SACRAMENTO HELOC RATES TODAY
Current HELOC rates in
Sacramento, CA.
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 Sacramento.
Key Points
• A home equity line of credit (HELOC) offers a revolving line of credit with a variable interest rate.
• To qualify for a HELOC, you’ll generally need to have at least 15% equity in your home.
• Lenders will also look at your credit score, debt-to-income ratio, and home equity when deciding what interest rate to offer you.
• You can use a HELOC for a variety of things, like home improvements or paying off high-interest debt.
• HELOC interest rates are often lower than those for unsecured personal loans.
Introduction to HELOC Rates
Welcome to our comprehensive guide on HELOC rates in Sacramento, California. We’re here to help you understand how to qualify for the best rates, learn about the factors that influence HELOC rates, and discover the benefits and risks of HELOCs. Whether you’re dreaming of a home renovation, looking to consolidate debt, or have a significant expense on the horizon, we’re here to equip you with the knowledge to make a well-informed financial decision.
What Is a HELOC?
A HELOC, or home equity line of credit, is a revolving credit line secured by your home equity (the value of your home, less the amount you owe on your existing home loan). Most lenders require homeowners to have at least 15% equity in their home to qualify for a HELOC. You can typically borrow up to 90% of your equity. HELOCs have two phases: draw and repayment.
The Draw Period
This is typically the first five of 10 years of a HELOC. During this time you can draw money from the credit line, up to whatever ceiling you have, and only pay interest on the amount that you have used. You can repay the principal and then draw again, but most lenders don’t require you to repay — just to pay interest. A HELOC interest-only calculator is helpful during the draw phase.
The Repayment Period
The repayment period is typically 10 to 20 years. This is when you’ll stop drawing on the credit line and begin to pay back principal and interest. HELOC interest rates are usually variable, which means your rate can change many times over your repayment period, going up or down. Monthly payments aren’t always the same so a HELOC monthly payment calculator may be useful.
The Origin of HELOC Interest Rates
Interest rates for HELOCs and different types of home equity loans are tied to the prime rate, which is influenced by the Federal Reserve’s policies. Each lender adds a margin to the prime rate, which is why interest rates can vary so much — and why you will want to seek out HELOC quotes from multiple lenders. Lenders also consider individual borrower factors, such as credit score, debt-to-income (DTI) ratio, income, and the amount of equity in the home. So each lender may make you a slightly different offer.
How Interest Rates Impact HELOC Affordability
As you are thinking about how to get equity out of your home, you’ll come to see that the initial interest rate on your HELOC is a big deal. Even though the HELOC’s rate can rise and fall, these changes are based on whatever rate you originally obtain.
Let’s say 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.
(Remember, due to a HELOC’s variable rates, real-world results on a $50,000 HELOC may differ. What won’t change? Securing the lowest possible costs for your HELOC is always a good thing.)
HELOC Interest Rate Trends
Monitoring the prime rate can give you a sense of where HELOC rates in Sacramento may be headed. And looking at the history of the rate can offer perspective on whether the numbers you are seeing from lenders are relatively high or low. The prime rate was at a low 3.25% in 2020 and hit 8.50% in 2023. Understanding this range is helpful. Some borrowers try to time their application for a HELOC to a dip in the prime rate, but it isn’t always possible.
| 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
As we’ve noted, HELOCs usually come with adjustable rates that can change over time. While they often begin lower than fixed rates, they rise and fall with the market. The HELOC agreement will spell out periodic and lifetime rate caps: how often the variable rate can change and how much it can rise or fall in a given period, as well as how much it can increase over the life of the HELOC.
Helpful Tools & Calculators
Before you apply for a HELOC or a home equity loan, you can use online tools to estimate monthly payments and interest costs. Here are three you’ll probably use again and again:
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 snag a competitive HELOC rate, you’ve got to meet a few key requirements. In addition to having 15% equity in your home, you’ll need to examine your credit score and DTI ratio. Here’s how:
Improve Your Credit Score
To ensure you’re in the position to secure the best available HELOC rate, you’ll want a credit score of 700 or higher. The good news is, you have the power to change your score. Making timely payments and reducing credit card balances are two effective strategies. Also, be sure to check your credit report for any errors and dispute them if necessary. Keeping old credit accounts open and using them responsibly can also work in your favor. You can get a HELOC with a score as low as 640, but for great rates, 700 is the goal.
Calculate Your Debt-to-Income Ratio (DTI)
Your DTI ratio is a simple equation: your monthly debt payments divided by your gross monthly income. HELOC lenders generally prefer a DTI under 50%, but for the best interest rates, you’ll want to get your DTI to 36% or less.
Application Process for a HELOC in California
Many lenders offer the convenience of prequalification for a HELOC online, which allows prospective borrowers to view rates they might qualify for. Once you’ve looked around at different lenders and gotten some initial quotes, the next step is to file a full application. This is how that process works:
Step 1. Run the Numbers
Start by checking your credit scores and calculating your debt-to-income ratio as described above. Also take a look at your home equity. Subtract your mortgage balance from your home’s estimated value, then divide the answer by the home value to get a percentage of equity. If it’s 15% or greater, you could proceed with the application process. The more equity you have, the better position you’re in.
Step 2. Compare Lenders
See what interest rate offers you might qualify for, but then do a deeper dive into the lenders that seem most promising. Look at qualification requirements, minimums and maximums, fees, and the length of both the draw and repayment periods they’re offering. Comparing multiple lenders can help you find the best HELOC rates in Sacramento and the terms that best fit your specific financial needs.
Step 3: Submit Your Application
Once you have identified the HELOC rate and terms that look best, you’ll do a full application. Gather your ID, proof of income, and details about the property you’re using as collateral. For income verification, you might need to show pay stubs, W-2s, and tax returns. If you’re self-employed, a profit-and-loss statement and a couple years’ worth of tax returns could be on the list. Also have your homeowners insurance declaration page handy. You can submit an application online, over the phone, or in person. Just doublecheck everything you type in is accurate to keep things moving along smoothly.
Step 4: Get an Appraisal
After you’ve filed your application, a lender will require an appraisal. The appraisal determines how much you can borrow and the rates you’ll be offered. A pro will give your home an objective once-over to figure out its value. (Some lenders use a computer program to estimate value; others require a home visit.) The typical cost ranges from $300 to $610. If your home’s value comes in higher than what you owe, your lender might just greenlight that HELOC.
Step 5: Prepare for Closing
Before you can access your HELOC funds, you’ll need to sign your HELOC agreement and pay any necessary fees. Some lenders make funds available within three days following the closing of the HELOC. Prepare for closing by reviewing all documents carefully and understanding the terms and conditions. Make sure you have the required funds to cover any fees.
Closing Costs and Fees
The good news is that HELOC closing costs are generally more affordable than what you’d encounter with a home purchase or refinance. The most significant expense is often the appraisal fee. A title search, if needed, might add another $100 to $450 to the tab. You could also face application, origination, and administrative fees, along with annual maintenance fees (up to $250). Keep an eye out for potential transaction, inactivity, or early termination fees, too. These will be detailed in the HELOC agreement.
Tax Benefits and Considerations
Here’s something that can take the sting out of HELOC fees: The interest you pay on a HELOC could be tax-deductible. During 2025, if you use the HELOC to make significant improvements on your home and you itemize the interest costs on your return, you can usually deduct them. And in the future, interest on HELOCs used for any purpose could be deducted. You’ll want to see a tax advisor about your specific situation.
Alternatives to HELOCs
Other options besides HELOCs include home equity loans, cash-out refinancing, and personal loans. Each of these has its own set of benefits and considerations, so it pays to evaluate these options to find the best fit for your financial goals.
Home Equity Loan
A home equity loan is a lump-sum loan with a fixed interest rate. Typically, you can borrow up to 85% of your equity with this type of loan which, like a HELOC, uses your home as collateral. A home equity loan calculator can help you figure out how much you might borrow. Lenders generally look for a credit score of 680 or higher, but for the best rates you’ll need 700 and above. When comparing a HELOC vs. a home equity loan, note that the latter has fixed interest rates and a consistent monthly payment amount over the entire term.
Cash-Out Refinance
A cash-out refinance is a mortgage refinance that allows homeowners to get a new mortgage for more than they owe on their original loan. They then receive the difference in cash. For a cash-out refi, you’ll need a credit score of 620 or more and a DTI ratio under 43%. One cash-out refinance vs. a home equity line of credit. point of difference: A refi leaves you with a single monthly payment instead of two. Because it’s an entirely new mortgage, you can choose the loan term and decide between a fixed or variable rate.
Personal Loan
A personal loan is a versatile, typically unsecured loan that you repay in regular, fixed installments over a period of two to seven years. The key benefit here is that the loan is not guaranteed with your home, so your dwelling is not at risk of foreclosure in times of financial strain. Many lenders look for a credit score of 670 or higher when considering a personal loan application. While the process is often swift, do note that personal loans may carry higher interest rates than HELOCs or home equity loans.
The Takeaway
When you’re mulling over a HELOC, it’s important to weigh the pros and cons. A HELOC is flexible — you borrow what you need, when you need it — and might offer lower interest rates than a personal loan. But defaulting could mean losing your home, so you’ll want to make sure you have a plan in place to repay what you owe. For those in Sacramento, exploring HELOC rates and taking the time and effort to search for the lowest available costs can help you find the HELOC that’s the best fit for your financial needs.
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FAQ
What can you use a HELOC for?
The money you borrow with a HELOC, or home equity line of credit, can be used for any purpose. Common uses include paying for home renovations and debt consolidation. HELOCs offer the flexibility to draw funds as needed and pay interest only on the amount of the credit line that you have used. This makes them a versatile financial tool for significant expenditures and larger projects.
What’s the monthly payment on a $100,000 HELOC?
The monthly payment on a $100,000 HELOC can vary greatly depending on the interest rate and the repayment period. During the draw period, which can last 5, 10, or even 20 years, you may only need to pay interest on the amount you’ve borrowed, which isn’t necessarily going to be the full $100,000. If you did use the entire credit line of $100,000, your interest rate for repayment would likely be a variable one. But at an average of 8.00% and a repayment term of 20 years, you would pay $836 per month.
Do you need an appraisal for a HELOC?
The appraisal is a critical step in the process of obtaining a HELOC, or home equity line of credit. It helps the lender understand the value of your home, which in turn determines the amount of equity you have available to borrow.
How tough is it to get a HELOC?
A HELOC is quite attainable if you meet the lender’s criteria. They typically look for a minimum credit score of 640, a debt-to-income ratio under 45%, and at least 15% equity in your home. The application process involves a few steps, such as checking your credit score, comparing lenders, submitting documents, getting a home appraisal, and preparing for the closing.
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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