A Home Equity Line of Credit (HELOC) is a revolving line of credit secured by your home, allowing you to borrow money against the available equity. It functions similarly to a credit card, where you can borrow funds as needed up to a credit limit, repay the balance, and borrow again. HELOCs are often used for major expenses like home improvements, education, or debt consolidation.
HELOCs typically have two phases: a draw period (usually 5-10 years) where you can withdraw funds and often only pay interest, and a repayment period (usually 10-20 years) where you repay both principal and interest. Interest rates are usually variable, fluctuating with market conditions, though some lenders offer fixed-rate options for portions of the balance. As of early February 2026, average HELOC rates are around 7.31%. The amount you can borrow depends on your home equity, with lenders typically allowing you to borrow up to 85% of your home's value minus your mortgage balance. Keep in mind that your home serves as collateral, so failure to repay could result in foreclosure.
