Current Home Equity Loan Rates in California Today
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.
Turn your home equity into cash. Call us for a complimentary consultation or get prequalified online.
Compare home equity loan rates in California.
Key Points
• Home equity loans provide borrowers a lump sum of money upfront that is repaid with fixed monthly payments, typically for 20 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 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 loans 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, from the prime rate to your DTI ratio, and popular alternatives to home equity loans, such as HELOCs and HECMs. Plus, we include valuable 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 essentially a second mortgage, which 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, from home improvements to 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? 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. But even a fraction of a percentage point has a significant impact on your cost. That’s why shopping around for the best home equity loan deal is so important.
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 |
|---|---|
| 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% |
Source: St. Louis Fed
Source: TradingView.com
Factors Influencing Home Equity Loan Rates in California
Now for the final piece of the puzzle that is home equity loan interest rates: The California housing market and the borrower’s financial profile also come into play. Your credit score, loan-to-value 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, but if you’re aiming for the top-tier rates, a score of 700 or above is the sweet spot. 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 are 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 what your home is worth. The appraiser will compare your home to similar properties in your area and consider the condition of your home and 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 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, like 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 debt-to-income (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% to 50%, meaning 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 with paying down high-interest credit card debt first.
Obtain Adequate Property Insurance
It’s 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 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, ensuring that you have a financial cushion and 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.
Home equity lines of credit (HELOC) typically come 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 & 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 cost of a loan 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.
-
Home Equity Loan Calculator
Enter a few details about your home loan and we’ll provide you your maximum home equity loan amount.
-
HELOC Payment Calculator
Punch in your HELOC amount and we’ll estimate your monthly payment amount for your HELOC.
-
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: The interest on your home equity loan can be tax-deductible if you use it for home improvements. The deduction limit through 2025 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 home equity lines of credit (HELOCs), home equity conversion mortgages (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 home equity line of credit (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 each.
Home Equity Conversion Mortgage (HECM)
A home equity conversion mortgage (HECM) is a government-backed reverse mortgage that can be a game-changer 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 the 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 be of interest.
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 8.00% interest over 10 years, you’d be looking at a monthly payment of roughly $607.
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 8.50% and a $50,000 draw would have a monthly payment of about $620. The same rate with a $75,000 draw would result in a monthly payment of $930.
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?
Let’s break it down. 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.
SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.
SoFi Loan Products
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.
SOHL-Q324-065
More home equity resources.
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What is a Home Equity Line of Credit
-
Different Types of Home Equity Loans
-
HELOC vs Home Equity Loan: How They Compare
Turn your home equity into cash. Call us for a complimentary consultation or get prequalified online.
Current Home Equity Loan Rates in Texas Today
TEXAS HOME EQUITY LOAN RATES TODAY
Current home equity loan rates in
Texas.
Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
Turn your home equity into cash. Call us for a complimentary consultation or get prequalified online.
Compare home equity loan rates in Texas.
Key Points
• Home equity loan rates are influenced by the borrower’s credit score and loan-to-value ratio, and by lender policies, among other influences.
• Home equity loans allow homeowners to borrow against the equity in their homes for large expenses like renovations, education, or debt consolidation.
• Fixed interest rates provide stability and predictability for monthly payments, while variable rates can fluctuate based on market conditions.
• Closing costs and fees associated with home equity loans can vary but typically range from 2% to 5% of the loan amount.
• Home equity loan interest may be tax-deductible if used for the purpose of purchasing, constructing, or renovating a home.
Introduction to Home Equity Loan Rates
Welcome to our guide to home equity loan rates in Texas. We’ve done the legwork to highlight the factors that influence rates, and how to snag the lowest ones. We’ll cover closing costs, tax deductibility, and alternatives to home equity loans, and introduce you to helpful tools and calculators. Armed with this information, you’ll be ready to make the best choice for your home equity financing needs.
How Do Home Equity Loans Work?
A home equity loan is like a second mortgage. It uses your home as collateral, which often means lower interest rates than with personal loans. And just like your mortgage, you pay back the loan in equal monthly installments with interest over a longer term (typically 20 years).
The interest rate is typically fixed, so you can plan your budget with more certainty. To qualify, you’ll usually need to have at least 20% equity in your primary residence.
Where Do Home Equity Loan Interest Rates Originate?
Home equity loan interest rates are influenced by a variety of economic factors, including the prime rate. The prime rate is the interest rate that banks charge their most creditworthy customers.
Federal Reserve policy decisions regarding interest rates can also influence home equity loan rates. Understanding the factors that influence home equity rates can enable borrowers to anticipate rate fluctuations and make informed decisions about the best time to take out a home equity loan.
How Interest Rates Impact Affordability
The interest rate you secure can have a big impact on your monthly loan payments and the total interest you pay over the life of the loan. For example, the difference between a 7.00% and 8.00% interest rate on a 20-year term can add up to $11,000 more in interest. The more you borrow, the more noticeable the difference in monthly payment and total interest would be.
A home equity loan calculator can help you understand how different interest rates and loan terms affect your monthly payment and the overall cost of the loan.
HELOCs vs Home Equity Loans
It’s important not to confuse a home equity loan with a home equity line of credit (HELOC), which is also secured by your home. The chart below explains HELOCs vs. home equity loans.
| HELOC | Home equity loan | |
|---|---|---|
| Type | ||
| Interest rate | ||
| Repayment | ||
| Disbursement |
Recommended: What Is a Home Equity Line of Credit?
Home Equity Loan Rate Trends
The prime interest rate is a key indicator of future home equity loan rates. By keeping an eye on the prime rate, you can get a sense of where home equity loan rates are headed. This can help you make smarter decisions about the timing and terms of your home equity loan application, so you can get the best rate possible in Texas.
Historical U.S. Prime Rates
Since 2018, the U.S. prime rate has fluctuated greatly, reaching a low of 3.25% in 2020 and a high of 8.50% in 2023. This rate plays a large role in the economic environment, and it is important to understand how it can affect Texas home equity loan rates.
| 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% |
Source: St. Louis Fed
Source: TradingView.com
Factors Influencing Home Equity Loan Rates
In addition to macroeconomic factors like the prime rate, the interest rate you’re offered for a home equity loan is influenced by microeconomic metrics. These include the borrower’s credit score, their loan-to-value ratio, the stability of the local housing market, the location of the property, and the policies of the home loan lender.
Understanding these factors can help you secure the best possible rates and make the most of your financial strategy.
Credit Score
Those who have a track record of responsible financial management, including making payments on time, are more likely to be offered a lower interest rate. Most lenders will look for a credit score of about 680 or higher when considering a home equity loan, but many prefer a score of 700 or above. This is because higher credit scores are associated with a lower risk of default, which makes you a more attractive candidate for a loan.
Loan-to-Value (LTV) Ratio
The loan-to-value (LTV) ratio is a key factor in determining the maximum LTV most lenders will allow for a home equity loan, which is typically 85%. The LTV is calculated by dividing the loan amount by the appraised value of the property. By looking at the LTV, a lender can determine the appropriate interest rate and loan term for a borrower.
Home Value
Lenders often use independent appraisals to help determine a home’s market value and the maximum loan amount. This is important because the amount of equity you have in your home can impact the maximum loan amount a lender is willing to approve. The valuation process is an important step in assessing your financial standing and ensuring responsible lending practices.
Home Value Stability
The stability of home values can significantly impact the amount of equity homeowners can potentially access and utilize. When local home values experience an upward trend, lenders may be more inclined to approve larger home equity loans, as the increasing value of the property mitigates some of the associated risk. Conversely, when home values decline, the lender’s risk exposure increases, potentially leading to stricter lending criteria and smaller home equity loans approvals.
Lender Policies
Here’s a tip: Lender policies can really shake up the interest rates they offer. So when you’re on the prowl for the best deal, be sure to compare rates, fees, and closing costs from a handful of lenders. It takes time, but it can lead to some serious savings and a much better borrowing experience.
Property Location
If you live in an area with a high risk of extreme weather, you might see higher interest rates. That’s because lenders see these areas as riskier to lend in. These areas can be more prone to natural disasters like hurricanes, floods, and wildfires. And if you’re in one of these areas, it could impact your home equity.
How to Qualify for the Lowest Rates
To qualify for the best home equity loan rates, you need to have a good credit score, a low debt-to-income ratio, and enough equity in your home. You also need to have property insurance. If you meet these requirements, you can get a lower rate on your loan.
Build a Strong Credit Score
A higher credit score can be your golden ticket to snagging more attractive interest rates on home loans, which translates to significant savings over the loan’s lifetime. Not only that, but a beefed-up credit score can also unlock loan options and better terms, giving you the flexibility and control you want. And here’s a little secret — a higher credit score can even mean lower fees, lightening the load of borrowing.
Manage Debt-to-Income Ratio
When it comes to securing a home equity loan, your debt-to-income (DTI) ratio can play a big role in determining your eligibility. This ratio compares your monthly income to your monthly debt obligations, which helps lenders get a better picture of your financial health. Typically, lenders want to see a DTI that’s 36% or lower, but some may go up to 50%. Staying within these parameters can help you be better positioned to qualify for a loan.
Obtain Adequate Property Insurance
In many cases, having the right property insurance is a must for home equity loans, especially if you live in an area of Texas prone to flooding. This insurance is designed to protect both you and the lender in case of damage to your property.
Maintain Sufficient Home Equity
To secure a Texas home equity loan, you’ll need to maintain at least 20% equity in your primary residence. This requirement is in place to protect your financial well-being, ensuring you have a significant ownership stake in your property before you take on additional debt.
Fixed vs. Variable Interest Rates
Home equity loans often come with fixed interest rates. This means you’ll have the same interest rate and monthly payment for the life of the loan. While fixed rates offer stability, they can also start out higher than variable rates. Variable rates can start out lower, but they change over time based on the market. When it comes to how to get equity out of your home, it’s important to consider whether you prefer the fixed interest rate of a home equity loan or the variable interest rate of a HELOC.
Tools & Calculators
A variety of practical tools and calculators are available to help you get an accurate estimate of your home equity loan payments and determine your borrowing capacity. These resources can provide you with a better understanding of the financial implications of taking out a home equity loan, and help you make more informed decisions. 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.
-
Home Equity Loan Calculator
Enter a few details about your home loan and we’ll provide you your maximum home equity loan amount.
-
HELOC Payment Calculator
Punch in your HELOC amount and we’ll estimate your monthly payment amount for your HELOC.
-
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
Home equity loan closing costs in Texas tend to run 2% to 5% of the loan amount. Common fees include the appraisal, credit report, document prep, origination, notary, title search, and title insurance. Here are some quick estimates of what you might pay:
• Loan origination fee: 0.5-1% of loan amount or flat fee.
• Title insurance: 0.5-1% of loan balance.
• Appraisal: $300-$500.
• Credit report: $50-$100.
• Document prep and attorney fees: $500-$2,000.
No-closing-cost loans exist but often have higher interest rates. Compare multiple lenders — including their rates, fees, and terms — before choosing a loan.
Tax Deductibility of Home Equity Loan Interest
Here’s the scoop: The interest you pay on a home equity loan can be tax-deductible if you use the funds for home improvements. If you’re married and filing jointly, you can deduct interest on loans up to $750,000. Single filers can deduct interest on loans up to $375,000. Just remember, you’ll need to itemize your deductions to get this benefit.
Recommended: What Is a Home Equity Loan?
Alternatives to Home Equity Loans
You have a range of different types of home equity loans to consider, such as home equity lines of credit (HELOCs), home equity conversion mortgages (HECMs), and cash-out refinances (one type of mortgage refinance). Each option has its own unique features and eligibility requirements. These alternatives provide you with additional borrowing options that may be more tailored to your specific financial needs and circumstances.
Home Equity Line of Credit (HELOC)
A home equity line of credit (HELOC) is akin to a credit card, but with the potential for a much higher limit. It allows you to borrow up to a certain amount, and you only pay interest on what you’ve borrowed. However, the variable interest rate means that if market rates go up, your costs will too. It’s important to weigh both the benefits and risks associated with HELOCs.
Home Equity Conversion Mortgage (HECM)
An HECM, or home equity conversion mortgage, is a government-backed reverse mortgage that allows homeowners aged 62 and older to receive payments from the lender based on their home’s value. The disbursement form is your choice: lump sum, regular payments, or a line of credit. The beauty of an HECM is that you’re not required to make payments until you leave the home. Note that HECMs typically have higher closing costs and longer processing times compared to home equity loans and HELOCs.
Cash-Out Refinance
A cash-out refinance is a new mortgage that pays off your old one and lets you borrow extra cash. Lenders typically limit the loan-to-value (LTV) ratio to 80-85% of a home’s equity. If comparing all these options is confusing, you may find the comparison article Cash-Out Refinance vs Home Equity Line of Credit helpful.
The Takeaway
Home equity loans can be a great way to get the cash you need for a variety of uses, from home renovations to high-interest debt consolidation. Understanding how home equity loan rates work in Texas is important when shopping around for the best deal for your situation. By comparing rates and fees from multiple lenders, using online tools, and considering other options, you can find the best home equity loan for you.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.
FAQ
What would the monthly payment be on a $50,000 loan?
The monthly payment for a $50,000 home equity loan is determined by the interest rate and the loan term. For example, with an interest rate of 8.00% and a 10-year loan term, your monthly payment would be approximately $607. This is based on a standard repayment schedule with equal payments of principal and interest over the life of the loan.
What would the monthly payment be on a $100,000 HELOC?
The monthly payment on a $100,000 Home Equity Line of Credit (HELOC) is determined by the interest rate and the amount drawn. Let’s consider one scenario: Suppose we have a HELOC with an interest rate of 7.99% and a $50,000 draw. The monthly payment over 20 years would be approximately $418. If you draw the full $100K, the monthly payment would be $836.
What is the payment on a $25,000 home equity loan?
Your monthly payment for a home equity loan depends on the interest rate and the length of the loan. Let’s say you borrow $25,000 with an 8.00% interest rate and a 10-year term. Your monthly payment would be about $303. But remember, your number could be different based on the interest rate and other factors.
What would the payment be on a $30,000 home equity loan?
The monthly payment amount on a $30,000 home equity loan is going to be based on the interest rate you secure and the term of the loan. For instance, if you were to get an 8.00% rate and a 10-year term, your payment would be around $364.
What could disqualify you from getting a home equity loan?
There are a few things that could keep you from getting a home equity loan. If your credit score is too low, your debt-to-income ratio is too high, the equity in your home is too low, or you don’t have enough insurance on your home, you might not qualify. These are all things that you can work on to improve your chances of getting approved.
What are the benefits of a HELOC?
HELOCs, a type of revolving credit, offer several advantages, often including lower interest rates compared to credit cards, and the flexibility to pay interest only on the borrowed amount during the draw period. However, borrowers should be aware that variable interest rates can result in higher costs if rates increase, making it important to carefully consider the potential risks and benefits before using a HELOC.
Photo credit: iStock/Art Wager
SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.
SoFi Loan Products
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.
SOHL-Q424-103
More home equity resources.
-
What is a Home Equity Line of Credit
-
Different Types of Home Equity Loans
-
HELOC vs Home Equity Loan: How They Compare
Turn your home equity into cash. Call us for a complimentary consultation or get prequalified online.
Current Home Equity Loan Rates in Arizona Today
Arizona HOME EQUITY LOAN RATES TODAY
Current home equity loan rates in
Arizona.
Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
Turn your home equity into cash. Call us for a complimentary consultation or get prequalified online.
Compare home equity loan rates in Arizona.
Key Points
• Home equity loans offer a lump sum of money that you repay with fixed monthly payments, typically for 20 years.
• 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, you could face foreclosure.
• To qualify for the lowest rates, it’s important to build a strong credit score, manage debt-to-income ratio, obtain adequate property insurance, and maintain sufficient home equity.
• Home equity loans can be used for a variety of purposes, including home renovations, educational costs, and debt consolidation.
• Closing costs and fees for home equity loans can vary significantly and should be considered when budgeting.
Introduction to Home Equity Loan Rates
If you want to know your options for tapping your home equity, you’ve come to the right place. This guide focuses on how Arizona homeowners can get the best available rate on a home equity loan, also known as a “closed end” second mortgage.
We’ll also talk about how to calculate your home equity and different types of home equity loans, such as HELOCs and cash-out refis. And we’ll show you some handy online tools to help you zero in on the right repayment term.
Your home equity is a powerful financial tool, and understanding the rates in Arizona can help you make the most of it.
How Do Home Equity Loans Work?
What is a home equity loan? Usually, funds are distributed in a lump sum, which you start paying back right away with fixed monthly payments over 5 to 30 years. This predictability can be a big help when you’re planning your budget. And because it’s secured by your home, a home equity loan offers a lower interest rate than other, unsecured loans. The downside: Failing to make the monthly payments could result in foreclosure.
Most lenders require your combined loan-to-value ratio (CLTV) to be 85% — that’s your mortgage balance plus the amount you want to borrow, divided by the appraised value of your home. You can estimate your maximum loan amount with this two-step formula:
• Home Value x 85% = Maximum Mortgage + Loan Amount
• Maximum Amount – Mortgage Owed = Maximum Home Equity 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
A home equity loan calculator can help you determine how much you can borrow, based on your home’s value and your existing mortgage balance.
Home equity loans are the Swiss Army knives of the financial world, ready to tackle a variety of needs, from sprucing up your home to unexpected medical bills to consolidating high-interest debt. They offer the kind of flexibility that can help you reach your goals faster. In Arizona, home equity loans are a particularly good option, thanks to the state’s strong housing market.
HELOCs vs Home Equity Loans
How do you decide between a HELOC vs. a home equity loan? Both can allow you to borrow a large sum at a relatively low interest rate, and with lower fees than a mortgage refinance. But there are significant differences, as the chart below shows.
| 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. |
Recommended: What Is a Home Equity Line of Credit?
How Are Home Equity Loan Interest Rates Determined?
Home equity loan interest rates are based on the prime rate, which is influenced by a variety of economic factors. Understanding these factors can help you predict whether home equity loan rates are likely to rise or fall in Arizona.
The prime rate is the interest rate that banks give to their most creditworthy customers. The prime rate influences the interest rates that banks offer on home equity loans.
When shopping around for home equity loans rates, remember that half a percentage point can make a big difference in affordability over the long term. In the table below, you’ll see how the interest rate on a $50,000 home equity loan affects the monthly payment and total interest paid over a 10-year term:
| Interest Rate | Monthly Payment | Total Interest Paid |
|---|---|---|
| 8.50% | $620 | $24,391 |
| 8.00% | $607 | $22,797 |
| 7.50% | $594 | $21,221 |
Arizona Home Equity Loan Rate Trends
Like most interest rates, the prime interest rate has fluctuated over time. That has a direct impact on the rates for home equity loans. Keeping an eye on the benchmark prime interest rate can give you a heads-up on what’s to come with your home equity loan.
Historical Prime Interest Rates
Since 2018, the prime rate has fluctuated from a low of 3.25% in 2020 to a high of 8.50% in 2023.
| 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% |
Source: St. Louis Fed
Source: TradingView.com
Factors Influencing Home Equity Loan Rates
A variety of factors can impact the interest rates you’re offered for a home equity loan in Arizona. Understanding these factors can help you secure a more competitive rate, which can help your financial situation and get you closer to your goals as a homeowner.
Credit Score
A strong credit score is your ticket to favorable interest rates and terms on Arizona home equity loans. It’s a reflection of your financial prudence and can lead to lower monthly payments, among other benefits. Lenders typically like to see a credit score of 680 or higher for home equity loans. Many lenders prefer 700+.
Loan-to-Value (LTV) Ratio
The loan-to-value ratio, or LTV, is a comparison of your loan size to the appraised value of your home. It’s a big deal because the lower your LTV, the better your interest rate. The maximum LTV most lenders allow for a home equity loan is 85%, though some lenders will allow you to borrow 100%.
Home Value
Lenders use professional appraisals to determine the market value of a home. This helps them decide how much money they can lend you and at what interest rate.
Home Value Stability
When home values are stable or on the rise, you stand to gain more equity. This is especially good news if you’re considering a home equity loan. Home value stability can translate to improved loan terms, lower interest rates, and better financial opportunities.
Property Location
Properties in high-risk areas, such as those prone to natural disasters, may have higher interest rates because lenders view them as riskier. This risk premium is added to the interest rate to compensate the lender for the increased risk of default and potential loss on the property.
Lender Policies
Lending institutions have different policies, criteria, and guidelines that influence the interest rates they offer to potential borrowers, especially for home equity loans. By comparing different lenders, borrowers can identify and secure the most favorable interest rates available.
Recommended: Cash Refinance vs Home Equity Line of Credit
How to Qualify for the Lowest Rates
To ensure you snag the best Arizona home equity loan rates out there, make it a priority to boost your credit score, manage your debt-to-income ratio wisely, get the right property insurance, and maintain a healthy amount of home equity.
Build a Strong Credit Score
You can take charge of your financial future by being proactive about your credit score. Making consistent, timely payments and managing your finances responsibly can help you secure more favorable interest rates on home equity loans, which could mean significant savings for you.
Keep Your Debt-to-Income Ratio in Check
A lower debt-to-income (DTI) ratio indicates your overall financial health. Not only does it make you look better to lenders, but it can also snag you more favorable home equity loan terms and interest rates. That can save you thousands of dollars in the long run. The DTI requirement for a home equity loan is typically 36% to 50%.
Obtain Adequate Property Insurance
Lenders often require comprehensive property insurance to protect their investment, especially in areas with increased risk, such as flood zones. This insurance helps ensure that you and your lender are financially protected in the event of property damage or loss due to natural disasters or other unexpected events.
Keep Your Equity Above 20%
Why the 20% benchmark? It’s a safety net, ensuring you have a financial cushion and that the lending institution is protected from potential losses.
Fixed vs. Variable Interest Rates
Understanding the difference between fixed and variable rates can help you make the best financial decision for your situation. Home equity loans are typically offered with a fixed interest rate. This means that your monthly payments will remain the same over the life of the loan, which can make it easier to budget.
Home equity loans are structured much like your first home loan. You borrow a specific amount and agree to repay it, with interest, over a set period of time (typically 20 years). The amount of the loan is secured by your home and paid back with a series of regular payments.
Tools & Calculators
SoFi has a wealth of financial tools and calculators that can help you determine whether a home equity loan may be right for you and what your monthly payments will be. These resources can help you plan for the future and make sure you’re making the most of your home’s equity. 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.
-
Home Equity Loan Calculator
Enter a few details about your home loan and we’ll provide you your maximum home equity loan amount.
-
HELOC Payment Calculator
Punch in your HELOC amount and we’ll estimate your monthly payment amount for your HELOC.
-
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 and fees for home equity loans can vary significantly from lender to lender. Understanding these costs and their potential impact on the overall loan amount can help you budget effectively and make informed decisions about your financing options.
Closing costs for home equity loans generally range from 2% to 5% of the loan amount. Your costs will likely include an application fee, title search, appraisal, and attorney’s fees.
• Loan origination fees, which are for processing the loan paperwork, are typically around 0.5% to 1% of the loan amount. Alternatively, this can be a flat fee that’s charged no matter how much you’re borrowing.
• Title insurance costs for home equity loans can range from 0.5% to 1% of the loan balance, with title search fees typically falling between $100 and $250. These fees can vary depending on the location of the property, the loan amount, and the lender’s requirements.
• An appraisal is an unbiased professional opinion of a home’s value. Appraisals are almost always used in purchase and sale transactions and commonly used in mortgage refinance transactions. Appraisals for home equity loans typically range between $300 and $500.
• The preparation of documents and legal fees associated with home equity loans can vary significantly, ranging from a minimum of $500 to a maximum of $2,000. The specific cost incurred is largely influenced by the level of complexity associated with the loan process.
• Credit report costs for lenders can vary significantly, usually falling between $50 and $100, depending on the number of credit bureaus that must be accessed. Lenders may also incur additional fees for specialized credit reports or expedited services.
You can find lenders who will waive the closing costs on a home equity loan. But the trade-off might be a slightly higher interest rate to cover the costs the lender would typically recoup at closing.
Tax Deductibility of Home Equity Loan Interest
The deductibility of home equity loan interest for tax purposes depends on how you use the loan. You can deduct the interest on your home equity loan only if the money is funneled directly into the acquisition, construction, or substantial improvement of your residential property. Other uses of the loan don’t make the cut for tax deductions.
For borrowers who are married and file jointly, you can deduct the interest on up to $750,000 of qualified home equity loans obtained after December 15, 2017. Single filers are allowed up to $375,000 of such loans for deduction.
To claim the home equity loan interest deduction, you’ve got to itemize your deductions on your tax return. Taking the standard deduction isn’t possible if you want to snag this benefit. (Also keep in mind, it’s the interest you pay that’s tax-deductible, not the principal.)
Speaking with an experienced tax advisor can be invaluable in helping you navigate the complexities of the tax code and make the most of potential tax benefits associated with home equity loan interest deductions.
Alternatives to Home Equity Loans
If you’re still wondering how to get equity out of your home, you should explore other options like home equity lines of credit (HELOCs), home equity conversion mortgages (HECMs), and cash-out refinances. Each of these comes with its own unique features and eligibility requirements. You should understand these options thoroughly to make an informed decision and choose the best financing solution that suits your specific needs and circumstances.
Home Equity Line of Credit (HELOC)
A HELOC is a lot like a credit card, but with much lower interest rates. It’s a flexible way to borrow money, because you can take out what you need, when you need it. And like a credit card, as you pay down the balance, your available credit is replenished.
As noted above, HELOCs have variable interest rates that can change with the market. If you’re considering a HELOC, it’s important to understand that your payments could go up if interest rates rise, which means you could end up paying more over the life of the loan.
Home Equity Conversion Mortgage (HECM)
HECMs are government-backed reverse mortgages specifically designed for homeowners aged 62 and above. HECMs provide retirees with cash borrowed against the value of their home, through a lump sum, monthly payouts, or a credit line. Borrowers make no monthly payments themselves, as long as they stay in their home. And because the money borrowed isn’t considered income, income taxes aren’t owed on it.
Because interest is building over time and not being repaid, however, HECMs can eat into the equity you’ve built in your home, which may be less than ideal if you’re planning to pass it on to an heir as an asset.
Cash-Out Refinance
A cash-out refinance involves securing a new mortgage loan to pay off the existing one and obtain a lump sum of cash. The amount of cash received is determined by the amount of equity that the homeowner has. This equity is calculated by subtracting the outstanding mortgage balance from the appraised value of the home.
The Takeaway
Home equity loans can be a great way to get the cash you need for a variety of uses. By understanding the details of your loan and taking the time to shop around, you can make the best decision for your situation and get the most out of your home equity loan.
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?
Your monthly payment on a $50,000 home equity loan will depend on the interest rate and the length of the loan. For a $50,000 loan with an 8.00% interest rate and a 10-year term, your monthly payment would be $607. Using a monthly payment calculator can help you get an accurate estimate based on current rates and terms, so you can figure out what your payment will be.
What is the monthly payment on a $100,000 HELOC?
The monthly payment on a $100,000 home equity loan depends on the interest rate charged and the repayment term. For example, a $100,000 loan at 7.00% interest with a 20-year term would result in a monthly payment of $775. A monthly payment calculator can be a useful tool to estimate your payment amount.
What is the payment on a $25,000 home equity loan?
The monthly payment on a $25,000 home equity loan is determined by a number of factors, including the interest rate, loan term, and any fees involved. For example, a $25,000 loan with a 7.00% APR and a 5-year loan term has a monthly payment of $495. By using a loan calculator, you can get a good estimate of what your monthly payment will be, allowing you to make the best financial decision for your situation.
What would the payment be on a $30,000 home equity loan?
The interest rate and term of the loan will determine the monthly payment of a $30,000 loan. An 8.50% interest rate repaid over 10 years gives you a monthly payment of $372. Use our loan payment calculator to determine what your monthly payment might be based on the interest rate and term of the loan.
What might disqualify you from getting a home equity loan?
There are a few key factors that might make you ineligible for a home equity loan. These include a poor credit history, not enough equity in your home, a high debt-to-income ratio, or not having enough property insurance. Each factor can play a big role in your ability to get a home equity loan, so it’s important to consider them before applying.
What are the benefits of a HELOC?
The beauty of a HELOC is its flexibility. You can borrow what you need, when you need it, and you’ll only pay interest on the amount you’ve drawn — much like a credit card.
SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.
SoFi Loan Products
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.
SOHL-Q324-063
More home equity resources.
-
What is a Home Equity Line of Credit
-
Different Types of Home Equity Loans
-
HELOC vs Home Equity Loan: How They Compare
Turn your home equity into cash. Call us for a complimentary consultation or get prequalified online.
Cost of Living in Washington
Cost of Living in Washington
By Alene Laney
(Last Updated – November 11,2024)
Washington state has the seventh highest cost of living in the United States, according to data from MERIC, the Missouri Economic Research and Information Center. That’s behind Hawaii, California, and New York, but ahead of states like New Jersey and Oregon.
If you’re wondering exactly how much it’s going to cost to live in Washington, we’ve put together the most accurate, comprehensive guide possible, all backed up by data from the U.S. Census Bureau, the Bureau of Economic Analysis, Zillow, and other recent sources of data. By the end of this article, you should have a pretty good idea of what to expect from the cost of living in Washington state.
What’s the Average Cost of Living in Washington?
The average cost of living in Washington per person is $60,528 according to 2023 data compiled by the Bureau of Economic Analysis. The relatively high cost of living in Washington vs. the cost of living in the U.S. as a whole is largely due to the price of housing, which can be quite high in the areas surrounding Seattle, but also due to costly transportation and health care expenses. MERIC data shows that most other cost of living expenses will be close to the national average (some, like utilities, are even lower).
When the $60,528 is broken down by category, you can see the average cost of living in Washington state for housing, utilities, health care, groceries, transportation, and all other personal expenditures. We’ve included numbers per person and for a family of four.
|
Category |
Average Annual Per-Capita Cost in Washington |
Average cost for family of four |
|
Housing and Utilities |
$11,785 |
$47,140 |
|
Health Care |
$9,013 |
$36,052 |
|
Food and Beverages (non-restaurant) |
$4,543 |
$18,172 |
|
Gas and Energy Goods |
$1,146 |
$4,584 |
|
All Other Personal Expenditures |
$34,041 |
$9136,164 |
|
Total Personal Expenditures |
$60,528 |
$242,112 |
Housing Costs in Washington
Average Housing Costs in Washington: $1,731 (rent) to $2,396 (mortgage)
Washington state has over 3.2 million housing units. The median monthly rent sits at $1,731, while the average mortgage payment is $2,396. If you’re buying your first home in the state, there are down payment assistance programs available and other resources for novice buyers. Remember that you can usually qualify as a first-time homebuyer if you have not owned a primary residence in the last three years.
If you’re looking for housing in Washington, this is typically what you’ll find, according to the United States Census Bureau:
• Median monthly mortgage cost: $2,396
• Studio rent: $1,442
• 1-bedroom rent: $1,533
• 2-bedroom rent: $1,752
• 3-bedroom rent: $2,002
• 4-bedroom rent: $2,401
• 5-bedrooms or more rent: $2,499
• Median gross rent: $1,731
Keep in mind the less expensive areas of the state are factored into the median rent and mortgage numbers. If you’re looking at high-cost areas, you can expect to pay much more and you may need a jumbo loan.
With that in mind, it’s helpful to see what homes are worth across the state, so that you’ll have some numbers in mind when you begin to look for a home loan and go through the mortgage preapproval process. Here are 10 cities in Washington and their average homes values as of August 31, 2024.
|
City |
Average home value |
|
Seattle(Seattle Housing Market Trends) |
$748,591 |
|
Spokane |
$417,086 |
|
Kennewick |
$432,558 |
|
Wenatchee |
$499,067 |
|
Shelton |
$464,267 |
|
Walla Walla |
$413,709 |
|
Pullman |
$382,407 |
|
Olympia |
$524,070 |
|
Bellingham |
$606,975 |
|
Yakima |
$343,372 |
|
Statewide |
$591,888 |
|
Source: Zillow Home Value Index |
|
Utility Costs in Washington
Average Utility Costs in Washington: $346 per month
Though housing costs in Washington can take a large chunk of your budget, you’ll see utility costs close to the national average, if not a little better. Electricity, for example, comes in at an average monthly cost of $107, which is lower than California and similar to Oregon.
|
Utility |
Average monthly cost |
|
Electricity |
$107 |
|
Natural gas |
$33 |
|
Cable and Internet |
$125 |
|
Water |
$81 |
Sources: U.S. Energy Information Administration, Electric Sales, Revenue, and Average Price, 2021; Inspirecleanenergy.com; DoxoInsights, U.S. Cable & Internet Market Size and Household Spending Report 2022; and Rentcafe.com, What Is the Average Water Bill?
Groceries & Food
Average Grocery & Food Costs in Washington: $4543 per year
Groceries are some of the more expensive items you’ll find in Washington. You can expect to pay more for your groceries in Washington state than you would in many other states.
According to data from the BEA, the per-capita expenditure is $4,543 per year, or $379 per month.
The following is a grocery index for the major metro areas in Washington state. An index score of 100 indicates a national average, so it’s pretty clear that groceries are more expensive in every city in Washington when compared with the rest of the United States.
|
City/county |
Grocery cost index |
|
Kent |
115.3 |
|
Seattle |
115.5 |
|
Tacoma |
111.7 |
|
Spokane |
110.1 |
|
Kitsap County |
109.6 |
|
Mount Vernon-Skagit County |
109.2 |
|
Bellingham |
108.9 |
|
Olympia |
108.3 |
|
Kennewick-Richard-Pasco |
104.7 |
|
Moses Lake |
106.4 |
|
Yakima |
104.5 |
Transportation
Average Transportation Costs in Washington: $828 to $1,387 per month
Transportation expenses in Washington state are on the high side, as noted above, but how much you spend also depends on your family size and lifestyle. Washington residents can expect to pay the following costs for transportation, according to MIT’s Living Wage Calculator .
|
Family size |
Transportation costs |
|
1 adult, no children |
$828 |
|
2 working adults, no children |
$958 |
|
2 working adults and 3 children |
$1,387 |
Health Care in Washington
Average cost of health care in Washington: $9,013 per year
Healthcare seems expensive everywhere, and Washington state is no different. The average annual per capita cost of healthcare in Washington is $9,013, which is actually a little below the annual average of $9,130 in the United States.
Keep in mind, this number is for the entire year, and is for one person.
Recommended: Best Affordable Places in the U.S.
Child Care in Washington
Average Child Care Costs in Washington: $1,034 to $1,710 per child
If you have little ones still in need of full-time care, you’ll want to know what to expect when it comes to child care in Washington state. Keep in mind, as with other areas in the country, the older they get, the more affordable the tuition becomes.
|
Type of Child Care |
Per Child |
|
Infant Classroom |
$1,710 |
|
Toddler Classroom |
$1,227 |
|
Preschooler Classroom |
$1,034 |
|
Home-based Family Child Care |
$1,151 |
Taxes in Washington
Average taxes in Washington: $6,069
One of the best perks about living in Washington state is there is no income tax or corporate income tax, which creates the environment for one of the lowest tax burdens in the U.S.
• Captital gains: 7%
• Combined state and average local sales tax: 9.38%
• Gas tax: 52.82 cents per gallon
• Cigarette tax: $3.025
• Effective property tax rate: .76%
Washington also charges an estate tax and a state gross receipts tax. Between all the different taxes, Washington collects around $6,644 in taxes per capita.
Miscellaneous Costs
Average of miscellaneous costs in Washington: $34,041 per year
When it comes to all other expenses in Washington, most people spend right around $32,089, according to the BEA. That’s quite a lot, so where does it all go? There’s no shortage of cool things to do or businesses to support when you’re based in Washington. Some of these include:
• Space Needle tickets: $29 to $46.50
• Museum of Flight ticket: $26
• Whale watching tour: $105
• Mount Rainier tour: $195
• Starbucks every morning: $4
• Costco membership: $65
• REI jacket: $100
• Seattle mariners tickets: From $24
• Holland America Cruise from Seattle to Alaska: $1,274
How Much Money Do You Need to Live Comfortably in Washington?
Washington state ranks as one of the least affordable states in the nation, with housing costs mostly to blame. Although the average monthly expense for one person will depend on your lifestyle and family size, MIT’s Living Wage Calculator can help give you an idea of what they expect a living wage to be in Washington state.
For example, a family of four can expect to live reasonably comfortably on an hourly wage of $30.94 if there are two wage earners in the home. A single person with no kids needs $25.60 per hour to live comfortably, while a single parent with two kids needs $56.89 per hour to meet their needs.
Take a look at the chart below.
|
|
0 children |
1 child |
2 children |
3 children |
|
1 adult |
$25.60 |
$44.51 |
$56.89 |
$73.48 |
|
2 adults, 1 working |
$34.25 |
$40.39 |
$45.31 |
$50.31 |
|
2 adults, both working |
$17.12 |
$24.50 |
$30.94 |
$36.27 |
What City Has the Lowest Cost of Living in Washington?
Since the cost of living in Washington state is most affected by housing costs, you’ll find the lowest cost of living in Washington in cities with less expensive housing options. Of the 10 largest cities in Washington, the cities with the lowest housing costs are:
Yakima
The average home value in this sunny, central Washington city of just under 100,000 people is a relatively affordable $343,372. The cost of living index is 99.8, putting Yakima just at the edge of the average cost for Washington. Yakima has long been agricultural, with a strong apple-farming economy, especially. But there are also more than 250 manufacturing companies here, including aircraft parts makers.
Kennewick
The average home value in this Columbia River town is $432,558 and the cost of living index is 98. Kennewick is a friendly town of just over 80,000 people. Its 300 or so days of sunshine a year and mild winters have earned it the nickname, “winter paradise.”
Spokane
The state’s second-largest city has an average home value of $417,086 and a cost of living index of 101. It also has 40 acres of riverfront park, a strong beer scene and food culture, and plenty of opportunity for outdoor adventure.
Other smaller areas throughout Washington, especially in the central and eastern regions, are more likely to have lower cost of living expenses as well.
Recommended: Different Types of Mortgage Loans
Helpful Resources for Future Washington Residents
SoFi Home Loans
Washington is one of the higher-cost states where you can put down roots, but if you can find a home you love at a price you can afford, you’ll be well on your way to settling happily in the Evergreen State.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.
FAQ
What salary do I need to live in Washington?
The salary you need to feel comfortable depends on your level of comfort and family size. MIT’s living wage guide lists $25.60 per hour as a living wage for a single person in Washington state with no children, and it goes up from there.
Is it expensive to live in Washington state?
Washington state is one of the most expensive states to live in, mostly due to housing costs near Seattle. If you’re able to find housing at a rate affordable to you or live in a city with less expensive housing costs, you’ll find most other costs in line with what you’ll pay in other areas of the country.
Is it cheaper to live in WA or CA?
Washington state, as a whole, has a lower cost of living than California in almost all categories, including housing, utilities, and other personal expenditures.
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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.
*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.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
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HomeStory will issue the reward using the payment option you select and will be sent to the client enrolled in the program within 45 days of HomeStory Real Estate Services receipt of settlement statements and any other documentation reasonably required to calculate the applicable reward amount. Real estate agent fees and commissions still apply. Short sale transactions do not qualify for the reward. Depending on state regulations highlighted above, reward amount is based on sale price of the home purchased and/or sold and cannot exceed $9,500 per buy or sell transaction. Employer-sponsored relocations may preclude participation in the reward program offering. SoFi is not responsible for the reward.
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Why apply for a SoFi Personal Loan?
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That means no origination fees required, no prepayment penalty fees and no late fees whatsoever.
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Your funds could be available as quickly as the same day your loan is approved.
Expand to see how the features of a SoFi Personal Loan makes it stand out from the rest.
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How do personal loans work? A personal loan is a borrowed sum of money that is paid back with interest in installments. With SoFi Personal Loans, you can borrow between $5,000 and $100,000 for various expenditures that include home improvements, credit card consolidation, medical bills, IVF, even unplanned life events that call for emergency funds, and more. You can also check your rate in 60 seconds without affecting your credit score†, and get your loan amount funded as soon as the same day you’re approved.‡
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Example chart shows calculations based on a 5 year SoFi Personal Loan with a fixed rate of 14.90% APR, which is the rounded average median funded APR for SoFi Personal Loan borrowers who took out a loan with a 5 year term” from April 1 2023 – April 1 2024. Lowest rates are reserved for the most qualified borrowers. The ‘High-Interest Rate Credit-Card’ APR shown is the average credit card APR reported by Wallethub for Q1 2024 under their Good Credit category. The savings estimate also assumes that the borrower doesn’t take out any additional credit card debt during the same period. Both calculations assume 60 total monthly payments, no origination fee option selected and no pre-payment amounts.
Personal Loan Calculator
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Easily apply for a personal loan online in 3 steps.
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Prequalify
Find the rate that you qualify for in 60 seconds with no commitment.
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Choose from 2-7 year terms and finish your application online.
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Sign your documents and funds will be wired to your account—as quickly as the same day.‡
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Personal Loan FAQs
What can I use a personal loan for?
Many people apply for a low-interest personal loan to consolidate high-interest credit card debt. These loans can also be used to fund major life purchases or expenses, like home improvements, weddings, unexpected medical expenses, moving expenses, or funerals.
Learn more: What Are The Common Uses For Personal Loans?
What is a personal loan?
A personal loan is a loan offered by many banks, credit unions, or online personal loan lenders and typically range from $5K-$100K. While many loans specify how the money should be spent, personal loans allow for more flexibility and can be used to cover big expenses or consolidate high-interest debt with a more favorable rate.
Learn more: What is a Personal Loan?
Should I take out a personal loan to pay off my credit cards?
Personal loans can be used for a variety of purposes, but are commonly used to consolidate high-interest credit card debt. When using a personal loan to pay off credit card debt, the loan funding is used to pay off the cards’ outstanding balances. Ideally, the new debt consolidation loans will have a lower interest rate, making payments more manageable or saving the person money from accrued interest. Click here to learn more about the pros and cons of using low interest personal loans to consolidate debt.
Learn more: Using a Personal Loan to Pay Off Credit Card Debt
How can I calculate my expected monthly payments for a personal loan?
The monthly payment for a personal loan is determined by a variety of factors, including your interest rate, loan amount, loan term, and more. Our Personal Loan Calculator can help you figure out your monthly payments and decide whether applying for a personal loan is the right move for you.
Do personal loans require down payments?
No, unsecured personal loans do not require a down payment, unlike a secured home loan.
What credit score is needed for a personal loan?
Applying for personal loans online or at your financial institution will require meeting your lender’s criteria. Since most personal loans are unsecured (meaning they don’t require collateral) this criteria assures the lender that you can repay the loan. Lenders will typically evaluate your credit score, income, and debt-to-income ratio, among other factors. Lower credit scores could affect your eligibility, terms or rate for a SoFi Personal Loan.
Learn more: Typical Personal Loan Requirements Needed for Approval
Are SoFi Personal Loans fixed interest rate or variable interest rate loans?
SoFi Personal Loans are fixed rate loans. If you like the consistency of knowing exactly what your monthly payments will be over time, you might prefer a fixed rate loan. Also, if you plan to pay your loan back over a longer period of time, say 10 or 20 years, you might prefer to eliminate the risk of interest rate changes over time by selecting a fixed rate loan.
Is the SoFi Personal Loan secured or unsecured?
SoFi Personal Loans are unsecured loans. This means that you do not need to provide collateral for the loan.
How much money can I get a personal loan for?
The answer depends on a wide range of factors, which mainly includes the type of lender and your
credit score. A SoFi Personal Loan allows applicants to borrow between $5,000 and $100,000.
Will applying for a personal loan affect my credit?
To check the rates and terms you 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 credit bureaus, which is considered a hard credit pull.
How long do I need to wait to reapply after my Personal Loan application has been declined?
You will need to wait at least 30 days before re-applying for a Personal Loan with the same borrower(s). You are welcome to retry at any time with a co-borrower, if the previous application was as a single borrower. If you initially applied with a co-borrower, you can retry as a single borrower or with a different co-borrower.
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† 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.
Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or other eligible status, be residing in the U.S., and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates reserved for the most creditworthy borrowers. If approved, your actual rate will be within the range of rates at the time of application and will depend on a variety of factors, including term of loan, evaluation of your creditworthiness, income, and other factors. If SoFi is unable to offer you a loan but matches you for a loan with a participating bank, then your rate may be outside the range of rates listed above. Rates and Terms are subject to change at any time without notice. SoFi Personal Loans can be used for any lawful personal, family, or household purposes and may not be used for post-secondary education expenses. Minimum loan amount is $5,000. The average of SoFi Personal Loans funded in 2022 was around $30K. Information current as of 6/2/23. SoFi Personal Loans originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org). See SoFi.com/legal for state-specific license details. See SoFi.com/eligibility for details and state restrictions.
Fixed rates from 8.74% APR to 35.49% APR reflect the 0.25% autopay interest rate discount and a 0.25% direct deposit interest rate discount. SoFi rate ranges are current as of 12/15/25 and are subject to change without notice. The average of SoFi Personal Loans funded in 2022 was around $30K. Not all applicants qualify for the lowest rate. Lowest rates reserved for the most creditworthy borrowers. Your actual rate will be within the range of rates listed and will depend on the term you select, evaluation of your creditworthiness, income, and a variety of other factors.
Loan amounts range from $5,000– $100,000. The APR is the cost of credit as a yearly rate and reflects both your interest rate and an origination fee of 0%-7%, which will be deducted from any loan proceeds you receive.
5 Autopay: The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. Autopay is not required to receive a loan from SoFi.
7 Direct Deposit Discount: To be eligible to potentially receive an additional (0.25%) interest rate reduction for setting up direct deposit with a SoFi Checking and Savings account offered by SoFi Bank, N.A. or eligible cash management account offered by SoFi Securities, LLC (“Direct Deposit Account”), you must have an open Direct Deposit Account within 30 days of the funding of your Loan. Once eligible, you will receive this discount during periods in which you have enabled payroll direct deposits of at least $1,000/month to a Direct Deposit Account in accordance with SoFi’s reasonable procedures and requirements to be determined at SoFi’s sole discretion. This discount will be lost during periods in which SoFi determines you have turned off direct deposits to your Direct Deposit Account. You are not required to enroll in direct deposits to receive a Loan.
§ Awards or rankings are not indicative of future success or results. Neither SoFi Bank, N.A. nor its employees paid a fee in exchange for ratings. Awards and ratings are independently determined and awarded by their respective publications.
‡ Same-Day Personal Loan Funding: 82% of typical SoFi personal loan applications, excluding Direct Pay personal loans and personal loan refinance, from January 1, 2022–January 1, 2023 that were signed before 7pm ET on a business day were funded the same day.
^ Direct Pay: Terms and conditions apply. Offer good for new personal loan customers with credit cards in their name only and subject to lender approval. To receive the offer, you must: (1) register and/or apply through this landing page; (2) complete a loan application with SoFi within 90 days of your application submit date; (3) meet SoFi’s underwriting criteria; (4) apply 50% or more of your loan proceeds directly to your creditors. Once conditions are met and the loan has been disbursed, the interest rate shown in the Final Disclosure Statement will include an additional 0.25% rate discount. Offer good for new customers only. Cannot be combined with other rate discounts with the exception of the 0.25% autopay rate discount, 0.25% direct deposit discount. SoFi reserves the right to change or terminate the Rate Discount Program to unenrolled participants at any time with or without notice. It takes about 3 business days for your credit card lender to receive payment after your loan is signed. You will be responsible for making all required payments to avoid credit card fees.
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Returning Borrower Special Pricing: Current and former SoFi Personal Loan, Student Loan Refinance, In-school loan, or home mortgage loan customers may be eligible for Returning Borrower special pricing on a personal loan if they meet the eligibility criteria and any other applicable terms and conditions. To receive this offer you must (1) apply for a new personal loan and submit your application; (2) complete a loan application with SoFi within 90 days of your application submit date; and (3) meet SoFi’s underwriting criteria. The pricing special automatically will be reflected in the rate offered at the time of application, and it will fall within SoFi’s standard Personal Loan range of rates. SoFi reserves the right to discontinue or modify the Returning Borrower Special Pricing at any time and without notice. Such changes or modifications will only apply to applications begun after the effective date of the change.
How long do I need to wait to reapply after my Personal Loan application has been declined?
You will need to wait at least 30 days before re-applying for a Personal Loan with the same borrower(s). You are welcome to retry at any time with a co-borrower, if the previous application was as a single borrower. If you initially applied with a co-borrower, you can retry as a single borrower or with a different co-borrower.
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