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Compare home equity loan rates in Indiana.
Key Points
• Home equity loans allow homeowners to borrow against the equity in their homes for various expenses.
• Home equity loan rates are influenced by factors like the prime rate, economic conditions, market trends, and lending institution policies.
• To qualify for the lowest Indiana home equity loan rates, it is important to establish a strong credit score, manage debt-to-income ratio, obtain adequate property insurance, and maintain sufficient home equity.
• Home equity loans are typically characterized by fixed interest rates, providing stability in monthly payments.
• Borrowers should compare offers from different lenders and look at alternatives such as HELOCs before choosing a loan.
Introduction to Home Equity Loan Rates
Welcome to our guide to home equity loan rates in Indiana. You’ll learn everything you need to know about the current interest rate environment, how to compare different lenders and loan offers, and what you can do to get the best rates on your home equity loan. We’ll also cover what is a home equity line of credit and look at other alternatives to home equity loans. Armed with this knowledge, you’ll be better prepared to make smart decisions about how to take advantage of the equity in your home.
How Do Home Equity Loans Work?
Let’s start at the beginning: What is a home equity loan, exactly? With a home equity loan, you leverage your home’s value to secure a loan that will likely have a lower interest rate than a personal loan. If you are still paying off your mortgage, a home equity loan is a second mortgage. With a fixed interest rate and a repayment term that can be anywhere from 5 to 30 years, it’s a flexible and affordable option.
To qualify, homeowners usually need to have at least 20% equity in their property. (Your equity is the difference between what you owe on your mortgage and what your home is currently worth.) Home equity loans can be used for a variety of expenses, including home renovations, education costs, medical bills, and debt consolidation.
Where Do Home Equity Loan Interest Rates in Indiana Originate?
Home equity loan interest rates are not arbitrary; they are influenced by a variety of economic factors. Federal Reserve policy decisions regarding interest rates influence banks, which set a prime rate for their most creditworthy customers. They then adjust the rate according to individual borrowers’ financial stats (more on that below).
How Interest Rates Impact Home Equity Loan Affordability
The interest rate you obtain can make a big difference in the affordability of the loan over its full term. Imagine that you borrow $60,000 with a home equity loan. You can see below what a difference the interest rate will make in the monthly payment, but especially in the total interest paid over the life of the loan:
• At 6.00% interest, monthly payments would be $430 and the total interest paid would be $43,166.
• At 7.00% interest monthly payments would be $465 and the total interest paid would be $51,643.
• At 8.00% interest monthly payments would be $502 and the total interest paid would be $60,447.
Home Equity Loan Rate Trends
As noted above, a big part of the interest rate you’ll obtain is the prime rate, and since 2018, the prime rate has fluctuated between 3.25% in 2020 and 8.50% in 2023. These economic shifts have impacted home equity rates in Indiana. Staying tuned to these movements can help you assess whether or not the time is right for you to apply for a home equity loan.
Historical Prime Interest Rates
| Date | Prime Rate |
|---|---|
| 9/17/2026 | 7.00% |
| 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
Source: TradingView.com
Factors Influencing Home Equity Loan Rates
The prime rate isn’t the only thing that lenders factor into the decision about what interest rate to offer when you apply for a home equity loan in Indiana. There are a number of other important factors and — good news — they are much more within your control.
Credit Score
A robust credit score can be instrumental in securing better loan terms, just as it was when you initially applied for your home loan. Generally speaking, for a home equity loan in Indiana, you’ll need a minimum credit score of 680, and higher is better.
Home Value
A prospective lender will likely request an appraisal of your home. The home’s value will help determine both how much equity you have in the property (remember, you need a minimum of 20% equity to get a home equity loan) and how much you can borrow against your property.
Loan-to-Value (LTV) Ratio
The loan-to-value ratio (LTV) is a major factor that lenders consider when determining the interest rate offered on a home equity loan in Indiana. It represents the percentage of the home’s appraised value that the lender is willing to lend against.
Once you and the lender know your home value, you can determine your LTV ratio. Most lenders will let you borrow up to 85% of your home’s value, though the exact number can vary. The higher your LTV, the higher your interest rate is likely to be.
In the case of a home equity loan, any remaining first mortgage balance plus your new home equity loan will need to be under 85% of your home’s value. (Add your mortgage balance and desired home equity loan amount. Divide by your home’s appraised value. Multiply the result by 100 and you’ll get a percentage representing your LTV.)
Home Value Stability
You can anticipate better rates and more liberal loan amounts in a real estate market where prices are on the upswing. If your local market is on a downswing, lenders will be more cautious and interest rates may be higher.
Lender Policies
Lenders have varying policies that affect the interest rates they offer. These policies can have a big impact on the overall cost of borrowing, so borrowers should carefully consider and compare the terms offered by multiple lenders before making a decision.
Property Location
The geographic location of the property in question can have a significant bearing on the interest rate offered by lenders, with areas that are considered to be at higher risk for natural disasters such as wildfires or tornados often being offered higher interest rates.
How to Qualify for the Lowest Rates
To get the best home equity loan rates, you need to have a good credit score, manage your debt-to-income ratio, have property insurance, and have a good amount of equity in your home. By doing the following things, you can increase your chances of getting the best loan terms.
Build a Strong Credit Score
As you’re thinking about how to get equity out of your home, it would be a good idea to check your credit score. A good credit score can make it easier to get a loan and help you qualify for a lower interest rate. Check your credit report and request corrections to any inaccuracies (mistakes do happen). Avoid using the maximum credit line on all your credit cards. And of course, pay your bills on time.
Manage Debt-to-Income Ratio
When you’re applying for a home equity loan, your debt-to-income (DTI) ratio is a big deal. Add up your monthly debts (car payment, student loan payment, etc) and divide by your gross income. Hopefully the result is a DTI ratio of 36% or less, because that is what lenders are typically looking for, although some may allow a DTI up to 50% when considering you for a home equity loan.
Obtain Adequate Property Insurance
Property insurance is a must-have, but you’ll especially want to make sure you’re properly insured before applying for a home equity loan. This protects you and your lender in the event of a disaster.
Maintain Sufficient Home Equity
If you’re in Indiana and mulling over a home equity loan, remember that your equity should be at least 20% of your home’s value. This is a win-win; you get a loan with favorable terms, and lenders are assured that you’re just as invested in your home as they are.
Fixed vs. Variable Interest Rates
Home equity loans in Indiana, as elsewhere, usually come with fixed interest rates. This means your monthly payments will stay the same throughout the life of the loan, giving you a clear picture of your budget. While fixed rates might start a little higher than variable rates, they can offer peace of mind because payments are so predictable. Variable rates, on the other hand, may start lower but can fluctuate over time. (The interest rate on a home equity line of credit, or HELOC, is often variable.)
Tools & Calculators
Online tools and calculators can help you determine your borrowing power, see what your monthly payment would be with different interest rates and loan terms, and understand the potential impact of different loan options on your financial situation. Here are a few of our favorite home equity calculators:
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 range from 2% to 5% of the loan amount. Common fees include an application fee, an origination fee, and a title search fee. The fees vary by lender, so it’s important to compare Indiana home equity loan rates and terms when looking for the best loan.
Tax Deductibility of Home Equity Loan Interest
Many borrowers are happy to learn that the interest you pay on a home equity loan can be tax-deductible if you use the funds for significant home improvements. If you’re married and file jointly, you could be eligible to deduct the interest on a home equity loan up to $750,000, and for single filers, the number is $375,000. Just remember, you’ll need to itemize your deductions to claim this benefit. Keep a record of all your home-improvement expenses for tax purposes.
Alternatives to Home Equity Loans
In addition to a traditional home equity loan, there are different types of home equity loans — technically, different ways you can borrow against your home equity. Take a look at these alternatives:
Home Equity Line of Credit (HELOC)
A HELOC, like a home equity loan, is secured by your home. But in practice it is similar to a credit card — albeit one with a lower interest rate. A lender allows you to borrow up to a certain limit and you only pay interest on the amount of that credit line that you actually use.
Here’s a look at HELOCs vs. home equity loans.
| 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. |
Home Equity Conversion Mortgage (HECM)
A HECM is a government-insured reverse mortgage available to those 62 and older. The flexibility of an HECM allows you to choose from a lump sum, regular payments, or a line of credit. The best part? You don’t have to make payments until you leave your home. This is quite different from home equity loans, which require regular payments. While HECMs may have higher closing costs and longer processing times, the benefits may be worth it to borrowers. (While SoFi does not offer HECMs at this time, we do offer home equity loans and HELOCs.)
Cash-Out Refinance
Another option is to consider a special type of mortgage refinance called a cash-out refinance. In this case, you would get an entirely new mortgage. You use it to pay off the old mortgage and you walk away with extra cash to use however you wish.
As you consider a cash-out refinance vs. a home equity line of credit or a home equity loan, remember that the refi is just that: a refinance. So if you have a really sweet interest rate on your current mortgage, you may find that the cost of a cash-out refi doesn’t make sense for you. On the other hand, if a refi allows you to obtain a better interest rate, it could be a good solution.
The Takeaway
A home equity loan — or one of the alternatives, such as a HELOC — is a great way for Indiana homeowners to access money to pay for big projects. By understanding current interest rates, knowing the various factors that affect loan affordability, and carefully considering the different types of loans available, you can make the best choice for your financial situation.
SoFi now offers home equity loans. Access up to 85%, or $750,000, 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.
FAQ
What will the monthly payment be on a $50,000 home equity loan?
Borrow $50,000 with a home equity loan and repay it over 10 years, and your monthly payments could be anywhere from $530 to $607, depending on whether your interest rate is 5.00% or 8.00%, or somewhere in between.
What is the monthly payment for a $100,000 HELOC?
The monthly payment on a $100,000 HELOC can vary depending on the interest rate and how much principal you owe. To get an idea of what your monthly payment might be, use a HELOC monthly payment calculator. This will help you understand the financial implications of a HELOC and what you can expect to pay each month.
What is the payment on a $25,000 home equity loan?
The interest rate and the loan term will affect monthly payments on a $25,000 home equity loan. Assuming a 10-year term, an interest rate of 6.00% would mean a $278 monthly payment. An interest rate of 8.00% would be $303.
What’s the monthly payment on a $30,000 home equity loan?
A 10-year term and 8.00% interest rate would mean a monthly payment of $364 on a $30,000 home equity loan. The exact number can vary depending on the interest rate and the loan term.
What would disqualify you from getting a home equity loan?
A few factors could stand in the way of you and a home equity loan. These include, but aren’t limited to, a low credit score, a high debt-to-income ratio, insufficient home equity, and inadequate property insurance coverage. Each of these can play a big role in whether you’re approved for a loan, so it’s important to consider them carefully before you apply.
What are the benefits of a HELOC?
A home equity line of credit (HELOC) is a smart choice for many reasons. It generally has a lower interest rate than a credit card, and you only pay interest on the amount of the credit line that you actually use. This line of credit that can be used for a variety of purposes, from home improvements to debt consolidation and even educational expenses. And if you use a HELOC for big home improvements, some or all of the interest you pay could be tax-deductible.
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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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.
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.Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
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