be determined by the value of your home, the amount of equity you have in your home, and your financial profile.

Can You Pay Off a HELOC Early?

This is based on your lender, because some of them enable the borrower to pay off a HELOC without any penalties. If you would like to pay the loan early, then you can try to do it within the interest-only period so that you will avoid paying more during the repayment time. However, some lenders also charge prepayment penalties that can cost a few hundred dollars.

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