INDIANAPOLIS HELOC RATES TODAY
Current HELOC rates in
Indianapolis.
Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
Current HELOC rates in
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Key Points
• Home equity line of credit interest rates are influenced by the prime rate and borrower credit history, among other factors.
• HELOCs provide a revolving line of credit similar to a credit card.
• Interest rates can change during the HELOC term, which can impact monthly payments.
• Interest may be deductible if your HELOC is used for home improvements.
• An appraisal is the key to determining how much you can borrow with a HELOC.
Introduction to HELOC Rates
Welcome to our guide to home equity line of credit rates in Indianapolis, Indiana. We’ve put together a comprehensive resource to help you, as a homeowner, decode the current market conditions and learn how to qualify for the most favorable rates. You’ll discover the various factors that influence rates, pros and cons of a HELOC, and how to leverage online tools to get a handle on potential costs. First things first, though: Make sure you understand what a HELOC is, exactly.
What Is a HELOC?
A HELOC is a financial product that leverages your home equity as collateral. Equity is the difference between your home’s value and the balance of your home loan. To qualify, you typically need to have at least 15% equity in your home. With a HELOC, you can usually borrow up to 90% of your equity. Remember, though, that if you are going to get equity out of your home, then you must stay on top of your HELOC payments — otherwise, a lender could foreclose. HELOCs have two main periods, and each has its own payment requirements:
The Draw Period
The initial draw period for a HELOC can be up to a decade. This stage is an important distinction between a HELOC vs. a home equity loan, because with a HELOC, you have to pay interest only on what you’ve borrowed during the draw phase. (With a home equity loan, you get a lump sum and start repaying principal plus interest immediately.) A HELOC interest-only calculator can help you estimate costs at this time.
The Repayment Period
After the draw period comes the 10- to 20-year repayment period when you stop borrowing and start repaying what you owe, with interest. This is when a HELOC monthly payment calculator might be helpful, since HELOCs have variable interest rates that can change, rising (or falling) with market conditions. This means your monthly payment won’t stay constant; you’ll need to be comfortable with this uncertainty.
Recommended: Different Types of Home Equity Lending
Where Do HELOC Interest Rates Originate?
Lenders peg their HELOC rates to the prime rate, which is guided by the Federal Reserve’s actions. Each lender then adds a margin to the prime rate, which is why you’ll find varying HELOC rates across different financial institutions. Additionally, lenders take into account individual borrower factors such as credit score, debt-to-income (DTI) ratio, and the amount of equity in your home. All these variables mean that it’s a good idea to seek out rates from multiple lenders before zeroing in on your HELOC lending partner.
How Interest Rates Impact HELOC Affordability
The interest rates on a HELOC can make a world of difference when it comes to affordability. Even a small difference in the rate you pay can have a big impact. If you borrow $50,000 with a HELOC and have a 10-year repayment term and an interest rate of 8.00%, your monthly payment would be $607 and total interest paid would equal $22,797. But if you had a 7.50% rate, your monthly payment would drop to $581 and total interest would be $19,665. That’s a savings of over $3,000. (Real-world numbers would differ somewhat due to the HELOC’s variable interest rate.)
HELOC Interest Rate Trends
Keeping an eye on the prime interest rate may provide a glimpse into the future of HELOC rates in Indianapolis. Having a sense of the history of the prime rate can also put the rates you’re seeing now into context. Over the years, we’ve seen the prime rate fluctuate from an unusually low 3.25% in 2020 to a recent high of 8.50% in 2023. This also gives you a sense of what kinds of shifts a borrower might see in the HELOC’s variable 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
Variable vs. Fixed Interest Rates
HELOCs usually come with adjustable interest rates, which means they can change over the course of your loan. These rates often start off lower than fixed rates, but you’ll want to be prepared for potential adjustments based on market conditions. Rate shifts won’t be totally unfettered, however. Your HELOC agreement will tell you how often the rate can change and by how much. You will be able to decide if your budget can handle these shifts.
Helpful Tools & Calculators
Before you apply for a HELOC, it’s smart to use our HELOC calculator to see what your potential monthly payments and interest costs might be. Here are a few useful tools you’ll want to use during your HELOC search process.
Run the numbers on your HELOC.
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Home Equity Loan
CalculatorEnter a few details about your home loan and we’ll provide you your maximum home equity loan amount.
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HELOC Payment
CalculatorPunch in your HELOC amount and we’ll estimate your monthly payment amount for your HELOC.
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HELOC Interest Only
CalculatorUse 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 obtain a HELOC, you’ll need to meet some basic qualifications: an equity level of 15%, a credit score of 640, and a DTI ratio below 50%. But to qualify for the most competitive HELOC rates, more equity is helpful, and you’ll also want to spruce up your other stats:
Improve Your Credit Score
To get the best HELOC rates in Indianapolis, you’ll want to keep your credit score at 700 or higher. If you need to boost your score, focus on making payments on time and chipping away at credit card balances. It’s also a smart move to review your credit report for inaccuracies and dispute any you find. Don’t rush to close old credit accounts — they can actually help your credit history. And avoid opening new accounts in the months leading up to your HELOC application.
Calculate Your Debt-to-Income Ratio (DTI)
Your DTI ratio is simple math: Tally up your monthly debt payments, from credit cards to car loans to your existing mortgage, and divide that sum by your gross monthly income. For the best HELOC rate, you want a DTI ratio below 36%. You can get there by paying off debts, increasing your income, or both.
Application Process for a HELOC in Indianapolis
Some lenders offer the convenience of prequalification for a HELOC through online platforms. Prequalification can be a great first step, offering a glimpse of the HELOC rates in Indianapolis that you might be eligible for. Once prequalified, you can move forward with the full application, which will require more in-depth financial and property information for the lender’s assessment. Take it step by step.
Step 1: Run the Numbers
In addition to checking your credit score and DTI ratio following the instructions above, it’s important to examine your equity to make sure you have at least 15%. Look up your home value on a real estate site. Subtract whatever you owe on your mortgage from that number, then divide the result by your home value to arrive at a percentage of equity.
Step 2: Compare Lenders
Examine what offers you might qualify for when it comes to interest rates, but also look at lenders’ qualification requirements, minimums and maximums, fees, and the length of the draw and repayment periods. As noted above, you can expect lenders in Indianapolis to have different HELOC rates and terms, so it’s important to compare them.
Step 3: Submit Your Application
Gather recent pay stubs, W-2 forms, and tax returns and find a quiet moment to compile your application. If you’re self-employed, a lender might request a profit-and-loss statement and a couple years’ worth of tax returns. Also have your homeowners insurance documents handy. Doublecheck the info you’ve filled in as errors can slow the approval process. Then submit your application.
Step 4: Get an Appraisal
A lender will require a professional and objective analysis of your home’s value, so once you’ve zeroed in on the HELOC offer you find most appealing, you’ll pay between $300 and $600 to secure an appraisal. This step determines the amount of equity you have in your home and is an important part of getting a HELOC. The lender you apply to will share information about its appraisal process.
Step 5: Prepare for Closing
Before you can use your HELOC funds, you’ll need to sign your HELOC agreement and take care of any fees. Many lenders will allow you to use your HELOC within three days of closing. Be sure to review all your documents carefully and ask any questions you have to make sure you’re clear on the terms.
Recommended: What Is a Home Equity Loan
Closing Costs and Fees
Happily, HELOC closing costs are generally lower than those for a home purchase or a refinance. The appraisal fee is often the biggest potential cost. Title searches can cost $100 to $450, and other fees may include application, origination, and administrative costs. Some lenders charge an annual maintenance fee, which can be as high as $250, and some may also charge transaction, inactivity, or early termination fees.
Tax Benefits and Considerations
Homeowners can deduct HELOC interest on their 2025 taxes if the borrowed funds are used for significantly improving their primary residence. Just keep in mind that tax guidelines change periodically. To make sure you’re getting the most out of your HELOC while managing your tax obligations, it’s always a good idea to consult with a tax advisor.
Alternatives to HELOCs
There are other ways to tap into your home’s equity if a HELOC doesn’t feel like the right solution to your borrowing needs. And there’s also the option of a personal loan, which doesn’t entangle your equity at all. Here are the details:
Home Equity Loan
With a home equity loan, funds come all at once and you begin paying them back, with interest, immediately. The repayment term might be 10, 20, or 30 years. Usually, you can tap into 85% of your home equity. Lenders often look for a credit score of 680 or more, but as with a HELOC, better rates often go to those with a score of 700 or above. As you consider a HELOC vs. a home equity loan, the fact that the latter has a fixed interest rate is a point of differentiation.
Cash-Out Refinance
A cash-out refinance replaces your mortgage with a new, larger one; you take the difference as cash. This mortgage refinance might be right for you if you can score an interest rate that is an improvement on your current one (remember to factor in closing costs). To qualify, you’ll need a 620 credit score and a DTI ratio of under 43%. When comparing a cash-out refinance vs. a home equity line of credit, the more forgiving credit and DTI numbers on a refi may be attractive.
Personal Loan
A personal loan is a versatile, typically unsecured loan that you repay in regular, fixed installments over a term of two to seven years. The key advantage here is that your home is not on the line should you face financial challenges. Many lenders look for a credit score of 610 or more for a personal loan. While they are relatively quick to secure, do note that these loans often come with higher interest rates than either a HELOC or a home equity loan.
The Takeaway
As you ponder the possibilities of a HELOC, it’s essential to understand the advantages and potential pitfalls. HELOCs provide a flexible way to tap into your home’s equity. They are particularly good for ongoing expenses. But defaulting on payments could mean losing your home. In Indianapolis, investigating HELOC rates with multiple lenders can help you pinpoint the best borrowing option. It takes a little time to seek out rates and examine lenders’ terms, but it will ensure you’re making the best choice for you.
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 you use a HELOC for?
A HELOC can be used for most any purpose, including home renovations, education costs, or debt consolidation. It functions as a revolving line of credit, allowing you to draw funds as needed. This flexibility makes it ideal for larger, ongoing expenses.
What is the monthly payment for a $50,000 HELOC?
Your monthly payment on a $50,000 HELOC will vary according to the rate and terms of your agreement. During the draw period, you might only need to pay interest, which can be quite manageable. For instance, at a 7.00% interest rate, your monthly interest-only payment would be approximately $292. But keep in mind, once the repayment period kicks in, you’ll be paying both principal and interest, so your monthly expense will increase, and HELOCs have variable interest rates, so monthly payment amounts won’t always be the same.
Is a HELOC a smart move at this time?
The answer to that question depends on your financial situation and the current HELOC rates in Indianapolis. If you need funds for a major expense and can handle a HELOC’s variable interest rate, a HELOC might be a good option — especially because you can probably borrow more (and at a lower interest rate) than you could with a personal loan. But when you borrow with a HELOC, you do risk foreclosure if you can’t make your payments. So shop around for the best HELOC rate and make sure you have a solid payment plan in place before you borrow.
Do you need an appraisal for a HELOC?
The appraisal is a critical part of the HELOC process so you will need one. It helps the lender understand the value of your home and how much equity you have in it. The more equity you have, the more you may be able to borrow. The appraisal also helps the lender set your credit limit. Once you apply, a prospective lender will provide instructions on its appraisal process.
SoFi Mortgages
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*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
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.
†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. 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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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