Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
Key Points
• Home equity loan rates in Minneapolis are determined by your credit score, your debt-to-income ratio, and other factors.
• Prepare to secure the best rates by aiming for a credit score of 700 and a debt-to-income (DTI) ratio under 36%.
• The rates lenders offer you are impacted by the prime rate and, more distantly, Federal Reserve policy, as well as your personal financial profile.
• Even a small difference in your home equity loan interest rate can add up to substantial savings over the life of the loan.
• The interest you’ll pay on a home equity loan might be tax-deductible if you use the money to fund home improvements.
• Other options are out there, such as HELOCs and cash-out refinances. They come with their own perks and pitfalls.
What is a home equity loan? It’s a smart way for homeowners to access the value they’ve built in their homes. It is also a loan option used by many to relieve some of the pressure when they need cash.
In this article, we’ll cover everything you’ll want to know about home equity loans. We will discuss factors affecting loan rates and strategies for getting the very best rates in Minneapolis. 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 and their pros and cons.
Whether you are gearing up for a long-awaited home renovation, planning to consolidate the high-interest debt you’ve been carrying, or preparing to make a major family purchase, understanding Minneapolis home equity loan rates can help you make the best financial decisions and prepare you for an economically successful future.
A home equity loan is a second mortgage. It allows you to tap into your home’s equity and turn it into a lump sum of cash. You then repay it, usually in fixed monthly installments over a period of five to 30 years. The loan is secured by your home, and that may allow you access to lower interest rates than you would get with an unsecured personal loan.
One key thing to note: In order to draw on the equity in your home, you need to have equity in your home. You can be working to pay off your mortgage, but the money you still owe should not be more than your house is worth. Generally, lenders want you to have a minimum of 20% equity in your home in order to qualify for a home equity loan.
Here is a comparison of the two financing options 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 wonder how to get equity out of your home, a home equity loan may be an appropriate option for you.
Multiple factors are constantly driving what the home equity loan rates in and near Minneapolis look like. These are not only big-picture economic conditions, but variables within your individual financial profile as well.
Federal Reserve policies impact lenders’ base rates, with adjustments to the federal funds rate sending ripples through the lending market and impacting the prime rate. When the prime rate moves up or down, so do home equity loan rates. Understanding these important influences can enable a borrower 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 the rates you’re offered by lenders. Additionally, the amount of your loan and the length of your repayment term will factor into 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 take on.
Whether you’re shopping for a home equity loan or a HELOC, there’s no question — your interest rate will be a major factor determining the affordability of your loan. As of July 2025, the average home equity loan interest rate was 8.26%.
The chart shows the numbers for a $75,000 home equity loan with a 20-year repayment term, with the payments and the interest to be paid 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 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 be reduced to $64,554. The lower rate could ultimately save you $11,005 in interest 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 |
Considering a HELOC vs. a home equity loan? You’ll want to know that the latter tends to have a fixed interest rate. Monthly payments will stay the same for the entire length of the loan. A fixed rate may start off higher than adjustable rates you see advertised, but it’s usually still an optimal choice because of its stability. With a fixed rate, your payments won’t suddenly spike.
Adjustable rates can seem attractive at first glance, but after a defined period, the rates “adjust” to follow a market index. At this point, they may jump higher than the initial rate. Since rates can fluctuate 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 how flexible your budget tends to be and how much risk you’re comfortable with, along with your long-term financial goals.
If you are thinking about how to get equity out of your home, you can try to time your loan application to achieve the lowest possible rate. But unfortunately, predicting the prime rate is like playing a slot machine: Lucky hits are elusive. And not all borrowers have time to wait for the prime rate to dip. It has certainly seen its fair share of ups and downs, as you can see from the graphic.
| 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 several different lenders. Also, work on positioning yourself to get the best possible rate by staying in control of your credit.
To secure the most competitive home equity loan rates in Minneapolis, you should keep a few factors in mind, regardless of what type of loan you’re shopping for. Take the following steps before beginning the application process and you’ll be positioned to land a home equity loan with an interest rate and term that are favorable and manageable.
You should have at least 20% equity in your home before trying to qualify for a home equity loan. To figure out how much equity you’ve accrued, subtract your outstanding mortgage balance from your home’s estimated value. Divide the answer by that estimated home value from the last step to arrive at a percentage of equity. A higher percentage is better in this case.
To get the best home equity loan rate out there, you’ll want to have a robust credit score. Lenders tend to look for a score of 680 or higher, with many preferring a score above 700. Higher credit scores are a sign of financial savvy — they can often open doors to more favorable loan terms for borrowers. Focus on timely payments, reducing credit card balances, and avoiding new debt. You’ll boost your chance to qualify for a lower interest rate.
DTI ratio is an important factor when you want to qualify for a home equity loan and get a good rate. Lenders typically want to see your DTI ratio at 50% or less — and if yours is 36% or lower, it will help you qualify for the lowest interest rates. Manage your DTI effectively by paying down your existing debt or increasing your income. Even better if you can achieve some combination of the two.
Property insurance is a must-have if you’re trying to get a home equity loan. Homeowners’ insurance is a safety net for both you and the lender should damage occur, so make sure your coverage is comprehensive and up-to-date.
Before you take the steps to borrow against your home, you might want to do some math to understand what borrowing opportunities will be available to you and how much you can expect to spend over the life of your loan, just for the convenience of having the money you need now.
A home equity loan calculator can help you figure out just how much of a home equity loan you can qualify for. Other online tools and calculators can help you determine what your payments will be, and what sort of interest you’ll pay at the best rates you qualify for. These useful calculators make the math a cinch.
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.
If you’re wondering about closing costs for a home equity loan, they typically range from 2% to 5% of the loan amount. The table below shows you some common closing costs and about how much they will set you back.
| 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 |
While some lenders may offer no-closing-cost loans, they frequently come with higher rates, making them less desirable over the term of the loan.
Interest on your home equity loan may be tax-deductible if you’re using the funds to improve your home. For single filers, interest on the first $375,000 of loan debt is deductible. Married couples who file jointly can deduct interest on up to $750,000 of debt. You’ll need to itemize if you want to take advantage of this. A tax advisor can help you figure out what will make the most sense for you.
Home equity loans are just one way to leverage your home’s value. You might decide to consider a home equity line of credit (HELOC) or a cash-out refinance.
What is a home equity line of credit? A HELOC is a lot like a credit card, offering homeowners freedom to borrow, paying interest solely on what they use up to a set limit. Usually, during an initial “draw” period, they can withdraw funds. This is followed by a repayment period, in which they repay principal and remaining interest. Rates are generally adjustable.
Unlike a home equity loan, a HELOC is designed to be flexible. But bear in mind that with an adjustable interest rate, payments can fluctuate, potentially impacting your costs down the line.
Qualifying for a HELOC will most likely require a credit score of at least 680 (700, ideally) and a DTI ratio under 50% (below 36% is best). HELOCs often permit you to borrow up to 90% of the home equity you’ve accrued. Check out a HELOC repayment calculator to help you see what the loan would look like as you pay it down.
Want to calculate how much interest you’d have to pay during the “draw” period of a HELOC? Try out a HELOC interest-only calculator.
A cash-out refinance is a strategic mortgage refinance. You swap your original mortgage for one that’s larger than what you owe now, and take the difference as a lump sum. Cash-out refi rates can be fixed or adjustable.
If you are evaluating the benefits of a cash-out refinance vs. a home equity line of credit, it’s worth noting that qualifying for a cash-out refi is usually easier than it is for a home equity loan or a HELOC. Lenders can have different standards, but cash-out refinances tend to require a 630 minimum credit score and a 43% or lower DTI ratio.
To get the best home equity loan rates in Minneapolis, you’ll want to work to build your credit, manage your debt-to-income ratio, and secure reliable property insurance. You can use online tools to estimate your payments and the amount you can borrow, but be sure to factor in closing costs as you make your decision. If a home equity loan isn’t right for you, a HELOC or a cash-out refinance might be an option. Weigh the benefits and risks of each. The goal is to find the one that works best for your financial goals and best suits your needs.
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.
Popular reasons why people apply for home equity loans are to fund home improvements and to consolidate high-interest debt. If you choose to pursue a home equity loan, remember to use the funds wisely and make sure the loan fits into your overall financial picture.
Your monthly payment on a $50,000 home equity loan will vary depending on the interest rate and loan term. For example, if your loan had a 7.00% interest rate over 15 years, your monthly payment would be about $449. At a 9.00% interest over 15 years, the payment would be around $507. Experiment with a loan calculator to figure out what your payments would be with different variables.
A $100,000 home equity line of credit would likely come with a variable interest rate. During the draw period, you might need to pay interest only, based on the funds you use. When the draw period concludes, you’d start repaying both the principal and interest. If you repaid the full $100,000 over 20 years, and the interest rate held at 8.00%, you’d have an $836 monthly payment. But remember, the variable rate can make predicting payments down the line difficult.
Home equity loans offer a fixed interest rate, so monthly payments stay predictable. A home equity loan is secured by your home, so it will typically come with a lower interest rate than a personal loan, since those are generally unsecured. Bonus: The interest you pay may be tax-deductible if you’re borrowing funds to pay for major home improvements (consult a tax advisor to know for sure).
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Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.
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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.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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