VIRGINIA HELOC RATES TODAY
Current HELOC rates in
Virginia.
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 Virginia.
Key Points
• Factors such as credit score, home equity, and debt-to-income ratio significantly influence home equity line of credit rates in Virginia.
• Comparing rates from various lenders is crucial for securing the most favorable Virginia HELOC rates.
• HELOCs offer flexible access to funds for home renovations, debt consolidation, or significant expenses.
• Understanding the draw and repayment periods, and factors affecting rates is essential if considering a HELOC.
• There are alternatives to HELOCS including home equity loans, personal loans, and a cash-out refinance.
Introduction to HELOC Rates
A HELOC, or home equity line of credit, provides flexible access to funds for home renovations, debt consolidation, or significant expenses. The key to its affordability is the interest rate a borrower manages to secure. This article provides an overview of HELOCs in Virginia, explaining what is a home equity line of credit, how HELOC rates in Virginia are set, and what factors will influence the rate you’ll receive. As you’re thinking about how to get equity out of your home it helps to have strategies for how to present your HELOC application, and we’ve got that, too. But let’s start with the basics.
What Is a HELOC?
A home equity line of credit (HELOC) is a revolving line of credit. Using one is similar to using a credit card, but one that is secured by your home. A lender may allow you to borrow up to 90% of the home’s value, minus your mortgage balance. One advantage of a HELOC is that you only withdraw from it what you need at a given time — and you only pay interest on what you withdraw. HELOC interest rates are usually variable, meaning they can rise (or fall) with market conditions. HELOCs have two 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 even borrow the money again. Interest payments are typically required during this period, while principal payments are often optional. A HELOC interest only calculator can help you see what monthly payments might look like during the draw period.
The Repayment Period
During the repayment period (typically 10 to 20 years), borrowing ends and the principal is paid back with interest. HELOCs offer lower interest rates than many other forms of borrowing because your home serves as collateral. But especially because your home is on the line, it’s important to think about how a variable interest rate might change your payment amounts over the course of a HELOC. Using a HELOC repayment calculator can provide valuable insights into what payments might be depending on different borrowing levels and interest rates.
Where Do HELOC Interest Rates Come From?
HELOC interest rates are tied to the prime rate, which is the benchmark interest rate that lenders set for very creditworthy customers. Prime rates are in turn influenced by Federal Reserve policy decisions. Understanding these factors can help borrowers keep tabs on Fed movements and rate fluctuations and make an informed decision about when to apply for a HELOC.
How Interest Rates Impact HELOC Affordability
Interest rates have a significant influence on the affordability of HELOCs, both the monthly payment and the lifetime interest paid. As you can see from the chart below — which shows different interest amounts based on rate, term, and amount borrowed — it pays to research the best HELOC rates in Virginia to ensure you are getting the most competitive offers available.
| 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
One way to gain perspective on whether you’re being offered a good rate is to understand the history of the average prime rate. Since 2018, the prime rate has fluctuated, reaching a low of 3.25% in 2020 and a high of 8.50% in 2023, as you can see in the chart below. The graphic shows the average prime rate over more than a half-century. As you think about the variable rate of a HELOC, it’s helpful to see what kind of swing in the prime rate has happened historically and how broad (or not) those changes have been over a decade or two.
Historical Prime Interest Rate
| 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
Historical U.S. Prime Rates
Factors Influencing HELOC Rates
Of course, if everyone was offered the prime rate, you could stop reading right now. But lenders adjust their rate offers based on a series of metrics that is distinctive to you. Get to know them so you can see if any might get your application red-flagged.
Home Equity
As you’ve been making monthly payments on your home loan, you’ve built up equity in your property. You’ll need at least 15% to 20% equity to qualify for a HELOC, and the more substantial your ownership stake, the better rate you may get.
Credit Score
A credit score of 680 or higher is a good place to be when applying for a HELOC, but higher is better. Some lenders prefer a score of 700 or more.
Stable Income
Lenders assess your income to determine your ability to repay the HELOC. A stable income signals to them a lower risk of default, potentially leading to better HELOC rates. An erratic income isn’t a deal-breaker, but you might find that you have to take extra steps during the application process to show your earnings, such as providing more than one year of tax return information.
Loan-to-Value Ratio
Lenders usually require a combined loan-to-value ratio of 90% or less. For example, if your home is worth $500,000 and you have a $300,000 mortgage and want a $100,000 HELOC, your LTV ratio would be 80%, safely within the margin.
Variable vs Fixed Interest Rates
As we’ve seen, HELOCs feature variable interest rates, which will fluctuate during the loan term. Variable interest rates usually start out lower than fixed rates but adjust up and down with market conditions. A HELOC calculator can help you see what might happen if your entry HELOC rate adjusted up by, say, a half a percentage point or more.
Tools & Calculators
Calculators can not only assist you in estimating monthly payments, but can show you the total interest you might pay over the life of a HELOC or home equity loan. Here are a few we recommend:
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 qualify for a competitive home equity line of credit rate, it is prudent to concentrate on enhancing your credit score, maintaining a consistent income stream, and ensuring that your loan-to-value ratio remains low. These factors are evaluated by lenders when determining the interest rate offered.
Care for Your Credit Score
Pay on time and avoid maxing out all your credit cards — it’s good credit hygiene for life. Another thing you’ll want to do is check your credit report for errors. They do happen and fixing them can help your score recover.
Assess Your Home Equity
You know you need at least 15% equity in your home for a HELOC. Maybe you have enhanced your home value through renovations. Or perhaps you live in a hot real estate market. Take a few minutes to look up your home’s estimated value on a real estate web site. Subtract from that amount whatever you owe on your mortgage. Then divide the result by the estimated value. That’s your home equity percentage.
Calculate Your Debt-to-Income Ratio (DTI)
Your DTI ratio is how much you owe in monthly debt payments divided by your gross monthly income. Home equity lenders generally look for a DTI that’s below 50%, although some like 36% or less. Generally, the lower the better.
Application Process for a HELOC in Virginia
The steps involved in the application process for a HELOC in Virginia include reviewing your financial health, comparing rates, preparing documentation, submitting an application, undergoing a home appraisal, and waiting for approval and closing. Each step is crucial for securing a HELOC.
Step 1. Run the Numbers
Some lenders enable prospective borrowers to prequalify for a home equity line of credit online, thereby streamlining the application process. These lenders will calculate your DTI ratio and equity. If you don’t prequalify online, you’ll need to do the math by hand. First make sure you have at least 15% equity. Then ensure a DTI ratio of at least 50%. If you tick both boxes, it’s time for Step 2.
Step 2. Compare Lenders
When seeking the best HELOC rates in Virginia, it’s essential to compare various lenders. Don’t just look at posted interest rates. Consider factors such as qualification requirements, loan minimums and maximums, the length of draw and repayment periods, and fees.
Step 3: Gather Your Documents
To ensure a smooth and efficient HELOC application process, it’s important that you gather all the necessary documentation, including proof of income, a detailed employment history, and details about your property’s insurance coverage. Having these documents readily available will expedite the completion of your HELOC application.
Step 4: Submit Your Application
Submitting your HELOC application online or in person (or sometimes even by phone) is the next step. A complete and accurate application will better your chances of approval and helps you secure competitive HELOC rates in Virginia.
Step 5: Get an Appraisal
After you submit your application, you will probably need a home appraisal. This might be an in-person appraisal, or a lender may use an automated valuation model (AVM) appraisal, where an algorithm uses data to decide a home’s estimated value. The appraisal helps determine the amount of equity you have in your home, which affects your HELOC rate.
Step 6: Prepare for Closing
Once you find a HELOC offer at an acceptable interest rate and with terms you consider favorable, you’re ready to sign the loan agreement. Before accessing your HELOC funds, you’ll also pay necessary fees. Lenders can make funds available as quickly as three days after the closing. Ensuring all paperwork is in order and fees are paid will help you access your funds promptly.
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 paid on the first $375,000 of the mortgage principal for individual taxpayers ($750,000 for married couples filing jointly). Consult a tax advisor to navigate specific tax implications and confirm eligibility. And save your receipts for home improvements.
Closing Costs and Fees
HELOC closing costs are lower than home buying or cash-out refinance. The appraisal fee is usually the highest expense, ranging from $300 to $600. Other costs include application, loan origination, and administrative fees. Some lenders offer to reduce or waive closing costs but they may charge a higher interest rate.
Alternatives to HELOCs
In addition to HELOCs, there are different types of home equity loans and other financing options available. Consider this list before you sign on to any type of borrowing.
Home Equity Loan
Home equity loans and HELOCs are often confused. So it’s helpful to see what is a home equity loan and how it’s different from a HELOC. Unlike home equity lines of credit, home equity loans provide a lump sum and have a fixed interest rate. Homeowners can typically access up to 85% of the equity built in their home through a home equity loan. A home equity loan calculator can help you see how much you might be able to borrow. Here’s a quick look at the HELOC vs. home equity loan comparison:
| 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
A cash-out refinance is a mortgage refinance that allows homeowners to refinance their existing mortgage for more than they owe, paying off their initial loan and taking the balance in cash. It’s useful for those who need a large lump sum.
A few things to think about if you’re considering a cash-out refinance vs. a home equity line of credit: The refinance means you’ll have only one monthly payment, as opposed to two if you take on a HELOC while paying off a mortgage. It also means a new interest rate and loan terms. If rates have dropped since you initially financed your home, this could be good news. Look closely at current interest rates in Virginia to make sure you aren’t paying significantly more interest by refinancing.
Personal Loan
Personal loans can be used to cover a wide range of expenses, just like HELOCs and home equity loans. However the repayment term tends to be shorter — 2 to 7 years. Interest rates for personal loans are also often higher than those for HELOCs or home equity loans because personal loans are unsecured. Some borrowers like the fact that their home wouldn’t be used as collateral. And because you sidestep a home appraisal, the loan approval process may be faster, too.
Credit Cards
Credit cards tend to come with higher interest rates than HELOCs, which can make them much more expensive if you carry a big balance from month to month. When considering borrowing strategies, it’s worth noting that a home equity loan or HELOC can offer a better rate and more flexible repayment terms than a credit card.
The Takeaway
HELOCs present Virginia homeowners with a highly flexible method to effectively leverage their home equity for a wide range of financial needs. Given the availability of competitive rates and a diverse selection of lenders, homeowners can conveniently secure substantial loan amounts for various purposes. Carefully tending your credit score, fully documenting your application, and comparing lenders’ rates can help ensure you get the best available HELOC rate in the state.
SoFi now offers flexible HELOCs. Our HELOC options allow you to access up to 90% of your home’s value, or $500,000, at competitively low rates. And the application process is quick and convenient.
FAQ
What is the monthly payment on a $50,000 HELOC?
The monthly payment on a $50,000 home equity line of credit (HELOC) is contingent upon the interest rate and repayment conditions — and of course, whether you are using the entire credit line. The best way to get the precise monthly payment is to plug your numbers into an online HELOC payment calculator.
Is a HELOC a good idea right now?
Deciding if a home equity line of credit (HELOC) is a sound financial move will depend on your financial circumstances. A HELOC is a very flexible way to borrow because you only borrow (and pay interest on) what you need. Do you need to borrow in increments, and are you comfortable with the HELOC’s variable interest rate? If so, a HELOC may be a good move for you.
What is the monthly payment on a $100,000 HELOC?
The monthly payment on a $100,000 HELOC will be based on how much of the credit line you have used, and on your term and rate. If you use the entire $100,000 and need to pay it back at 7.50% interest over 20 years, your monthly payment would be $806. If you had a 7.00% interest rate, you would pay less: $775.
What are the benefits of a HELOC?
A home equity line of credit is a very flexible way to borrow. You only withdraw what you need at any given time. HELOCs also typically have a lower interest rate than a personal loan or credit card. You can use the funds borrowed from a HELOC for anything. And many borrowers find it reassuring to have a credit line open for any unexpected emergencies.
Do you need an appraisal for a HELOC?
Yes, an appraisal is usually a must for a HELOC. The value of your home helps the lender decide how much money you can borrow — and whether you can borrow at all.
What disqualifies you from getting a home equity loan?
Poor credit history, insufficient home equity, and a high debt-to-income ratio are some of the factors that can disqualify you from obtaining a home equity loan.
How difficult is it to get a HELOC?
The level of difficulty associated with getting a HELOC depends on your credit score, home equity, and debt-to-income ratio. Homeowners with strong financial profiles may find qualifying for a HELOC to be smooth sailing, whereas those with less favorable profiles may run up against challenges.
Does HELOC affect credit score?
Applying for a HELOC may result in a hard inquiry on your credit report, which can cause a temporary decrease in your score. How you manage your HELOC can also influence your credit score over the long term. If you’re the pay-on-time type, you should be fine.
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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