AUSTIN HELOC RATES TODAY
Current HELOC rates in
Austin, TX.
Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
Current HELOC rates in
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Key Points
• HELOC interest rates are influenced by the prime rate and your credit profile.
• Homeowners can usually access up to 90% of their home’s appraised value.
• A HELOC comes with two distinct payment phases: a draw period and a repayment period.
• Adjustable interest rates mean your monthly payments can change.
• HELOC interest may be deductible if you use the loan for major home improvements.
• To qualify, you’ll need a credit score of 680 or higher, a DTI under 50%, and 15% home equity.
Introduction to HELOC Rates
Welcome to our guide to interest rates for home equity lines of credit (HELOCs) in Austin, Texas. Our goal is to help you understand how to use your home equity to your advantage. We’ll cover the factors that influence HELOC rates, the benefits and risks of a HELOC, and how to compare lenders to find the best deal. Whether you’re planning a home renovation or need funds for other large expenses, this guide will help you make the best financial decision for your needs.
Let’s start by discussing what is a home equity line of credit, anyway?
What Is a HELOC?
A home equity line of credit (HELOC) is a financial tool that leverages your home equity as collateral. To calculate your equity, you subtract your outstanding mortgage balance from your home’s current value. Typically, lenders require you to have 15% equity in your home to qualify for a HELOC, and you can borrow up to 90% of that equity. HELOCs come with a draw period and a repayment period.
The Draw Period
During this initial period, usually spanning 10 years, borrowers can access funds as needed, make interest-only payments, and re-borrow up to the credit limit if you repay the principal. You may find it helpful to have a HELOC interest-only calculator on hand to estimate payments.
The Repayment Period
Next is the repayment period, lasting 10 to 20 years, which requires you to make monthly principal-plus-interest payments. HELOCs have variable interest rates, so monthly payments change over the course of the term. A HELOC monthly payment calculator will help you anticipate your bills.
Where Do HELOC Interest Rates Come From?
Lenders peg HELOC rates to the prime rate, a figure that indirectly follows Federal Reserve actions. Each lender then adds its own margin to this rate, which is why there is a variety of HELOC interest rates in the marketplace. By keeping an eye on these larger economic factors, you’ll be better equipped to anticipate rate changes and make savvy decisions about when to apply for different types of home equity loans and HELOCs.
Your individual financial profile — including your credit score, debt-to-income ratio, income, and the equity in your home — will also influence the rate you’re offered. We’ll get into those factors later.
How Interest Rates Impact HELOC Affordability
The interest rate on your HELOC can have a big impact on how much you end up paying. Even a small increase in the interest rate can cause you to pay a lot more in interest over the life of the loan. Let’s say you have a $50,000 HELOC with a 15-year repayment period. At an 8.00% interest rate, your monthly payment might be $478. Raise that rate by one-percentage-point, to 9.00%, and your payment bumps up to $507.
While that doesn’t seem like a big difference, the total interest tells another story: The 8.00% rate saves you more than $5,200 over the life of the loan. And the longer your repayment term, the more interest will add up.
HELOC Interest Rate Trends
While there’s no crystal ball for interest rates, keeping an eye on the prime interest rate can offer some clues. Since 2018, the prime rate has seen a wide range, from a low of 3.25% in 2020 to a high of 8.50% in 2023. This historical perspective can help you determine whether current rates are relatively high or low, and even anticipate rate movements.
Historical Prime Interest Rate
| Date | U.S. Rate |
|---|---|
| 9/19/2024 | 8.00% |
| 7/27/2023 | 8.50% |
| 5/4/2023 | 8.25% |
| 3/23/2023 | 8.00% |
| 2/2/2023 | 7.75% |
| 12/15/2022 | 7.50% |
| 11/3/2022 | 7.00% |
| 9/22/2022 | 6.25% |
| 7/28/2022 | 5.50% |
| 6/16/2022 | 4.75% |
| 5/5/2022 | 4.00% |
| 3/17/2022 | 3.50% |
| 3/16/2020 | 3.25% |
| 3/4/2020 | 4.25% |
| 10/31/2019 | 4.75% |
| 9/19/2019 | 5.00% |
| 8/1/2019 | 5.25% |
| 12/20/2018 | 5.5% |
| 9/27/2018 | 5.25% |
Source: U.S. Federal Reserve
Adjustable vs Fixed Interest Rates
HELOCs often come with adjustable interest rates, which seesaw up and down with the market. The good news is that these rates usually start lower than fixed rates, making your initial payments more affordable. The downside is that your monthly payments can change, too. Compare that to home equity loans, which usually have a fixed rate and regular monthly payments for the entire loan. When you’re considering how to get equity out of your home, your comfort level with adjustable interest rates can help you make a decision.
Tools & Calculators
Before you apply for a HELOC, it’s a good idea to use our online tools to help you estimate your monthly payments and interest costs. There are a few different HELOC calculators you can use to get a better understanding of your financial situation. And our home equity calculator can help you estimate how much you might be able to borrow.
Run the numbers on your HELOC.
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Home Equity Loan Calculator
Enter a few details about your home loan and we’ll provide you your maximum home equity loan amount.
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HELOC Payment Calculator
Punch in your HELOC amount and we’ll estimate your monthly payment amount for your HELOC.
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HELOC Interest Only Calculator
Use SoFI’s HELOC interest calculator to estimate how much monthly interest you’ll pay .
Using the free calculators is for informational purposes only, does not constitute an offer to receive a loan, and will not solicit a loan offer. Any payments shown depend on the accuracy of the information provided.
How to Qualify for a Competitive HELOC Rate
To land a competitive HELOC interest rate, you’ll need to meet a few financial benchmarks. In addition to having at least 15% equity in your home, you’ll need to work on these two tasks:
Improve Your Credit Score
To ensure you’re in the best position to secure a competitive HELOC rate, aim for a credit score of 700 or higher. By making timely bill payments and reducing credit card balances, you can significantly enhance your creditworthiness, making it easier to qualify for a lower HELOC rate. Regularly checking your credit report for errors and disputing them can also help improve your score.
Calculate Your Debt-to-Income (DTI) Ratio
Your DTI ratio is a simple calculation: Divide your total monthly debt payments by your gross (pretax) monthly income. Most HELOC lenders prefer a DTI below 36%, but the lower, the better. A lower DTI ratio signals to lenders that you’re comfortably managing your debt and can handle extra monthly payments.
Application Process for a HELOC in Austin
The application process for a HELOC in Austin is a breeze when you prequalify online. This first step is a great way to get a sense of the rates and terms you could be eligible for, without any impact on your credit score. Once you’re prequalified, you can move forward with the full application, which will involve sharing more detailed financial and property information. From there, the lender will assess your credit and home equity to determine your eligibility and borrowing limit.
Step 1. Run the Numbers
Before you dive into the HELOC application process, it’s wise to take a moment to check your credit score and calculate your DTI ratio. Then consider your home equity, which is the difference between what your home is worth and what you still owe on your original home loan. Regular mortgage payments are a surefire way to build equity, and if you’ve made significant improvements to your home, you may have even more equity than you realize. This is a critical step in understanding your financial situation and how much you might be able to borrow.
Step 2. Compare Lenders
Research and compare different lenders to find the best HELOC rates in Austin. Look at interest rates, qualification requirements, loan minimums and maximums, fees, and the length of the draw and repayment periods. Each lender will have unique terms and conditions, so it’s important to read the fine print. Comparing multiple offers can help you secure the most favorable HELOC terms and ensure you’re making an informed financial decision.
Step 3: Submit Your Application
Now, it’s time to get your paperwork in order. You’ll need to gather your identification, income verification, and property information to submit your HELOC application. Income verification often includes recent pay stubs, W-2 forms, and tax returns. If you’re self-employed, lenders may request a profit-and-loss statement and two years of tax returns. Property documentation typically requires a homeowners insurance declaration page. You can submit your application online, by phone, or in person.
Step 4: Get an Appraisal
An appraisal is an unbiased analysis of your home’s worth, conducted by a pro. The typical cost of this step is between $300 and $610. But here’s the thing: It’s very important. Because it’s the key to unlocking the equity in your home. If the appraised value comes in higher than your mortgage balance, you’re one step closer to a HELOC.
Step 5: Prepare for Closing
Before you can access your HELOC funds, you’ll need to sign the loan documents and take care of any associated fees. Some lenders are quick to get the funds to you, making them available within three days of closing. Being prompt with your paperwork and payments will help you get your hands on your HELOC funds without delay.
Closing Costs and Fees
HELOC closing costs are usually less than those for a mortgage or cash-out mortgage refinance. The most significant cost is often the appraisal fee. You may also encounter fees for a title search (ranging from $100 to $450), application, loan origination, and administrative costs. Some lenders may also charge annual maintenance fees (up to $250) and transaction fees.
Tax Benefits and Considerations
Here’s a tip: In 2025, you may be able to deduct HELOC interest if the funds are used to improve your primary residence. Consult a tax advisor to make sure you’re eligible for the deduction. Understanding these tax benefits can help you make the most of your HELOC and potentially reduce your overall financial burden.
Alternatives to HELOCs
There are several alternatives to HELOCs that you might want to consider. Weigh these options carefully to find the best fit for your financial needs.
Home Equity Loan
What is a home equity loan? It’s a one-time lump sum that is paid back at a fixed interest rate. You can borrow up to 85% of the equity in your home, and your credit score needs to be 680 or higher. This loan is ideal for someone who needs a large sum of money upfront and would like to have set payments with a fixed interest rate.
Cash-Out Refinance
With a cash-out refi, you refinance your current mortgage for more than the balance owed and pocket the difference. Typically, you need a credit score of 620 or above and a debt-to-income ratio of 43% or less to qualify. If you’re debating a cash-out refinance vs. a home equity line of credit, know that a refi leaves you with one payment instead of two.
Personal Loan
A personal loan is a versatile, typically unsecured loan that you repay in regular, fixed installments over a period of 2-7 years. The key benefit here is the security of your home—there’s no risk of foreclosure. Many lenders look for a credit score of 670 or higher for personal loans. They are relatively quick to secure, but do note that they come with higher interest rates than HELOCs or home equity loans.
The Takeaway
If you’re considering a HELOC, it’s important to weigh the benefits and risks. HELOCs offer a revolving line of credit with competitive interest rates, making them suitable for large, ongoing expenses. However, they come with the risk of foreclosure if payments are not made. Always assess your financial health, compare lenders, and understand the terms and conditions before applying. For homeowners in Austin, exploring HELOC rates can help you make an informed decision.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.
Unlock your home’s value with a home equity line of credit from SoFi, brokered through Spring EQ.
FAQ
What can a HELOC be used for?
A HELOC can be a versatile financial tool, useful for home improvements, personal expenses, or consolidating debt. The beauty of a HELOC is its flexibility: You can borrow what you need, when you need it, and only pay interest on the amount you’ve withdrawn, making it perfect for projects or expenses with fluctuating costs.
What’s the monthly payment on a $50,000 HELOC?
The monthly payment for a $50,000 HELOC is determined by the interest rate and whether you’re in the draw or repayment phase. For instance, with an 8.00% rate during the draw period, your interest-only payment would be approximately $333. Given the same rate during the 20-year repayment period, the monthly principal-and-interest payment rises to $418. Keep in mind, the adjustable interest rate makes predicting monthly payments a moving target.
Do I need an appraisal for a HELOC?
Yes, an appraisal is usually necessary to get a precise read on your home’s current market value and the equity you can tap into. This evaluation assists lenders in determining the maximum amount you can borrow against your home, typically up to 85% of your home’s value, minus the balance of your current mortgage. The appraisal is a crucial step.
How hard is it to qualify for a HELOC?
The process of securing a HELOC is quite manageable, provided you meet the lender’s criteria. Usually, a minimum credit score of 620, a debt-to-income (DTI) ratio below 43%, and at least 15% home equity are required. The steps include evaluating your home’s worth, calculating the available equity, and selecting a lender offering competitive HELOC rates. Although HELOCs are generally more accessible than some other loans, it’s wise to get your finances in order and gather the necessary paperwork to ensure a seamless application process.
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¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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SOHL-Q225-385
More HELOC resources.
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What is a Home Equity Line of Credit
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Different Types of Home Equity Loans
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HELOC vs Home Equity Loan: How They Compare