CALIFORNIA HOME EQUITY LOAN RATES TODAY
Current home equity loan rates in
California.
Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
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Compare home equity loan rates in California.
Key Points
• Home equity loans provide borrowers a lump sum of money upfront that’s repaid with fixed monthly payments, typically from 5-30 years.
• Home equity loans in California usually require at least 20% home equity.
• Because a home equity loan uses your home as collateral, the interest rate is lower than for unsecured personal loans. However, if you fail to make payments, the bank could seize your home.
• To qualify for the lowest rates, establish a robust credit score, manage your debt-to-income (DTI) ratio, secure adequate property insurance, and maintain sufficient home equity.
• Interest on home equity loans can be tax-deductible if used for home improvements.
Introduction to Home Equity Loan Rates
Welcome to our comprehensive guide to home equity loan interest rates in California. We’re here to help you navigate the challenges and opportunities of tapping your home equity in the current housing market. We’ll cover the key factors that influence rates, including the prime rate and DTI ratios, as well as popular alternatives to home equity loans, such as home equity lines of credit (HELOCs) and home equity conversion mortgages (HECMs). Plus, we include tips for securing the lowest rates and making the application process as smooth as possible.
How Do Home Equity Loans Work?
A home equity loan is a type of second mortgage that leverages your home as collateral in exchange for a lower fixed interest rate. To qualify, homeowners should have at least 20% equity in their primary residence.
You can estimate your maximum loan amount with a home equity loan calculator or the two-step formula below. Many lenders allow a combined loan-to-value ratio (CLTV) of no more than 85%. Your CLTV represents your mortgage balance plus the amount you want to borrow, divided by the appraised value of your home.
• Appraised home value x 85% = Maximum home debt (mortgage + loan)
• Maximum home debt – Mortgage owed = Maximum loan amount
Let’s say your home is appraised at $800,000 and your mortgage owed is $600,000.
• $800,000 x 85% = $680,000
• $680,000 – $600,000 = $80,000 Max loan amount
Home equity loans can be used for a variety of big-ticket expenses, including home improvements, education costs, and more.
Recommended: How to Get Equity Out of Your Home
Origin of Home Equity Loan Interest Rates
Now that you know what a home equity loan is, let’s dive into interest rates. Home equity loan interest rates are a product of various economic factors, with the prime rate playing a significant role. This prime rate is the baseline interest that banks offer to their most creditworthy clients. Policy decisions by the Federal Reserve also have a ripple effect on home equity rates in California. And a borrower’s financial profile influences the interest rates they’re offered as well — we’ll get into that in detail below.
By grasping these influences, you can be better prepared to anticipate rate changes and make well-informed decisions about home equity loans.
How Interest Rates Impact Affordability
The interest rate you secure can have a big impact on your finances. How big an impact? Even a mere one-percentage-point difference can significantly impact the cost of your loan. The difference in the total interest you’ll pay on a $100,000 loan at 6.00% and 7.00% is about $14,000 over a 20-year term. That’s why shopping around for the best home equity loan deal is so important.
| Loan Amount | Loan Term | Interest Rate | Monthly Payment |
|---|---|---|---|
| $100,000 | 20 years | 7.00% | $775 |
| 6.00% | $716 | ||
| 10 years | 8.00% | $1,213 | |
| 7.00% | $1,161 | ||
| $50,000 | 20 years | 8.00% | $418 |
| 7.00% | $388 | ||
| 10 years | 8.00% | $607 | |
| 7.00% | $581 | ||
| $25,000 | 20 years | 8.00% | $209 |
| 7.00% | $194 | ||
| 10 years | 8.00% | $303 | |
| 7.00% | $290 |
Home Equity Loan Rate Trends
The prime interest rate’s ups and downs are like a crystal ball for home loan rates. Pay attention to these changes, as they can guide your borrowing decisions when you’re on the hunt for the best home equity loans in California. Stay informed, and you’ll be better equipped to make the right financial moves at the right time.
Historical Prime Interest Rates
Since 2018, the prime rate has seen its share of ups and downs, ranging from a low of 3.25% in 2020 to a high of 8.50% in 2023. Take a look at the history of the prime rate to get a sense of how high or low it may go this year.
| Date | Prime 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% |
Source: St. Louis Fed
Factors Influencing Home Equity Loan Rates in California
Now for the final piece of the puzzle that’s home equity loan interest rates: The California housing market and individual borrowers’ financial profile also come into play. Your credit score, LTV ratio, home value, property location, and lender policies all exert their push and pull on rates. Here’s what to expect when applying for a home equity loan in California:
Credit Score
Your credit score is a big deal. It’s like a financial thumbs-up, telling lenders that you’re responsible and reliable. The better your score, the better the interest rates you can snag. For home equity loans, you’re looking at a score of 680 or higher to get the nod from most lenders. In California, where the market’s hot and the competition’s fierce, a solid credit profile is your golden ticket.
Loan-To-Value (LTV) Ratio
The loan-to-value (LTV) ratio is a number lenders use to help them decide how much risk they’re taking on when they lend you money. To calculate your LTV, divide the amount of your loan by the appraised value of your home. Most lenders will let you borrow up to 85% of your home’s value, including your mortgage balance. The LTV ratio is important because it helps lenders set the interest rate and loan terms that are right for you and your financial situation.
Home Value
When it comes to home equity loans, lenders want to make sure they’re not lending you more money than your property is worth. To do this, they’ll typically order an appraisal, which is a professional (and human-generated) estimate of your home’s worth. The appraiser will compare your home to similar properties in your area and consider the condition of your home, including any improvements you’ve made. The appraised value of your home will help determine how much money you can borrow.
Home Value Stability
The stability of home values can significantly impact the amount of equity that homeowners can potentially access and utilize. When home values experience an upward trend, lenders may be more inclined to approve larger loan amounts, as the increasing value of the property mitigates some of the associated risk. Conversely, declining home values can heighten the lender’s risk exposure, potentially leading to more stringent lending criteria and smaller loan approvals. In most areas of California, home value stability is strong.
Property Location
If your home is in a high-risk area, you might see higher interest rates. High-risk areas are often places that are more likely to experience extreme weather or natural disasters, such as hurricanes, floods, wildfires, and earthquakes. It’s important to keep this factor in mind when you’re shopping for a loan in California, which has had its fair share of extreme weather in recent years.
Lender Policies
When you’re looking for a home equity loan, it’s important to consider how the lender’s policies might affect the interest rate you’re offered. To help you make an informed decision, we recommend shopping around and comparing interest rates, fees, and closing costs from multiple lenders. By doing your homework and comparing your options, you might be able to find more favorable terms and save money in the long run.
How to Qualify for the Lowest Rates
Here are your action items for getting the best available rates on a home equity loan. By checking these things off your list in advance, you can increase your chances of getting the best loan terms.
Build a Strong Credit Score
As noted above, a good credit score can work wonders when you’re applying for a loan. Lenders often reward higher credit scores with better interest rates. So by maintaining a solid credit history, you could be looking at more favorable terms for your California home equity loan, which translates to more financial freedom and potential savings for you. For tips on how to build up your score, check out What Factors Affect Your Credit Score?
Manage Debt-to-Income Ratio
Another three-letter acronym! Not to be confused with your LTV, your DTI ratio is a critical piece of the loan puzzle. It’s calculated by comparing your monthly income to your monthly debt obligations. Most lenders look for a DTI of 36% or less but may accept DTI ratios that range from 43% to 50% from borrowers with strong credit scores, savings, and down payments. This means that if more than half of your income goes to debt, you may not qualify for a home equity loan. To lower your DTI ahead of a home equity loan application, start by paying down high-interest credit card debt first.
Obtain Adequate Property Insurance
Property insurance is a common requirement for home equity loans in California, especially in areas prone to flooding. The reason is simple: Flooding can wreak havoc on your property, and insurance is a safety net for both you and the lender. It’s a smart move to safeguard your investment and your financial well-being. Even if you haven’t needed a separate flood insurance policy in the past, it’s worth looking into before applying for a home equity loan.
Maintain Sufficient Home Equity
In California, the rule of thumb is to keep at least 15% to 20% equity in your primary residence to be eligible for a home equity loan. This is a protective measure for both you and the lender, because it ensures that you have a financial cushion and that the lender has a secure investment.
Fixed vs Variable Interest Rates
Home equity loans often come with fixed rates, which means you’ll have the same rate for the life of your loan. This predictability makes it easier to plan your monthly budget. Fixed rates can sometimes be a bit higher than variable rates at the start.
A HELOC typically comes with a variable interest rate. Variable rates might begin lower than fixed rates but can change over time with the markets, meaning you could end up with a higher, more expensive monthly payment.
Tools and Calculators
Homeowners have access to many online tools and calculators that can assist them in managing their home finances. These user-friendly resources empower homeowners to calculate their California home equity loan amount, estimate loan payments, and compare the total costs of loans with different interest rates. Here, in addition to the home equity loan calculator, you’ll find a HELOC repayment calculator and a HELOC interest-only calculator.
Run the numbers on your home equity loan.
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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.
Closing Costs and Fees
Closing costs for home equity loans typically run from 2% to 5% of the loan amount. Common fees include an application, origination, appraisal, and a credit report fee. Other costs may include a title search, surveys, attorneys, and mortgage preparation and filing fees.
Tax Deductibility of Home Equity Loan Interest
Here’s a tip: For the 2026 tax year, the interest on your home equity loan can be tax-deductible if you use it to build or improve a primary or secondary residence. For tax purposes, a second home is one not used for income that is treated much like the owner’s primary home. The deduction limit through 2026 is $750,000 for joint filers and $375,000 for single filers. Just remember, you’ll need to itemize your deductions to claim this benefit. And for the best advice, consider consulting a tax advisor.
Alternatives to Home Equity Loans
In California, you have several alternatives to home equity loans. These include HELOCs, HECMs, and cash-out refinances. Each of these different types of home equity loans has its own unique features and eligibility requirements. These alternatives can provide you with additional borrowing options that are tailored to different financial situations and needs.
Home Equity Line of Credit (HELOC)
A HELOC is like a credit card but one that’s backed by your home. It gives you the flexibility to borrow up to a certain limit, and you only pay interest on the amount you actually draw. But here’s the thing: The variable interest rates on HELOCs can change with the market, which means your costs could go up if rates rise. So it’s important to keep an eye on the current rates in California before you decide if a HELOC is the right move for you. The comparison article HELOCs vs. Home Equity Loans can help you distinguish the pros and cons of these two options.
Home Equity Conversion Mortgage (HECM)
An HECM is a government-backed reverse mortgage that can be a good option if you’re 62 or older. It allows you to receive payments from the lender based on your home’s value. You can get the money as a lump sum, in regular payments, or as a line of credit. The best part? You don’t have to make payments until you leave your home.
Cash-Out Refinance
A type of mortgage refinance, a cash-out refinance is a new mortgage that pays off your old one and gives you extra cash. Lenders usually cap cash-out refinances at 85% of your home’s equity. If that sounds intriguing, the comparison story Cash-Out Refinance vs. Home Equity Line of Credit might interest you.
Recommended: What Is a Home Equity Line of Credit?
The Takeaway
For California residents, the options are plentiful when it comes to securing competitive home equity loan rates. Your credit score, DTI ratio, LTV ratio, and the choice between variable and fixed rates all play a part in the rates you can access. By familiarizing yourself with general market conditions and exploring your options, you can find the best rates and terms for your home equity loan in the Golden State.
Unlock your home’s value with a home equity loan from SoFi.
FAQ
What would the monthly payment be on a $50,000 home equity loan?
The monthly payment required for a home equity loan of $50,000 is determined by the interest rate and the duration of the loan. If you were to take out a loan at 7.00% interest over 10 years, you’d be looking at a monthly payment of roughly $581.
What is the monthly payment on a $100,000 HELOC?
When you’re considering a home equity line of credit (HELOC), the monthly payment is affected by the interest rate and how much of the credit line is being used. For example, a $100,000 HELOC with an interest rate of 7.00% and a $50,000 draw would have a monthly payment of about $581. The same rate with a $75,000 draw would result in a monthly payment of $871.
What is the payment on a $25,000 home equity loan?
The monthly payment on a $25,000 home equity loan is determined by the interest rate and the loan term. For example, if you take out a loan at 7.00% interest over 10 years, your monthly payment would be approximately $290. This is based on a standard repayment schedule with equal payments toward the principal and interest over the loan’s life.
What would the payment be on a $30,000 home equity loan?
A $30,000 home equity loan at a 7.00% interest rate over a 10-year term would mean a monthly payment of about $348. This is just one example of how the numbers play out. Try entering different scenarios in a home equity loan calculator to see what works best for you.
What might disqualify you from getting a home equity loan?
There are a few things that could prevent you from getting a home equity loan. These include a low credit score, a high debt-to-income ratio, not enough equity in your home, or not having enough insurance on your property. These factors can make it more difficult to get a loan, but there are ways to work around them.
What are the benefits of a HELOC?
Home equity lines of credit (HELOCs) offer a flexible way to borrow, often at much lower interest rates than you’d pay on credit cards. With a HELOC, you can choose to pay only the interest on the amount you borrow during the draw period (typically 10 years). HELOCs can be used for a variety of purposes, including home renovations, education expenses, consolidating higher-interest debt, or other financial needs.
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*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.
²SoFi Bank, N.A. NMLS #696891 (Member FDIC), offers loans directly or we may assist you in obtaining a loan from SpringEQ, a state licensed lender, NMLS #1464945.All loan terms, fees, and rates may vary based upon your individual financial and personal circumstances and state.You should consider and discuss with your loan officer whether a Cash Out Refinance, Home Equity Loan or a Home Equity Line of Credit is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit not originated by SoFi Bank. Terms and conditions will apply. Before you apply, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and a minimum loan amount. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria. Information current as of 06/27/24.In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee.
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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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.
This content is provided for informational and educational purposes only and should not be construed as financial advice.
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More home equity 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