Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
Key Points
• Home equity loan rates are influenced by economic conditions as well as a borrower’s personal financial factors.
• You may be able to secure lower interest rates by working to boost your credit score and manage your debt.
• You’ll need to have at least 20% equity in your home to be eligible for a home equity loan.
• Fixed interest rates offer stability and predictability in your monthly payments over the life of your loan.
• The interest you pay on a home equity loan may be tax-deductible if you are using the money you borrow to improve your home.
• Homeowners have other options, too, including HELOCs and cash-out refinancing.
What is a home equity loan? It’s a great way for homeowners to access the value they’ve built in their homes. It’s also a loan option many use to relieve the pressure when they need cash.
In this article, we’ll cover everything you should know about home equity loans. We will discuss factors that affect loan rates and tips for getting the very best rates in Boston. We’ll also explain the fine points of different types of home equity loans, including home equity lines of credit (HELOCs) and cash-out refinances, so you’ll be aware of the alternatives available, and their pros and cons.
Whether you’re gearing up for a home renovation, planning to consolidate high-interest debt, or preparing to make a major purchase, understanding Boston home equity loan rates can help you make smart financial decisions and get you set up for a successful economic future.
A home equity loan is a type of a second mortgage. It can allow you to tap into your home’s equity so that you receive a lump sum of cash. You then repay it, usually in equal monthly installments over a period of five to 30 years. The loan, which is secured by your home, may allow you to access lower interest rates than you would get with an unsecured personal loan.
One important thing to note: In order to draw on the equity in your home, you need to have equity in your home. You can still be in the process of paying off your mortgage, but the money you owe now should not be more than the house is worth. Typically, lenders will want you to have a minimum of 20% equity in your home to qualify for a home equity loan.
Here is a comparison of the two types of financing you may use to take equity from your home.
| 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 plus interest; 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 |
If you’ve been paying your mortgage consistently and on time, and now you are wondering how to get equity out of your home, a home equity loan may be a great option for you.
Multiple factors determine what the home equity loan rates in and near Boston look like. These include not only big-picture economic conditions, but your individual financial profile as well.
Federal Reserve policies have an impact on lenders’ base rates and thus the rates they charge borrowers. Increases in the federal funds rate and the prime rate, for instance, lead to rises in home equity loan rates. Understanding these important influences can enable borrowers to anticipate rate fluctuations and make informed decisions about all different kinds of home loans, including home equity loans.
Your credit score and debt-to-income ratio can strongly influence what rate you are offered by lenders. Additionally, the amount of your loan and the length of your repayment term will have an impact on the rate you get. Generally, the larger the loan and the longer the term, the higher your rate — this is due to the increased risk lenders are taking on.
Once you see how it pays to look for the best available interest rates, whether you’re shopping for a home equity loan or a HELOC, there’s no question — your interest rate will be a major factor when it comes to affordability. As of early July 2025, the average home equity loan interest rate was 8.26%.
The chart below shows the numbers for a $75,000 home equity loan with a 20-year repayment term, with the payments and total interest calculated at various interest rates. If you have an 8.00% interest rate, your monthly payment would be $627, and the interest you’d pay over the loan’s entire term would be $75,559. With a rate just one percentage point lower, at 7.00%, your monthly payment would be $581, and total interest would drop to $64,554. The lower rate could ultimately save you $11,005 over the loan’s life.
| Interest Rate | Monthly Payment | Total Interest Paid |
|---|---|---|
| 8.00% | $627 | $75,559 |
| 7.50% | $604 | $70,007 |
| 7.00% | $581 | $64,554 |
When it comes to a HELOC vs. a home equity loan, the latter tends to have a fixed interest rate. Monthly payments don’t change — they will stay the same for the entire length of the loan. A fixed rate may start off higher than an adjustable rate, but it is usually an optimal choice because of its stability. Your payments won’t suddenly spike with a fixed rate.
Adjustable rates can seem attractive at first glance, but after a defined period, the rates “adjust” to follow a market index. They may jump higher than the initial rate. Since rates can fluctuate quite a bit over the life of an adjustable-rate loan, the future of your payments can feel unpredictable.
When you decide between the two kinds of rates, think carefully about your financial goals, how flexible your budget tends to be, and how much risk you’re comfortable with.
You can think about how to get equity out of your home and try to time your loan application to achieve the lowest possible rate, but unfortunately, predicting the prime rate is like trying to forecast the weather. Sometimes the direction things will go is impossible to guess, and not all borrowers have time to wait for a dip.
The prime rate has seen its fair share of ups and downs, as you can see from the graphic and the chart below.
| Date | Prime 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 | 5.50% |
| 9/27/2018 | 5.25% |
If you need a loan, focus on comparing offers from different lenders. Also, work on positioning yourself to get the best possible rate. How? By controlling what you can.
To have success in securing the most competitive home equity loan rates in Boston, you should zero in on a few factors. Take the following steps before beginning the application process and you’ll be in a better spot to line up a home equity loan with rates and terms that are not only manageable but hopefully beneficial.
To calculate home equity, you need just a simple equation. In general, you’ll have to have at least 20% equity in your home to qualify for a home equity loan. Figure out what your level of equity is like this: First, subtract your outstanding mortgage balance from the estimated value of your home. Next, divide that resulting figure by the estimated home value. You’ll arrive at the percentage of equity you now possess. The higher it is, the better off you are.
A robust credit score is essential if you want to land the best available home equity loan rate. Boston lenders are likely to look for a score of 680 or higher, and many want to see a score over 700. A higher credit score is a sign of financial fitness — it can open doors to more favorable loan terms. To improve yours, make sure you reduce credit card balances, and submit timely payments. Avoid taking on new debt. These moves will help up your chances of qualifying for a home equity loan with a favorable interest rate.
Your DTI ratio is important when it comes to qualifying for a home equity loan and getting a great rate. Lenders most often prefer to see a DTI ratio of 50% or less, and 36% or lower will give you a real chance at qualifying for the lowest interest rates. Manage your DTI by working on paying down your existing debt, increasing your income, or achieving a combination of the two.
One must-have for a home equity loan is proper insurance coverage on your property. This safety-net insurance plan protects both you and your lender should something unexpected strike your home or land. Make sure your coverage is active, and confirm annually that it’s sufficient, especially if you are actively improving the place.
Taking steps to borrow against your home? You might want to run some numbers so you can understand what borrowing opportunities will be available to you, and what you can expect to spend for future loan payments. A home equity loan calculator and other online tools can make that math easy for you. Here are some we use often.
Enter a few details about your home loan and we’ll provide you your maximum home equity loan amount.
Punch in your HELOC amount and we’ll estimate your monthly payment amount for your HELOC.
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.
When it comes to home equity loan closing costs, you’ll pay a ballpark figure of 2% to 5% of the loan amount. This table details typical closing costs that are encountered by borrowers.
| Service | Typical Fees |
|---|---|
| Appraisal | $300-$500 |
| Credit report | $30-$50 or more |
| Document preparation | $100-$500 (may be billed on an hourly basis if attorney involvement is required, or built into the loan origination fee) |
| Loan origination | 0.5%-1.0% of the loan amount |
| Notary | $20-$100 |
| Title insurance | 0.5%-1.0% of the loan amount |
| Title search | $75-$250 or more |
Some lenders offer no-closing-cost loans, but these frequently carry higher interest rates. Be sure to calculate what you’ll pay over the life of the loan before you apply.
The interest you pay on your home equity loan may be tax-deductible, though usually only if you use the funds to pay for improvements on the home you borrow against. A single filer can deduct interest on the first $375,000 of loan debt. Married couples filing jointly can deduct interest on up to $750,000 of debt. But you’ll need to itemize on your tax return if you want to take advantage of the writeoff. For the most up-to-date information on how it applies to you, consult with a tax advisor.
While home equity loans are a desirable option for many, you’ll find other ways to borrow against your equity, too. Let’s take a look at some other options you may have heard of, including a home equity line of credit and a cash-out refi.
What is a home equity line of credit? A HELOC is a bit like a credit card for homeowners. It gives you the ability to borrow up to a certain limit and — during the initial “draw” period — pay interest only on the amount you’ve borrowed. A HELOC offers homeowners the freedom to borrow up to a set limit and pay interest solely on what they use.
Usually, there’s an initial “draw” period during which they can withdraw funds, followed by a repayment period in which they repay principal and interest. Rates are generally adjustable. Unlike a home equity loan, a HELOC is about flexibility, but keep in mind that adjustable interest rates mean payments may fluctuate.
Also often referred to as a cash-out refi, this is a special mortgage refinance that lets you replace your existing mortgage with a new, larger one. You then pocket the difference and use it as you wish. The amount you can cash out is determined by the home equity you’ve accrued, with most lenders allowing you to borrow up to 80% of that. Typically, you will need to have a credit score of 620 or above and a debt-to-income ratio that is under 43% to qualify.
The beauty of a cash-out refi is that you often get to choose between a fixed rate or a variable one. Below is a quick guide to help you compare a home equity loan vs a cash-out refinance vs a home equity line of credit:
| Home Equity Loan | HELOC | Cash-Out Refinance | |
|---|---|---|---|
| Borrowing Limit | Up to 85% of borrower’s equity | Up to 90% of borrower’s equity | 80% of borrower’s equity for most loans |
| Interest Rate | Fixed | Generally variable | May be fixed or variable |
| Type of Credit | Installment loan: Borrowers get a specific amount of money all at once that they then immediately begin repaying, with interest, in regular installments. | Revolving credit: Borrowers receive a line of credit. They have a draw period (5-10 years) during which they borrow and can only pay interest (a HELOC interest-only calculator is useful then). Then there is a repayment period (10-20 years) to repay the principal plus interest. | Installment loan: Borrowers receive a lump sum payment from the excess funds of their new mortgage, which has a new rate and repayment terms. |
| Repayment Term | Generally 5-30 years | A draw period of 5-10 years, followed by a repayment period of 10-20 years | Generally 15-30 years |
| Fees | Closing costs (typically 2-5% of the loan amount) | Closing costs (typically 2%-5% of the loan amount), plus other possible costs, depending on the lender (annual fees, transaction fees, inactivity fees, early termination fees) | Closing costs (typically 2-5% of the loan amount) |
If you’re thinking about a home equity loan in Boston, it’s wise to study up on the key factors that drive loan rates. Your credit score, DTI ratio, and equity level all play a role. But shopping around can also help you get the best available rate, and if a home equity loan isn’t the right fit, remember that HELOCs and cash-out refinances have their own unique benefits.
SoFi now offers home equity loans. Access up to 85%, or $350,000, of your home’s equity. Enjoy lower interest rates than most other types of loans. Cover big purchases, fund home renovations, or consolidate high-interest debt. You can complete an application in minutes.
Unlock your home’s value with a home equity loan from SoFi.
Some popular reasons why people pursue home equity loans are to pay for home improvements and to consolidate their high-interest debt. If you decide to apply for a home equity loan, remember to think about whether the loan fits into your bigger financial picture and use the funds wisely.
For a $50,000 home equity loan, the amount of your monthly payment can vary depending on the interest rate and the loan term. For example, if you got a 7.00% interest rate on the loan and a term of 15 years, your monthly payment would be about $449. At a 9.00% interest rate over 15 years, the payment would be around $507. A loan calculator can help you quickly figure out what your monthly payments would be with a variety of variables.
A number of factors could get in the way of your securing a home equity loan. First, lenders typically require a minimum credit score, generally around 680, and having a lower one may disqualify you. A high debt-to-income (DTI) ratio – usually above 50% – might also keep you from getting your loan. Having less than 20% equity in your home could be a red flag for lenders, too. Potential lenders will look at how stable your home’s value is and how comprehensive your property insurance is. Qualifications vary from lender to lender, but these are common disqualifiers.
Home equity loans often come with fixed interest rates, so they have predictable monthly payments, making budgeting easier. They also usually have lower rates than unsecured personal loans, making them a cost-effective option for significant one-time expenses like home improvements or debt consolidation. Just be sure to balance the benefits with the potential risks, including home foreclosure if you fall behind on your payments.ome equity loans often come with fixed interest rates, so they have predictable monthly payments, making budgeting easier. They also usually have lower rates than unsecured personal loans, making them a cost-effective option for significant one-time expenses like home improvements or debt consolidation. Just be sure to balance the benefits with the potential risks, including home foreclosure if you fall behind on your payments.
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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.
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.
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