MINNEAPOLIS HELOC RATES TODAY
Current HELOC rates in
Minneapolis, MN.
Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
Current HELOC rates in
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Compare HELOC rates in Minneapolis.
Key Points
• Home equity line of credit rates are influenced by the prime rate and borrower’s credit score, among other factors.
• HELOCs provide a revolving line of credit and the option to pay only interest during an initial draw period.
• Variable interest rates, common with HELOCs, can lead to fluctuating monthly payments.
• It’s wise to compare offers from multiple lenders to find the best rate and terms.
• You can deduct the interest on a HELOC in 2025 if funds are used for home improvements.
Introduction to HELOC Rates
This article will give you a complete look at home equity line of credit (HELOC) rates in Minneapolis and the factors that influence them, so you can get a handle on the current market. We’ll cover the pros and cons of HELOCs, and how to compare different lenders. Whether you’re thinking about a HELOC for home improvements, to consolidate debt, or for another reason, you’ll walk away with the information you need to make a smart choice.
What Exactly Is a HELOC?
A HELOC is a revolving credit line that allows you to borrow against the equity in your home. Your equity is the market value of your home minus the amount you still owe on your home loan. To qualify, you typically need to have at least 15% equity, and you can generally borrow up to 90% of it. When you borrow with your home as collateral, a lender could foreclose if you fail to make your payments. So take a moment to learn about the two phases of a HELOC and how payments differ in each:
The Draw Period
In the HELOC’s initial draw phase, typically 10 years, you can borrow money when you need it, up to whatever credit line your lender has established. Most lenders only require you to pay interest on what you have borrowed during this time — paying down the principal is often optional. HELOCs have variable interest rates, and a HELOC interest-only calculator is a useful tool during this phase.
The Repayment Period
As you hit the repayment period, you’ll have to stop borrowing and you’ll start making monthly payments of both principal and interest. The interest rate continues to be variable, so payments aren’t always predictable. A HELOC monthly payment calculator can help you estimate what you might owe depending on the amount you’ve borrowed and your current rate.
Recommended: HELOC vs. Home Equity Loan
Where Do HELOC Interest Rates Originate?
Lenders determine HELOC rates based on the prime rate, which is heavily influenced by the Federal Reserve’s policies. Each lender adds a margin to the prime rate, which explains why different lenders have varying HELOC rates. Lenders also consider individual borrower factors such as credit score, debt-to-income (DTI) ratio, and the amount of equity in the home before setting a specific interest rate. All this means that smart borrowers seek out interest rate quotes from multiple lenders before making a decision about which lender to partner with for a HELOC.
How Interest Rates Impact HELOC Affordability
It’s worth taking the time to explore current interest rates in Minneapolis, because the rate you obtain for your HELOC can have a significant impact on the overall cost of borrowing. Imagine that you borrowed $100,000 and had a 20-year repayment term on your HELOC. If your interest rate was 7.00%, you’d pay $775 per month and total interest of $86,072. But if your rate was 8.00%, your monthly payment would be $836 and your total interest would climb to $100,746. Of course, HELOCs’ variable rates mean your real-world results will vary, but the fact that a lower initial rate is better holds true.
HELOC Interest Rate Trends
As you explore how to get equity out of your home, you’ll probably start paying more attention to the prime rate. While it’s no crystal ball, monitoring the prime rate can give you a sense of where HELOC rates in Minneapolis might be headed. It’s also helpful to know a bit about the history of the prime rate. It will help you put the rates you’re seeing in the current market into perspective. Since 2018, the prime rate has hit an unusually low 3.25% in 2020 and climbed to 8.50% in 2023. This gives you a sense of how rates can change over time — an important thing to understand before you sign on to a variable-rate method of borrowing.
| 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
Let’s take a moment to unpack what we mean by “variable rate,” exactly. Yes, a variable (or adjustable) interest rate means your rate can change with the market, so your monthly payments might be a bit unpredictable. But it’s not entirely unfettered. The HELOC agreement you sign with a lender would spell out how often the rate can change and by how much, essentially providing you with a rate cap that you can use when you compute what your HELOC borrowing costs might be.
Helpful Tools and Calculators
Before you apply for a HELOC, it’s pretty easy to get a sense of what borrowing might cost. Try putting the amount you might borrow plus the interest rate you’re being offered into a HELOC calculator. You can also input rates that are higher or lower than the offered rate, to get a sense of how monthly payments might change with a variable rate. These are three useful calculators you’ll probably use again and again:
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
If you’re thinking a HELOC is the right move, naturally you’ll want to qualify for the best interest rate in Minneapolis. First make sure you have 15% equity in your home: Subtract what you owe on your home loan from your home’s estimated value. Then divide the answer by your home value to get a percentage of equity. If you clear the 15% bar, keep going toward the goal but sharpen your financial stats along the way.
Improve Your Credit Score
To qualify for a HELOC, you need a credit score of 640 or better. But to get the best HELOC rates in Minneapolis, you’ll need a score of 700 or more. To give your credit score a lift, make every single payment on time and chip away at any credit card balances you may be carrying. Avoid opening new credit accounts or closing old ones in the months leading up to your application. And take the time to check your credit report for inaccuracies, as they do happen. Request a correction for any glitches you find.
Calculate Your Debt-to-Income Ratio (DTI)
Your DTI ratio is a simple calculation: your total monthly debt payments divided by your gross monthly income. HELOC lenders typically require a DTI below 50%, but for the best rates you’ll want to get below 36%. To lower your ratio, pay down debts, increase our income, or do a little of both.
Application Process for a HELOC in Minneapolis
The application process for a HELOC in Minneapolis is straightforward, especially if you prequalify online. This preliminary step gives you a sense of the rates and terms you might be eligible for, and you can prequalify with multiple lenders in relatively little time. Once prequalified, you can see the rates you might qualify for and determine if you want to proceed to the full application, following these steps:
Step 1: Run the Numbers
Hopefully by now you’ve already verified that your equity level is at least 15%, your credit score is above 640, and your DTI ratio is under 50%. If not, take the time to do so.
Step 2: Compare Lenders
Examine the HELOC rates from lenders in Minneapolis. But don’t just look at the rates — also consider qualification requirements, credit line minimums and maximums, fees, and the length of the draw and repayment periods. Each lender may have unique terms, so it’s important to review all factors to ensure you choose the most suitable option.
Step 3: Submit Your Application
Once you’ve gathered your documentation, including identification, income verification, and property information, you’re ready to submit your HELOC application. For income verification, you’ll typically need recent pay stubs, W-2 forms, and tax returns. If you’re self-employed, a profit-and-loss statement and two years’ tax returns may be required. Property documentation usually involves a homeowners insurance declaration page. The application process can be completed online, by phone, or in person, depending on the lender’s protocol.
Step 4: Get an Appraisal
An appraisal will cost you between $300 and $600 but it’s well worth it, as it will determine your home’s market value, which will be used to qualify you for a HELOC and set your equity level and credit limit. The lender you’ve applied to will guide you through this process, so wait for its instructions.
Step 5: Prepare for Closing
Before you can access HELOC funds, you’ll need to sign documents (after thoroughly reading them, of course) and pay any required fees. Some lenders make funds available within three days after the HELOC closes.
Recommended: Different Types of Home Equity Lending
Closing Costs and Fees
HELOC closing costs are generally more affordable than those associated with a traditional home purchase or refinance. In fact, the appraisal fee may be your most significant expense. Other costs might include an application fee, origination fee, and administrative fees. Some lenders charge annual maintenance fees, transaction fees, inactivity fees, or early termination fees. Keep in mind that while some lenders may offer to reduce or even waive certain closing costs, the trade-off could be a higher HELOC rate.
Tax Benefits and Considerations
More good news on HELOCs and your finances: You may be able to deduct the interest you pay on a HELOC from your federal taxes, if the borrowed funds are used to significantly improve your primary residence. These tax guidelines are set to remain in place through 2025. It’s always a good idea to touch base with a tax pro to see if you qualify for this deduction; your tax advisor can also keep tabs on tax policy changes in 2026 and beyond.
Alternatives to HELOCs
Minneapolis homeowners have options when it comes to HELOC alternatives, including home equity loans, cash-out refinancing, and personal loans. If you’re not sure a HELOC is the best option for you, or just want to cover all your bases, check out this guide:
Home Equity Loan
Unlike HELOCs, home equity loans provide a lump-sum amount and are paid back at a fixed interest rate. You can usually access up to 85% of the equity you’ve built in your home. Lenders like to see a credit score of 680 or higher, and, as with a HELOC, many prefer 700+ for the best rates. The monthly payments on these loans are predictable. A home equity loan calculator can help you see how much you might be able to borrow with this loan type.
Cash-Out Refinance
A cash-out mortgage refinance is another way for homeowners to make the most of their equity. In this case, you would refinance your mortgage for more than you currently owe and pocket the difference. Typically, you’ll need a credit score of 620 or higher and a DTI ratio below 43%. If you are thinking about a cash-out refinance vs. home equity line of credit, one difference is that with a refi, you can choose a fixed or variable interest rate.
Personal Loan
A personal loan is typically unsecured and repaid in fixed installments over a period of two to seven years, a shorter time horizon than the other options. The key benefit here is that your home is not at risk of foreclosure should you encounter financial challenges. Most lenders look for a credit score of 610 or higher. While the process is relatively swift, interest rates are often higher than those of HELOCs or home equity loans.
The Takeaway
When mulling over the idea of a HELOC, it’s smart to consider the pros and cons. Yes, your home is at risk of foreclosure if you miss payments, and variable interest rates can mean monthly payments aren’t a steady amount. However, with a HELOC you borrow only what you need and if you don’t want to repay the principal immediately, you have the option of making interest-only payments in the draw phase. Before you take the plunge, it’s wise to shop around and compare HELOC rates and terms from various lenders to find the best fit for your financial situation.
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 would your monthly payment be on a $50,000 HELOC?
Your monthly payment on a $50,000 HELOC will vary according to the rates 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.
What are the benefits of a HELOC?
There are definite perks of a HELOC. You can use the funds you borrow for just about anything, and it’s a revolving credit line so you don’t have to withdraw all the money at one time. You only pay interest on the amount of the credit line that you use. HELOCs also have potential tax benefits if you’re remodeling your home. Variable interest rates can make your monthly payments a bit unpredictable, but if rates fall in the wider market, a variable rate will keep pace.
Do you need an appraisal for a HELOC?
You will likely need a home appraisal to get a HELOC because the appraisal helps a lender determine the current market value of your home, which is used to calculate the amount of equity you can access.
Lenders use this information to set your credit limit.
How tough is it to get a HELOC?
It shouldn’t be hard to get a HELOC if you can meet the minimum requirements: You’ll need 15% equity in your home, a credit score of at least 640, and a debt-to-income ratio under 50%.
You’ll have to fill out an application, which will likely be online, and you will probably have to admit an appraiser to your home to evaluate its worth. It’s not as easy to get a HELOC as it is to get a personal loan, but HELOC interest rates are usually more favorable.
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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