PHOENIX HELOC RATES TODAY
Current HELOC rates in
Phoenix, AZ.
Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
Current HELOC rates in
Turn your home equity into cash. Call us for a complimentary consultation or get prequalified online.
Compare HELOC rates in Phoenix.
Key Points
• Home equity line of credit interest rates are determined by the prime rate and individual factors such as credit score.
• HELOCs can be used like a credit card, with borrowers paying interest on the amount borrowed.
• HELOCs have variable interest rates that can change with the market.
• Homeowners should compare rates and terms from different lenders.
• HELOC interest is tax-deductible if borrowed funds are used for significant home improvements.
Introduction to HELOC Rates
Welcome to your comprehensive guide to home equity line of credit (HELOC) rates in Phoenix, AZ. We’re here to help you get equity out of your home and learn how to borrow money for large expenses in the most cost-efficient way possible. Here, you’ll find current HELOC rate trends, the factors that sway the rate you’ll be offered, and the tools available to estimate your costs. Whether you’re dreaming up a home makeover, aiming to streamline your debt, or investing in education, our guide will empower you to make savvy decisions and secure the best HELOC for your financial goals.
What Is a HELOC?
A HELOC is a flexible line of credit that’s secured by your home’s equity, which is the difference between your home’s value and the amount you still owe on your home loan. To qualify for a HELOC, you typically need to have at least 15% equity in your home. With a HELOC, you may be able to borrow up to 90% of your home’s equity. Because this borrowing method uses your home as collateral, it’s important to understand what your payments will be. If you fail to make them, you could face foreclosure.
A HELOC has two phases, each with different parameters:
The Draw Period
During the HELOC’s draw period (usually 10 years) you can use funds from the credit line in increments, as needed. You’ll have to pay interest on what you borrow, but most lenders won’t require you to pay down the principal — although you can do so if you wish to draw on the credit line again. A HELOC interest-only calculator can help you estimate what your payments might be.
The Repayment Period
After the draw period ends, the repayment period of between 10 and 20 years begins. Monthly payments will increase as you begin to repay the principal plus interest. HELOC interest rates are usually variable, which means the amount you pay each month may go up or down as rates change. You can use a HELOC monthly payment calculator to estimate payments during this time.
The Origin of HELOC Interest Rates
HELOC interest rates are a product of the prime rate, which is influenced by the Federal Reserve’s policies. Lenders then add their margin to the prime rate, making for a range of HELOC rates across the financial landscape. Your personal borrowing profile, including your credit score, debt-to-income (DTI) ratio, and home equity level, will also factor into the rate you’re offered. Because there are many lenders and many variables, it’s a smart move to seek out interest rates from multiple lenders before deciding on a HELOC.
How Interest Rates Impact HELOC Affordability
When it comes to HELOCs, interest rates are a big deal. An increase of even a single percentage point can translate to a significant amount of extra interest paid over the life of the loan. Imagine that you had a $50,000 HELOC and you borrowed the full amount. During a 10-year repayment period, when you’re paying down the principal plus interest, if you had an interest rate of 8.50%, your monthly payment would be $620. If your interest rate was 9.50%, your monthly payment would be $647. The difference might not seem that substantial, but over a decade, you would pay several thousand dollars more in interest with the higher rate. And the larger the amount you borrow, the greater the costs will be.
HELOC Interest Rate Trends
Keeping an eye on the prime interest rate is a smart move if you’re tracking HELOC rates in Phoenix. Borrowers can’t always wait for a lull in rates to seek out a HELOC, but having a sense of the history of rates will give you perspective on what you are seeing in the marketplace. The prime rate hit a low of 3.25% in 2020 and a high of 8.50% in 2023.
| 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
As noted above, HELOCs usually come with variable (also called adjustable) interest rates, which can change in response to market conditions. The variability of these rates means your monthly payments can also change. If the prime rate goes up, your HELOC rate will likely follow. This can make budgeting a bit trickier, but it also means you could save if rates go down. If you sign on to a HELOC, your agreement will specify how large an increase you might see, as well as how frequently the rate can change and the overall cap — a number your rate cannot exceed. This may provide some reassurance to those who aren’t entirely comfortable with moving rates.
Recommended: Different Types of Home Equity Financing
Helpful Tools and Calculators
Before you apply for a HELOC, you can use online tools to help you estimate monthly payments and interest costs at various rate levels. These tools can help you fully understand the cost of a HELOC so you can move forward with confidence.
Run the numbers on your HELOC.
-
Home Equity Loan Calculator
Enter a few details about your home loan and we’ll provide you your maximum home equity loan amount.
-
HELOC Payment Calculator
Punch in your HELOC amount and we’ll estimate your monthly payment amount for your HELOC.
-
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
As we’ve seen, you’ll need at least 15% equity in your home to qualify for a HELOC, though the more equity you have, the better. Lenders will also consider other factors, so spend a little time making sure you are a strong candidate for a great rate based on the advice below:
Improve Your Credit Score
To land the best HELOC rates, you need a credit score of 700 or above. You can qualify for a HELOC with a lower number, 640. But why not aim high? Making payments on time and chipping away at credit card balances can give your credit score a bump. Also check your credit report for errors and request a correction for any you find. A higher credit score isn’t just about approval, it’s about getting the most favorable terms and conditions from lenders.
Calculate Your Debt-to-Income Ratio (DTI)
Your DTI ratio is a key figure that shows how much of your monthly income goes toward paying off debts. To calculate it, add up all your monthly debt payments and divide that number by your gross monthly income. To qualify for a HELOC, you generally want a DTI of 50% or less, but for the best interest rates, you’ll need to hit 36% or lower. You can get there by paying down debts, increasing your income, or both.
Application Process for a HELOC in Phoenix
The process of applying for a HELOC in Phoenix is made easier by the option to prequalify online. This is a great first step, as it will give you an an idea of the rate and terms you could be eligible for. Once you’re prequalified, you can move forward with the full application, following these steps.
Step 1: Run the Numbers
Before you take the leap, check your credit scores from all three major bureaus and calculate your debt-to-income (DTI) ratio as detailed above. You need a minimum of a 640 credit score and a 50% DTI ratio. Also assess your home equity. Subtract your mortgage balance from your home value and then divide the product by your home value to get a percentage of equity. If it’s 15% or more, move on to the next step.
Step 2: Compare Lenders
Explore what you might qualify for when it comes to HELOC rates in Phoenix. Compare lenders’ qualification requirements, loan minimums and maximums, applicable fees, and the length of both the draw and repayment periods. Since different lenders may have varying terms and conditions, it’s important to shop around carefully to find the best HELOC rates.
Step 3: Submit Your Application
Once you’ve identified a lender with the right mix of rate and terms, gather your paperwork. You’ll need to show your ID, document your income with pay stubs and a tax form, and provide details about the property you want to use as collateral, including your insurance coverage. If you’re self-employed, the lender might ask for two years’ worth of tax returns and a business profit-and-loss statement.
Step 4: Get an Appraisal
An appraisal is a pro’s unbiased assessment of your home’s value in the current market. The cost of this service typically falls between $300 and $600. If your home appraises for more than your outstanding mortgage balance, you may be eligible for a HELOC. Your home’s value is crucial as it helps determine the rates and the total amount of credit you can access.
Step 5: Prepare for Closing
Before you can access your HELOC funds, you’ll need to sign documents and pay any fees. Some lenders make the funds available within three days after the HELOC closes. This step involves reviewing and signing all the necessary paperwork, making sure you understand the terms and conditions, and paying any closing costs.
Closing Costs and Fees
The good news is that HELOC closing costs are generally lower than what you’d face when buying a home or undertaking a mortgage refinance. The most expensive part of the process will likely be the appraisal. A title search, if required, may run you $100 to $450. You may also face application, origination, and administrative fees, as well as maintenance fees (which can be up to $250 per year) and transaction fees.
Tax Benefits and Considerations
Homeowners can deduct HELOC interest in the 2025 tax year if the borrowed funds are used to significantly improve a primary residence. Chat with a tax advisor who can help you navigate the ins and outs of these potential benefits and also keep you updated on benefits in future years. You’ll have to itemize on your federal return to claim this deduction.
Recommended: HELOC vs. Home Equity Loan
Alternatives to HELOCs
If a HELOC’s variable interest rate makes you uncomfortable, or if you simply want to cover all the bases before signing on, there are other financing options to consider. Here are the HELOC’s chief competitors:
Home Equity Loan
>A home equity loan is a bit different from a HELOC. With a home equity loan, you receive a lump-sum loan and begin paying it back immediately, at a fixed interest rate. Most lenders will let you borrow up to 85% of your home’s equity. They’ll be looking for a credit score of 700 and above to offer you the best rate, though you can qualify at 680. A home equity loan calculator can help you find out how much you might be able to borrow with this method.
Cash-Out Refinance
The cash-out refinance vs. home equity line of credit comparison is stark: A cash-out refi gets you a completely new loan. You would borrow more than you currently owe on your mortgage and take the difference between what you borrow and what you owe as a lump-sum loan. To qualify, a 620 minimum credit score and a DTI ratio of 43% or less are usually required. You can opt for fixed or variable rates. This option leaves you with one monthly payment instead of two.
Personal Loan
A personal loan is a versatile, unsecured loan that you pay back in regular installments over two to seven years. The great thing is, your home is not used as collateral for this type of loan, so you don’t have to worry about foreclosure during tough times. Most lenders will be looking for a credit score of 610 or higher. While personal loans are relatively quick to secure, the interest rates might be a bit higher than those of a HELOC or home equity loan.
The Takeaway
If you’re thinking about a HELOC, it’s important to weigh the benefits and risks. HELOC rates in Phoenix are variable and depend on the prime rate and your creditworthiness. HELOCs can be a flexible way to pay for ongoing expenses, but they also come with the risk of variable rates and foreclosure. If you are interested in a HELOC, always spend a little time upfront researching and comparing lenders’ offers to find the best loan for your 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 can you use a HELOC for?
A home equity line of credit can be used for just about any purpose. The funds you borrow can cover home renovations, personal expenses, or debt consolidation. HELOCs provide a revolving line of credit, allowing you to draw funds as needed and pay only interest initially, for a period of as long as 10 years. After that “draw” period you’ll have to repay the principal, plus interest.
What would the monthly payments be on a $100,000 HELOC?
The monthly payments on a $100,000 HELOC can change based on the interest rate, the terms of repayment, and how much of the credit line you have actually used. If you borrow the full $100,000 and have an 8.00% rate, you might pay around $667 per month in interest during the draw period. Once the repayment phase arrives, you would start paying down the principal, and your monthly payment would be over $1,200. HELOCs have variable interest rates so your results will vary.
Do you need an appraisal for a HELOC?
An appraisal is typically required for a HELOC. It determines the current market value of your home, which is crucial for calculating the amount of equity you can leverage. Lenders use this information to establish your credit limit.
What could prevent you from getting a home equity loan?
There are a few things that could stand in the way of being approved for a home equity loan, such as a low credit score, a high debt-to-income (DTI) ratio, or not enough equity in your home. Most lenders look for a minimum credit score of 680 and a DTI ratio of 50% or less. Plus, you typically need to have at least 15% equity in your home. If you don’t meet these requirements, you might need to work on improving your financial situation or consider other options, like a personal loan.
SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
*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.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
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.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
SOHL-Q225-400
More HELOC resources.
-
What is a Home Equity Line of Credit
-
Different Types of Home Equity Loans
-
HELOC vs Home Equity Loan: How They Compare