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Compare HELOC rates in Vermont.
Key Points
• A home equity line of credit is a flexible way to borrow funds for home renovations, debt consolidation, or other expenses.
• HELOCs offer a line of credit, while home equity loans provide a lump sum.
• Understanding the draw and repayment periods is crucial for managing a HELOC.
• The best HELOC rates in Vermont depend on factors like home equity, credit score, and income.
• Using a HELOC interest calculator can help borrowers compare rates and make informed decisions about Vermont HELOC rates.
Introduction to HELOC Rates
A HELOC is a flexible financial tool that allows homeowners to tap into the equity they’ve built up in their home as they have made payments on their home loan. But before you sign on to a home equity line of credit, it’s important to understand how a HELOC works, and how its interest rate will be determined. This will allow you to put your finances in order before you apply and obtain the best available HELOC rate in Vermont.
What Is a HELOC?
A HELOC is a revolving line of credit similar to a credit card, but secured by your home’s equity. (Your equity is the difference between your home’s current value and what you owe on your mortgage.) You don’t have to borrow the entire amount of the credit line all at once; you can borrow as you need to, and (one advantage of a HELOC) you’ll only pay interest on the amount of the credit line that you actually use. You may be able to borrow up to 90% of your home’s value, minus your mortgage.
HELOC interest rates are usually variable, and so the monthly cost of a HELOC can go up or down based on the amount of the credit line that you are using and your variable rate. HELOCs are one of the types of home equity loans available, but they aren’t the only option, and below we’ll cover alternatives to a HELOC.
A HELOC has two main phases: the draw period and the repayment period.
The Draw Period
During the HELOC’s draw period (usually 10 years), you can access funds up to your credit limit, make payments to pay down your balance, and borrow the money again. The borrower is usually required to make interest payments during the draw period, but payments toward the principal may be optional. Use a HELOC monthly payment calculator to plan your payments effectively.
The Repayment Period
During repayment (10-20 years), borrowers pay back the principal with interest. Borrowers should expect rate fluctuations during this time.
Where Do HELOC Interest Rates Come From?
HELOC rates are based on a lender’s prime rate, which in turn is influenced by Federal Reserve decisions about rates. The prime rate is the rate a lender offers the customers it deems to be at lowest risk of default. Understanding this and keeping an eye on news of rate changes can help borrowers decide when to get a HELOC and whether borrowing with a fixed-rate loan, such as a home equity loan, might be a better move.
How Interest Rates Impact HELOC Affordability
Your interest rate can make a big difference in affordability over the course of a HELOC with a 10-year draw and a 20-year repayment term. A HELOC repayment calculator can help you see how different rates affect payment amounts. The chart below shows different HELOC amounts and how monthly payments and total interest paid change based on the interest rate and repayment term.
| Loan Amount | Loan Term | Interest Rate | Monthly Payment | Total Interest Paid |
|---|---|---|---|---|
| $100,000 | 20 years | 8.00% | $836 | $100,746 |
| 7.00% | $775 | $86,072 | ||
| 10 years | 8.00% | $1,213 | $45,593 | |
| 7.00% | $1,161 | $39,330 | ||
| $50,000 | 20 years | 8.00% | $418 | $50,373 |
| 7.00% | $388 | $43,036 | ||
| 10 years | 8.00% | $607 | $22,797 | |
| 7.00% | $581 | $19,665 | ||
| $25,000 | 20 years | 8.00% | $209 | $25,186 |
| 7.00% | $194 | $21,518 | ||
| 10 years | 8.00% | $303 | $11,398 | |
| 7.00% | $290 | $9,833 |
HELOC Interest Rate Trends
It helps to have a sense of the history of the average prime rate when you go into the process of deciding whether or not to get a HELOC (or a loan of any kind). Since 2018, as shown in the chart below, the average prime rate has experienced significant fluctuations, ranging from a low of 3.25% in 2020 to a high of 8.50% in 2023. These variations have had a direct and substantial impact on Vermont HELOC rates.
The graphic below shows the average prime rate over a much longer time period. As you can see, rates that are below 4.00% or above 10.00% have not historically come around that often.
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
HELOC rates are influenced by several key factors, and understanding these can help you better prepare for the application process.
Home Equity
Having substantial equity in your home makes you appear less risky to lenders, which can lead to lower interest rates. Homeowners typically need at least 15% equity in their property to qualify for a HELOC.
Credit Score
Maintaining a credit score of 680 or higher is of paramount importance when you’re applying for a HELOC. Some lenders prefer a credit score of 700 or above. A higher credit score is a reliable indicator of lower risk, improving your likelihood of qualifying for the best available terms on your home equity line of credit.
Stable Income
Lenders assess your income to determine your ability to repay the HELOC. A stable income indicates a lower risk of default, potentially leading to better HELOC rates. Providing proof of income, such as pay stubs and tax returns, will be an essential part of the application process.
Loan-to-Value Ratio
Many lenders require your combined loan-to-value ratio to be 90% or less. Your combined LTV ratio is calculated by dividing the HELOC amount you’re seeking plus any remaining balance on your first mortgage by the appraised value of the home. If your mortgage balance is $280,000, and you want a $120,000 HELOC, and your home value is $600,000, then your LTV ratio would be 66%.
Variable vs Fixed Interest Rates
As noted above, HELOCs feature variable interest rates, which are subject to change over the course of the loan, within certain limitations that will be put in place in your HELOC agreement. While initially lower than typical fixed rates, these variable rates can rise (or fall) in response to market conditions. Understanding this distinction is crucial for making an informed decision about whether or not to obtain a HELOC, or whether to choose a HELOC vs. a home equity loan.
Tools & Calculators
User-friendly online tools can assist you in estimating your payments, seeing the effect of different interest rates, and exploring possible loan amounts. Here are three of our favorites:
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 secure the most favorable HELOC rates available in Vermont, aim to maintain an exceptional credit score, furnish evidence of an adequate income stream, and ensure that your loan-to-value ratio remains low. Get the specifics on how you can better your case for a good HELOC rate in Vermont.
Take Care of Your Credit Score
Making on-time payments can help your credit score, and a good score is imperative for obtaining more favorable HELOC rates. It’s also a smart idea to keep overall balances low (in other words, don’t max out every credit card). And periodically review your credit report to find and fix any inaccuracies.
Assess Your Home Equity
You’ll need 15% to 20% equity in your home to obtain a HELOC. To assess your equity level, look up your home on a real estate web site to find an estimated value. Subtract your mortgage balance from that number and then divide by the estimated home value to get your percentage of equity.
Calculate Your Debt-to-Income Ratio (DTI)
Your DTI ratio is how much you owe in monthly debt payments (car loan, student loan, etc.) divided by your gross monthly income. Home equity lenders generally look for a DTI that’s below 36%, though some allow a DTI below 50%. Generally, the lower the better where your HELOC interest rate in Vermont is concerned.
Application Process for a HELOC in Vermont
The application process for HELOCs in Vermont will entail a thorough examination of your financial well-being. Take it a step at a time and check everything you submit for accuracy.
Step 1. Run the Numbers
Check that your credit score is 680 or above and that your DTI ratio is below 36%. Estimate your home equity to understand how much you can borrow. Some lenders offer online prequalification tools to streamline this process.
Step 2. Compare Lenders
When looking for the best HELOC rates in Vermont, compare different lenders’ qualification requirements, interest rates, loan limits, fees, and duration of the draw and repayment periods.
Step 3: Gather Your Documents
When preparing your HELOC application, it helps to gather and organize all the necessary documents in advance. This typically includes proof of income (such as W2 forms and your tax return), and property documents such as proof of insurance. If you’re self-employed, lenders may ask for a profit-and-loss statement and two years of tax returns.
Step 4: Submit Your Application
Depending on the lender, you’ll submit your HELOC application online, in person, or sometimes even by phone. Carefully attach all the necessary documents at this stage.
Step 5: Get an Appraisal
A home appraisal has an important role in determining eligibility for a HELOC. If the appraised value of your home exceeds the outstanding balance of your mortgage, you may qualify for a HELOC. The lender will tell you if an in-person appraisal by a professional appraiser is needed.
Step 6: Prepare for Closing
Before you can use your home equity line of credit, you’ll need to read and sign documents spelling out your terms and pay fees. Some lenders make funds available as quickly as three business days after this step.
Tax Benefits and Considerations
Homeowners can deduct HELOC interest if the funds are used for buying, building, or significantly improving their primary residence. Deductions are limited to interest on the first $375,000 of the principal for individual taxpayers ($750,000 for married couples filing jointly). Consulting a tax advisor will be helpful, and you’ll need to itemize in order to take this deduction.
Closing Costs and Fees
HELOC closing costs are usually lower than the costs associated with buying or refinancing a home. Appraisal fees, which are the largest portion of costs, range from $300 to $600. Other charges might include application, origination, and administrative fees. Some lenders have annual maintenance and transaction fees. Understanding these costs is vital for managing your home loan.
Alternatives to HELOCs
When thinking about how to get equity out of your home or how to borrow a large sum for a renovation or other expense, it’s important to consider all your financing options. Here are some alternatives to HELOCs you might be considering.
Home Equity Loan
Unlike a HELOC, a home equity loan provides a lump sum amount and is paid back at a fixed interest rate. Borrowers can usually access up to 85% of the equity built in their home through a home equity loan. This option is suitable for those needing a specific amount for a one-time expense. Here’s a quick look at how the two compare:
| 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 this special type of mortgage refinance to obtain a large lump sum. If you choose this option, you would refinance for more than you currently owe. You use the funds to pay off your initial home loan and take the difference in cash to use as you wish.
As you consider a cash-out refinance vs. a home equity line of credit, here are some things to think about: A refi would leave you with one larger monthly payment as opposed to two smaller ones. If you got a good interest rate when you purchased your home, and rates are higher now, you may spend more with a cash-out refi than you would otherwise. It’s always best to run the numbers with an online calculator to see how interest rates compare.
Personal Loan
A personal loan is typically an unsecured lump-sum loan that you pay back in regular, fixed payments over a set term of 2–7 years. Personal loans can be used for various purposes, just like HELOCs. But because they do not require collateral, they may have a higher interest rate.
Credit Cards
Credit cards also typically come with a higher interest rate than a HELOC or a home equity loan, which can make this an expensive way to carry a large balance from month to month.
The Takeaway
HELOCs offer a flexible way to access the equity in your home, with competitive interest rates. Because you only borrow what you need at any given time, your monthly interest payments could be lower with a HELOC than with other types of financing. It’s important to consider your financial needs and your comfort level with a HELOC’s variable rate before you apply, but HELOCs can be a smart financial tool for homeowners looking to fund large expenses while maintaining financial stability.
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 is the monthly payment on a $50,000 HELOC?
If you owed $50,000 on a HELOC and had a 20-year repayment term at a 7.00% interest rate, your monthly payment would be $388. But if you were able to obtain a 6.00% interest rate, your monthly payment would be $358. At an 8.00% interest rate and with a 10-year term, your monthly payment would run you about $607. Needless to say, the interest rate and term are important factors.
Is a HELOC a good idea right now?
Whether a HELOC is a wise move right now depends in large part on your personal financial situation. Do you need to borrow a large sum? Then a home equity loan may be an efficient way to do that. Are you not quite sure how much you need to borrow? A HELOC may be preferable to a lump-sum loan. Are you already a little nervous about your other monthly debt payments? Then this may not be the right time for a variable-rate loan.
What is the monthly payment on a $100,000 HELOC?
The monthly payment on a $100,000 HELOC depends on how much of the credit line you have used, and on your rate and term. If you used the entire $100,000 and needed to pay it back at 7.50% interest over 20 years, your monthly payment would be $806. If you obtain a 7.00% interest rate, your payment would be reduced to $775.
What are the benefits of a HELOC?
HELOCs offer several benefits, including flexible access to funds, competitive interest rates, and potential tax advantages. They can be used for home improvements, debt consolidation, education expenses, and more. However, it’s important to weigh the benefits against the risks, such as variable interest rates and the potential for foreclosure if payments are not made.
Do you need an appraisal for a HELOC?
A home appraisal is generally a prerequisite for a HELOC. The appraisal serves as an essential tool in determining the value of your property and helps the lender calculate what your maximum HELOC amount will be.
What disqualifies you from getting a home equity loan?
Several factors, such as an unfavorable credit history, insufficient home equity (less than 15%), and a high debt-to-income ratio, can render you ineligible for a home equity loan.
How difficult is it to get a HELOC?
The process of obtaining a HELOC is influenced by your financial profile. Lenders meticulously evaluate various factors, including your credit score, the amount of home equity you have, and the stability of your income. By carefully preparing your financial documents and diligently comparing multiple lenders, you can enhance your chances of securing loan approval.
Does HELOC affect credit score?
HELOCs can affect your credit score in several ways. Applying for a HELOC results in a hard inquiry, which can temporarily lower your score. Additionally, using a significant portion of your available credit can increase your credit utilization ratio, potentially impacting your score. However, making timely payments can positively affect your credit history.
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Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
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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