Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
Key Points
• Home equity loan rates in Omaha are influenced by a borrower’s credit score and debt-to-income ratio.
• Even a slight shift in interest rates can translate to substantial savings or costs over the life of your loan.
• Property insurance is often a requirement for a home equity loan.
• The interest on home equity loans could be tax deductible if used for significant home improvements.
• There are multiple ways to tap your home equity, each with its own benefits and considerations.
• Online calculators can help you get a better grasp on your monthly payments and total costs.
Home equity loan rates are a key consideration when you’re thinking about how to get equity out of your home in Omaha, NE. We’ll help you understand what they are, how they can affect your finances, and how to find the best rate and loan type for your unique situation as a homeowner. Step one? Make sure you understand what a home equity loan is and how it differs from other ways of borrowing against your home’s equity.
A home equity loan is essentially a second mortgage that allows you to borrow against the equity in your home. To calculate your equity, simply subtract your mortgage balance from your home’s market value. Many lenders offer home equity loans up to 85% of your equity. A home equity loan calculator can help you figure out how much you might be eligible to borrow.
Because your home is used as collateral, these loans typically offer lower interest rates than personal loans. If approved, you’ll be given a lump sum and you’ll begin repaying the loan, with interest, almost immediately. Payments can stretch out over anywhere from 5 to 30 years, depending on the term you choose. Longer terms generally have lower monthly payments but cost more in interest over the life of the loan.
Home equity loan interest rates are influenced by a variety of economic and personal factors. Lenders set home equity loan interest rates based on the prime rate, which is driven largely by the Fed’s policies. A borrower’s credit score and debt-to-income (DTI) ratio are also important determinants of exactly what rate will be offered. Better scores mean better rates. We’ll get into that in more detail below.
Let’s focus on interest rates. They’re a big deal when it comes to the affordability of your home equity loan. Even a small percentage point can make a world of difference in your monthly payments and the total amount you’ll pay over the loan’s life. Understanding the impact of interest rates is key to making a smart financial decision. As an example, check out the numbers below. These are different monthly payment amounts and total interest costs for a $75,000 home equity loan that is repaid over 20 years.
| Interest Rate | Monthly Payment | Total Interest Paid |
|---|---|---|
| 8.00% | $627 | $75,559 |
| 7.50% | $604 | $70,007 |
| 7.00% | $581 | $64,554 |
Interest rates for different types of home equity loans go up and down based in part on the prime rate. So you might find yourself paying close attention to that number as you think about borrowing money. The prime rate dropped to 3.25% in 2020 and rose to 8.50% in 2023. Fluctuations like these have a direct impact on home equity loan rates in Omaha, but it’s hard to predict them. If you can time your application to a period of low rates, that’s great. But you may be better off focusing on how to improve your personal financial profile, which is within your control and will also have an impact on the rate you are offered.
| 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% |
To land the most favorable home equity loan rates, you’ll need to pay close attention to your credit score and DTI ratio. Here are some steps to take before you file your first application:
To be eligible for a home equity loan, you need to have at least 20% equity in your home. Calculating your equity is as simple as subtracting your mortgage balance from your home’s estimated value, which you can find on a real-estate site. Let’s say your mortgage balance is $400,000 and your home is now valued at $550,000. That means you’ve got $150,000 in home equity. Divide your equity number by your home’s estimated value to arrive at a percentage of equity. That’s the magic number to keep in mind if you’re aiming for the best home equity loan rates. You can boost your equity over time by making regular mortgage payments and sprucing up your home.
To snag an enviable home equity loan rate, a robust credit score is key. Lenders are often looking for a score of 680 or even 700. A high score speaks volumes about your financial prudence and reassures a lender about your risk level. The result? Sweeter interest rates. So make timely payments, keep credit card balances in check, and steer clear of new debt. Also give your credit report a regular once-over to catch any errors — disputing them can nudge your score in the right direction.
Your DTI ratio is a key player when it comes to qualifying for a home equity loan and scoring the best rates. Lenders usually look for a DTI ratio under 50%, but they love to see it under 36%. To calculate your DTI, divide your total monthly debt payments by your gross monthly income. To boost your DTI, think about chipping away at debts, finding ways to increase your income, or even better, both.
Property insurance is often a must-have for home equity loans. Lenders want to be sure that the property securing the loan is covered in the event of damage. When you’re gearing up for a home equity loan, have your insurance documents handy. Good coverage can influence the rates you’re offered, as lenders see well-insured properties as less of a risk.
Calculators can help you get a handle on how much you might pay for different loans, both monthly and over the long haul. Here are three that can help you pinpoint the loan that best fits your financial situation.
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.
Home equity loans have closing costs much the way your original home loan did. In this case, costs typically range from 2% to 5% of the loan amount. These fees cover essential services such as appraisals, credit reports, and title searches. There may also be document preparation and attorney fees.
Here’s a little-known perk: the interest on home equity loans could be tax deductible if the funds are used to buy, build, or significantly improve your home. As of 2025, those filing jointly can deduct interest on up to $750,000 of qualified home equity loans, and single filers can claim up to $375,000. To take this deduction, you would need to itemize on your tax return. Chat with a tax advisor about future tax years and to see how this could play out in your specific financial situation.
Although home equity loans are a popular choice, there are other options to consider. Have a look at these options before you commit:
A home equity loan and a HELOC are often confused, so let’s focus on what is a home equity line of credit, and how it differs from a home equity loan. A HELOC is like a credit card that’s secured by your home’s equity. You can borrow up to a certain limit, as you need it, and you’ll only pay interest on the amount of credit that you actually use. During an initial “draw” period of as long as 10 years, you only pay interest. A HELOC interest-only calculator comes in handy at this time. After that, the repayment period begins and your payments increase. The interest rate on a HELOC is usually variable, which means it can change based on the market. A HELOC repayment calculator can help you see what payments could be at this time, based on various interest rates.
To get a HELOC, you’ll typically need a credit score of at least 680, but many lenders prefer 700. Your debt-to-income ratio should be below 50%, and ideally, below 36%. HELOCs are great for ongoing expenses and can give you access to up to 90% of your home’s equity. Here’s a quick look at a HELOC vs. a home equity loan.
| 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 |
A cash-out refinance is a special kind of mortgage refinance that can simplify your finances by consolidating debt into one payment. It also might give you a lower interest rate than a home equity loan or HELOC. To qualify for a cash-out refinance, you typically need to have a credit score of 620 or higher and a DTI ratio of 43% or lower. Most lenders will let you borrow up to 80% of your home’s value, although some may go higher. Variable rates may allow you to access more equity. As you think about a cash-out refinance vs. a home equity line of credit, one important difference is that the refinance leaves you with an entirely new home loan, and one payment instead of two.
As you mull over the possibility of a home equity loan in Omaha, it’s wise to consider the factors that sway interest rates. You may not be able to sway the prime rate, but cultivating a robust credit score, lowering your DTI ratio, and ensuring your property insurance is up to par are all pivotal in securing the most favorable rates. Leverage the power of tools and calculators to estimate your monthly payments and the grand total, and don’t overlook the potential tax benefits of the interest. Seek out rates from multiple lenders and choose the one that best fits the specific needs you’re aiming to fulfill with the loan.
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.
Home equity loans are versatile and can be used to cover major expenses, home improvements, or to consolidate high-interest debt. The adaptability of these loans makes them a good resource for homeowners who are in need of a substantial sum but who don’t want to part with their property. When contemplating a home equity loan, it’s crucial to employ the funds judiciously and in a manner that supports your financial goals.
The monthly payment for a $50,000 home equity loan will depend on the loan term and interest rate. For instance, a 15-year fixed-rate loan at 7.50% would mean a monthly payment of about $464. Opting for a 30-year term at the same rate would lower the monthly payment to roughly $350. The total interest paid over the life of the loan is usually higher with a longer term.
A $100,000 home equity line of credit (HELOC) typically has a draw period where only interest payments are required, followed by a repayment period. Once the draw period concludes, you’ll pay both the principal and interest. If you were repaying the full $100,000 over a period of 20 years and the interest rate held steady at 8.00%, your monthly payment would be $836. Remember, though, that a HELOC often comes with a variable interest rate, so exact payment amounts are hard to predict.
There are a few things that might stand in your way of being approved for a home equity loan, such as not having at least 20% equity in your home, or having a credit score that’s less than stellar (below 680). If your DTI ratio is under 36% that could also be a dealbreaker. Understanding these requirements can help you present your best profile to a potential lender.
SoFi Mortgages
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.
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