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Compare HELOC rates in Minnesota.
Key Points
• Minnesota homeowners have several options for securing competitive home equity line of credit (HELOC) rates, including online lenders and local credit unions.
• A HELOC is like a credit card based on your home equity, allowing you to borrow up to 90% of your home’s value minus what is owed on your mortgage. Funds can be used for home improvements, debt consolidation, education, and investments.
• HELOC rates in Minnesota depend on the prime rate and economic factors, as well as your accumulated home equity, credit score, and income.
• To find the best available HELOC rates in Minnesota, homeowners should compare offers from multiple lenders and focus on cultivating a good credit score.
• Maintaining a credit score of 680 or higher is crucial for securing more favorable Minnesota HELOC rates, with some lenders preferring credit scores exceeding 700.
Introduction to HELOC Rates
If you’re wondering how to get equity out of your home and considering a home equity line of credit (HELOC), this guide will make your application process easier and help you get a competitive interest rate. You’ll learn the key factors influencing Minnesota HELOC rates and how to effectively utilize this information to make an informed decision. Let’s start with the basics:
What Is a HELOC?
A home equity line of credit enables homeowners to borrow against equity they’ve built in their home. You can borrow up to 90% of your home’s value, minus what you still have to pay on your mortgage. Because a HELOC works somewhat like a credit card, you don’t have to borrow the entire amount at once. You can draw money as you need it. The HELOC is secured by your home, so it may have a better interest rate than a credit card or a personal loan.
HELOCs have two phases: first the draw period, followed by the repayment period. It’s important to understand them and their differences.
The Draw Period
During a HELOC’s draw period (10 years is standard), you can access funds up to your credit limit, make payments on your balance, and borrow the money again if you want to. As a borrower, you’ll usually be required to make interest payments in the draw period, but paying back the principal may be optional.
The Repayment Period
During the 10- to 20-year period of repayment, borrowers pay off the principal with interest. Experiment with a HELOC repayment calculator for help understanding your monthly payments and overall interest.
Where Do HELOC Interest Rates Come From?
Interest rates on HELOCs are variable, meaning they change over the life of the credit line. They’re influenced by the prime rate, which is the rate banks and other lenders charge borrowers they perceive to be at the lowest risk of default.
How Interest Rates Impact HELOC Affordability
Interest rates can have a significant impact on the costs surrounding a HELOC. When it’s time to repay a $60,000 HELOC, having an interest rate of 6.00% over a 20-year term would mean a monthly payment of $430. An interest rate of 7.00% would require a $465 payment. Over the entire term, a customer with a 7.00% rate would pay $8,477 more in interest. The more you borrow and the higher your interest rate, the larger the numbers.
HELOC Interest Rate Trends
HELOC rates are tied to the prime interest rate set by banks, so getting to know the history of the average prime rate (shown in the chart and graphic below) may help you understand where current HELOC rates in Minnesota fall on the spectrum.
Since 2018, the prime rate has ranged from 3.25% at its lowest in 2020 to 8.50% at its highest in 2023. These fluctuations can have a impact on HELOC vs. home equity loan considerations, in part because, while HELOC rates are variable, home equity loan rates tend to be fixed (more on that below).
Historical Prime Interest Rate
| Date | U.S. Rate | |
|---|---|---|
| 12/11/2025 | 6.75% | |
| 9/17/2025 | 7.25% | |
| 12/20/2024 | 7.50% | |
| 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% | |
Historical U.S. Prime Rates
Factors Influencing HELOC Rates
The prime rate is important, but it’s not the only thing influencing HELOC interest rates in Minnesota. A number of key factors specific to an individual borrower also matter. Understanding them can help you secure the most favorable rates for your loan or line of credit.
Home Equity
Having a sizable amount of equity in your residential property makes you an attractive prospect for lenders, potentially scoring you reduced interest rates. Homeowners typically need a minimum of 15% equity to qualify for a HELOC.
Credit Score
When it comes to securing a desirable interest rate for a HELOC, maintaining your credit score at 680 or higher is a good move. Many lenders even prefer a credit score of 700 or above.
Stable Income
Lenders look hard at your income. They are going to carefully evaluate your ability to repay the HELOC, so stability is important to them. It’s a good idea to use a HELOC monthly payment calculator to make sure you’re able to make the monthly payments.
Loan-to-Value Ratio
Most lenders require your combined loan-to-value ratio (CLTV) to be 90% or less. You can compute your CLTV by adding the existing balance on your mortgage to the amount you hope for your HELOC to be, and then dividing by your appraised home value. Here’s an example:
A homeowner’s property appraises at $500,000. They still owe $300,000 on the mortgage. They are applying for a $120,000 HELOC.
$300,000 + $120,000 = $420,000
$420,000 / $500,000 = .84 (aka an 84% CLTV)
Variable vs Fixed Interest Rates
As you read above, HELOCs often carry variable interest rates, subject to change over the loan’s duration. To begin with, variable interest rates often look lower when compared to fixed rates, but by design, they increase or decrease in accordance with market conditions.
Tools & Calculators
Time-saving online tools can assist you in calculating approximate payments and the interest you’ll pay on a HELOC. Our favorites include a HELOC interest-only calculator, which can determine the payments you’ll need to make during the draw period.
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
A checklist for securing a competitive rate on your HELOC can help you get started. These “to dos” will help you to think about factors that lenders will scrutinize when determining your eligibility and interest rate. A solid financial standing can enhance your ability to secure different types of home equity loans and lines of credit.
Cultivate Your Credit Score
When you applied for your home loan, your credit score was paramount. Its importance when you apply for a HELOC is equal. You can build your credit score over time by paying your bills on or before the due dates. Reducing or eliminating credit card balances is also essential. Review your credit report regularly and address errors promptly.
Assess Your Home Equity
Timely mortgage payments help homeowners build home equity. Renovations not only make your home happier — they can enhance your equity by boosting the property’s value. If your home equity is in the single digits or teens, getting approved for a HELOC may be difficult.
Calculate Your Debt-to-Income Ratio (DTI)
Your DTI ratio is how much you pay monthly on debt — like student loans, a car loan, or a personal loan — divided by your gross monthly income. Home equity lenders tend to look for a DTI below 36%. Some allow up to 50%. Calculating your DTI ratio is important, as it can help you determine your eligibility for a HELOC, and whether you’ll qualify for favorable terms.
Application Process for a HELOC in Minnesota
A HELOC application in Minnesota involves several key steps. If you understand the process, your application journey will be smooth and hopefully fruitful.
Step 1. Run the Numbers
Check your credit scores, crunch your DTI, and get an estimate of your home equity before you apply for a HELOC. Some lenders have website options that let you prequalify for a HELOC online, streamlining the application process.
Step 2. Compare Lenders
Look at multiple lenders’ interest rates. Also compare qualification requirements, minimums and maximums, fees, and the lengths of their draw and repayment periods.
Step 3: Gather Your Documents
Putting together your paperwork or digital documentation is a crucial step in applying for a HELOC. Typically you need to present proof of income such as pay stubs and tax returns, documentation of your home’s value, and stubs verifying your mortgage balance . Lenders may ask for your homeowner’s insurance policy and a list of your current debts and assets, too.
If you are self-employed, a lender may ask you for a profit-and-loss statement and two years’ worth of tax returns. Having these documents prepared can make the application process go faster and boost your chances of grabbing a competitive HELOC rate.
Step 4: Submit Your Application
If you find a potential lender that offers an online HELOC application portal, it will make the process that much more efficient. You can also likely submit by phone, or in person if the lender has a brick-and-mortar branch.
Step 5: Get an Appraisal
After you submit your application, the lender will schedule a home appraisal. This is to determine the current value of your property. If your home appraises higher than your outstanding mortgage balance, there’s a good chance the lender will approve your HELOC. The appraisal process might take a few weeks.
Step 6: Prepare for Closing
Before you can access and spend your HELOC funds, you will need to sign loan documents and most likely pay some fees. Your lender may make funds available as quickly as three days following closing. Make sure you understand your loan’s terms and conditions before you sign.
Tax Benefits and Considerations
Before you can access and spend your HELOC funds, you will need to sign loan documents and most likely pay some fees. Your lender may make funds available as quickly as three days following closing. Make sure you understand your loan’s terms and conditions before you sign.
How Much Does a HELOC Cost?
HELOC’s do have costs, but they tend to be lower than those of a typical home loan or mortgage refinance, which can range from 2% to 5% of the loan amount. With a HELOC, the appraisal fee, which can reach $500, is the biggest line item. Application and administrative fees may represent additional charges. Some lenders bill for annual maintenance, as well as transaction, inactivity, and early termination fees. Some lenders may reduce or waive fees but charge a higher interest rate.
Alternatives to HELOCs
HELOCs have competition! Other financing options you could consider include home equity loans, cash-out refinancing, and personal loans. Each has benefits and drawbacks.
Home Equity Loan
Unlike a HELOC, a home equity loan hands you a lump sum. More on what is a home equity loan: Often, you can tap into up to 85% of your home’s equity with one of these. The qualification process is similar to a HELOC, requiring an appraisal.
Another factor in any HELOC vs. home equity loan comparison: You must begin repaying a home equity loan immediately, and because it will have a fixed interest rate, the payments will remain the same over the loan term of 5–30 years. Use a home equity loan calculator to get an idea of what you could borrow and compare the two options.
Here’s a quick look at the two:
| HELOC | Home Equity Loan | |
|---|---|---|
| Type | Revolving line of credit | Installment loan |
| Interest Rate | Usually variable-rate | Usually fixed-rate |
| Repayment | Repay only what you borrow; you may have the option to make interest-only payments during the draw period. | Starts immediately at a set monthly payment |
| Disbursement | Charge only the amount you need. | Lump sum |
Cash-Out Refinance
Homeowners can use cash-out refinancing as another way to leverage a home’s value. This mortgage refinance option is a good one for those who need a large sum of money at once.
When comparing cash-out refinance vs. a home equity line of credit, be sure to note that cash-out refinancing might come with a higher interest rate than other home loans. Cash-out refis draw some borrowers because they prefer to have one payment to keep track of instead of two.
Personal Loan
A personal loan has fixed payments made over 2–7 years. It can be used for almost anything and you won’t have to offer your home as collateral to get one. However, personal loans are likely to have higher interest rates than HELOCs or home equity loans.
Credit Cards
Credit cards carry steeper interest rates than HELOCs, and that factor can balloon your costs if you juggle a big balance. Credit cards are definitely handy for everyday buys, but HELOCs may be a better pick to pay for big-ticket items like a home upgrade or consolidating debt.
The Takeaway
HELOCs offer a helpful, flexible way to tap your home equity. They’re especially useful if you need to borrow money but aren’t sure exactly how much you need, since you’ll only have to pay interest on the amount you use at a given time. With good preparation and efforts to build your credit score and drop your debt level, you can submit an application that will get you a great rate in Minnesota.
SoFi now offers flexible HELOC options to turn your home equity into cash. Access up to 85% of your home equity, or $750,000, to finance home improvements or consolidate debt. Competitive interest rates and repayment terms up to 20 years could result in lower monthly payments versus other loans. And the online application process is quick and convenient.
FAQ
What’s the monthly payment on a $50,000 HELOC?
An 8.00% interest rate and a 10-year term would require a monthly payment of about $607. The exact amount you’ll pay will always depend on your interest rate and loan term. The same 8.00% rate over a 20-year term would cost you about $418 per month, although you would pay significantly more total interest in the end.
Is a HELOC a smart move for you?
Whether a HELOC is a good idea at this moment depends on your financial scenario and your longer-term goals. HELOCs can help you accomplish home improvements, consolidate debt, or cover other large expenses. But it’s important to consider interest costs, fees, and the potential impact on your home equity before making a decision.
What is the monthly payment on a $100,000 HELOC?
Monthly payments on a $100,000 HELOC depends on the interest rate and length of term for the line of credit you’ve chosen. At 6.00% over 20 years, the payment would be $716 monthly. An 8.00% interest rate and the same term would mean a payment of $836.
What are the benefits of a HELOC?
A HELOC is a flexible way to borrow. Rather than taking out a lump sum, you can pull money in smaller increments according to your needs, and at a lower rate than you’d get with a credit card. Plus, you only pay interest on what you borrow.
Do you need an appraisal for a HELOC?
Yes, you do. The appraisal is crucial to the process, since it helps to establish your home’s value, and that in turn determines the amount you’ll be able to borrow. Lenders want to make sure your loan is secured by enough home equity, and will provide details on what type of appraisal is required.
What might prevent you from getting a home equity loan?
Several factors can disqualify you from getting a home equity loan. These include bad credit, a lack of equity in your home, and a high level of debt relative to your income.
How hard is it to get a HELOC?
If you can meet lenders’ requirements of a healthy credit score and optimal debt levels, and you have a minimum of 15% equity in your home, it shouldn’t be hard to get a HELOC. Hardest for many would-be borrowers is compiling the financial documents required for the application. But taking the time to do it carefully and accurately will help move your application process along.
Does HELOC affect credit score?
When you apply for a HELOC, a lender will perform a hard inquiry on your credit report. That could cause a small decrease in your credit score, but it will be temporary. Carrying a large balance on your HELOC could negatively impact your credit utilization ratio and lower your credit score, too. But if you make regular payments to your HELOC account, it will demonstrate that you can use credit responsibly. That should reflect favorably on your score.
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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