Current Home Equity Loan Rates in Austin, TX Today
AUSTIN HOME EQUITY LOAN RATES TODAY
Current home equity loan
rates in Austin, TX.
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 Austin.
Key Points
• Your credit score, debt-to-income ratio, and market conditions all play a part in the interest rate you’re offered.
• Fixed interest rates result in predictable monthly payments, while adjustable rates tend to start a bit lower.
• To be eligible for a home equity loan, you’ll need to maintain at least 20% equity in your home.
• The interest on home equity loans may be tax-deductible if you use it for home improvements.
• Alternatives to home equity loans include home equity lines of credit (HELOC) and cash-out mortgage refinances.
Introduction to Home Equity Loan Rates
Home equity loans are a popular way to access cash for a variety of big expenses. Getting the best available home equity loan rates in Austin, Texas, starts with understanding how rates are influenced by economic and personal factors. We’ll also discuss how a home equity loan works — along with alternatives like the home equity line of credit (HELOC) and the cash-out mortgage refinance.
Whichever financing tool you choose, your prep work will be similar, and we’ll explain the steps to present yourself as a stellar candidate. The payoff could be thousands of dollars saved on interest and fees.
How Do Home Equity Loans Work?
What is a home equity loan? In short, it’s a second mortgage that uses your home as collateral. The loan is disbursed in one lump sum and repaid in equal monthly installments over five to 30 years. Because the loan is secured by your home equity, it typically offers lower interest rates than unsecured personal loans. Most home equity loans have fixed interest rates, which can provide peace of mind if you like predictable payments. To qualify, you’ll generally need to have at least 20% equity in your home.
How Are Home Equity Loan Interest Rates Determined?
The interest rates on all kinds of home loans are influenced by a multitude of factors, from the economy to your own financial standing. The Federal Reserve’s policies, particularly the federal funds rate, have a significant impact on lending. Lenders typically peg their rates to the prime rate, which in turn is influenced by the Fed. Keeping an eye on the prime rate can give you a good view of where home equity loan rates are headed.
Your credit score and debt-to-income ratio also factor in, with higher scores and lower ratios often translating to better rates. Loan size and repayment term come into play, with larger loans and longer terms carrying increased risk and, consequently, higher rates.
How Interest Rates Impact Affordability
Your interest rate helps determine the affordability of different types of home equity loans. Even a seemingly small difference in interest rate can add up to significant savings or costs over the life of your loan. For example, a $100,000 home equity loan with a 15-year term would have a monthly payment of $985 at 8.50% interest, and $1,044 at 9.50% interest.
But the real story is in the total interest paid: The 8.50% rate adds up to $77,253 in interest over the life of the loan. Compare that to $87,960 with the 9.50% rate. That means securing the lower rate would save you $10,700 — well worth the time and effort you spend shopping around.
The chart below gives you a broader view of how small changes in interest rate alter your monthly payment and total interest for a $100K loan repaid over 15 years.
| Interest Rate | Monthly Payment | Total Interest Paid |
|---|---|---|
| 9.00% | $1,014 | $82,568 |
| 8.875% | $1,007 | $81,232 |
| 8.75% | $999 | $79,901 |
| 8.625% | $992 | $78,574 |
| 8.50% | $985 | $77,253 |
| 8.375% | $977 | $75,937 |
| 8.25% | $970 | $74,625 |
| 8.125% | $963 | $73,319 |
| 8.00% | $956 | $72,017 |
Home Equity Loan Rate Trends
The trends in home equity loan rates can be a bit like the weather—unpredictable. Interest rates on home equity loans are influenced by a number of factors, including the prime rate, which is closely related to the federal funds rate set by the Federal Reserve. The prime rate has fluctuated significantly in recent years, ranging from 3.25% in 2020 to 8.50% in 2023. These changes can have a direct impact on the rates offered to you.
While it’s impossible to predict future movements with certainty, staying informed about economic conditions and what the prime rate is up to can help you time your application for the best possible rate. Comparing rates from multiple lenders and considering the broader market context can also provide valuable insights.
Source: TradingView.com
| 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
How to Qualify for the Lowest Rates
Most of us can’t wait around long for interest rates to drop. All we can do is set ourselves up for success. Lenders will scrutinize your credit score, debt-to-income (DTI) ratio, and the equity in your home. You can bolster your chances of qualifying for a lower rate by enhancing your credit score, reducing your debt, and ensuring your home’s value is accurately appraised.
Maintain Sufficient Home Equity
To be eligible for a home equity loan, you need to maintain at least 20% equity in your home. Calculating your equity is straightforward: Just subtract your mortgage balance from your current home value. For instance, if you owe $400,000 on your mortgage and your home is valued at $550,000, your equity is $150,000, or 27%. Lenders typically allow you to borrow up to 85% of your equity, which means in this example, you could potentially access $127,500.
Keeping a healthy amount of equity in your home is not only a smart financial move, but it also ensures you can secure favorable loan rates and manage the loan effectively, even in the face of financial challenges. A home equity loan calculator can help you calculate your equity level.
Build a Strong Credit Score
To get the most competitive home equity loan rates, set your sights on a credit score of 700 or higher. A robust credit score is a testament to your financial acumen and can lead to more favorable loan terms. Lenders scrutinize your payment track record, credit utilization, and the length of your credit history. By paying your bills on time and keeping credit card balances in check, you can give your score a boost. Steer clear of opening new accounts or closing old ones before applying, as this can dent your score.
Manage Debt-to-Income Ratio
Your debt-to-income (DTI) ratio is a big deal when it comes to qualifying for a home equity loan and getting lower rates. Lenders typically look for a DTI ratio below 50%, and ideally below 36%. To calculate your DTI, divide your total monthly debt payments (student loans, auto loan, mortgage payment) by your gross monthly income. Let’s say your student loan payment is $300 a month, your auto loan is $400, your mortgage is $1,600, and your monthly income before taxes is $7,000. Your DTI ratio is 33%. ($300 + $400 + $1,600 = $2,300 / $7,000 = 33%)
A lower DTI can help you qualify for a loan and show lenders that you have a manageable debt load, which can reduce the risk of default. To improve your DTI, consider paying down existing debts, increasing your income, or both. Keeping your DTI in check can help you qualify for better loan terms and lower interest rates, which can make your home equity loan more affordable.
Obtain Adequate Property Insurance
Property insurance is a must-have for home equity loans, especially in flood-prone areas. This insurance is a safety net for both you and the lender. It’s a smart move to review your current policy and consider beefing it up if needed. Getting the right coverage not only meets your lender’s requirements but also safeguards your investment, making the road to your home equity loan smoother and more secure.
Tools & Calculators
Using these resources can be a game-changer. They can help you get a handle on the numbers, compare rates, and find the loan that fits your financial situation like a glove.
Run the numbers on your home equity loan.
-
Home Equity Loan
CalculatorEnter a few details about your home loan and we’ll provide you your maximum home equity loan amount.
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HELOC Payment
CalculatorPunch in your HELOC amount and we’ll estimate your monthly payment amount for your HELOC.
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HELOC Interest Only Calculator
Use SoFI’s HELOC interest calculator to estimate how much monthly interest you’ll pay .
Using the free calculators is for informational purposes only, does not constitute an offer to receive a loan, and will not solicit a loan offer. Any payments shown depend on the accuracy of the information provided.
Closing Costs and Fees
Closing costs for home equity loans generally range from 2% to 5% of the loan amount. Here’s a quick breakdown: There’s the appraisal, which can set you back $300 to $500, and the credit report, which typically costs $50 to $100. Title insurance (0.5% to 1% of the loan) and the title search ($100 to $250) make sure everything’s shipshape with your property title. Origination fees (0.5% to 1% or a flat fee) cover the lender’s costs for getting you set up. And don’t forget about the document preparation/attorney fees, which can range from $500 to $2,000.
Tax Deductibility of Home Equity Loan Interest
The interest on home equity loans may be tax-deductible if the funds are used to improve your home. If you’re married and filing jointly, you can deduct the interest on up to $750,000 of qualified home equity loans. If you’re single, the limit is $375,000. To claim the deduction, you’ll need to itemize your tax return. A tax advisor can help you understand how this deduction applies to your specific financial situation and how you can maximize your potential tax savings.
Alternatives to Home Equity Loans
Home equity loans are just one of the many financial tools at your disposal. You might also consider a home equity line of credit (HELOC) or a cash-out mortgage refinance. Both options allow you to tap into the equity in your home, but they work a little differently. Both options can be helpful for big expenses or debt consolidation, but it’s important to compare the terms and fees to find the best fit for your financial goals.
First, let’s get into what is a home equity line of credit..
Home Equity Line of Credit (HELOC)
A HELOC is akin to a credit card, granting you the flexibility to borrow up to a set limit and pay interest solely on what you use. While the interest rates for HELOCs are variable, they can be a cost-effective solution. Typically, a 680 credit score (700 is even better) and a debt-to-income ratio under 50% (ideally under 36%) are what lenders look for. HELOCs are particularly handy if you’re uncertain about the total amount you need to borrow or anticipate expenses over time.
During the initial draw period, which often lasts 10 years, you typically make interest-only payments. (Use a HELOC interest-only calculator to estimate your monthly bills.) After that, the repayment period lasts 10-20 years; that’s when you’ll start repaying both the principal and interest. (A HELOC repayment calculator can help you determine how much you’ll owe.)
If you’re debating a HELOC vs. a home equity loan, this chart shows you their main differences at a glance.
| 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 |
Cash-Out Refinance
This option replaces your current mortgage with a larger one, giving you a lump sum to work with. The amount you can borrow is tied to your home’s equity, with most lenders allowing borrowing up to 80% of your property’s value. To qualify, you need a credit score of 620 or above and a debt-to-income ratio under 43%. You can choose between fixed or variable interest rates, with the latter potentially offering more financial flexibility.
If you’re on the fence about a cash-out refinance vs. a hoem equity line of credit, consider that a cash-out refinance consolidates your debts into a single monthly payment, streamlining your financial landscape.
The Takeaway
When you’re ready to take the next step, keep in mind that a strong credit score, a manageable debt-to-income ratio, and the right property insurance can all play a part in securing favorable terms for your home equity loan. Leverage the tools and calculators at your disposal to estimate monthly payments and compare lenders. And don’t forget to account for closing costs and fees, which typically range from 2% to 5% of the loan amount. We hope this information makes your decision a bit easier — and maybe saves you some serious money.
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.
FAQ
What can a home equity loan help you with?
Home equity loans are a great way to finance big expenses or consolidate high-interest debt. They can also be a smart option for home improvements since they can be tax-deductible. Just be sure to use the money wisely and make sure you can afford the monthly payments.
What’s the monthly payment on a $50,000 home equity loan?
The monthly payment for a $50,000 home equity loan depends on the loan term and interest rate. For instance, with a 7.00% rate across a 20-year term, your monthly payment would be around $388. Shorten the term to 10 years, and your payment rises to $581. The longer term eases your monthly budget, but remember you’ll pay more in interest over a longer repayment term. Before you decide, compare rates and terms from different lenders to find the best fit for your financial situation.
What’s the monthly payment on a $100,000 HELOC?
The payment on a $100,000 HELOC depends on the interest rate and the payment period you’re in. There are two phases to a HELOC: the draw period and the repayment period. During the draw period, which is typically 10 years, you usually can make interest-only payments on the amount you’re using. If you draw $50,000 and your rate is 8.00%, your interest-only payment would be $333 per month. Once the draw period ends, the repayment period begins, and you’ll start paying both principal and interest. If you draw the full $100,000 at the same 8.00% rate over a 20-year repayment period, the monthly payment would increase to around $1,503. Keep in mind that HELOCs have variable interest rates, and your actual payment could be higher or lower depending on the rate and how much you borrow.
What might prevent you from securing a home equity loan?
There are a few things that might prevent you from qualifying for a home equity loan, such as not having enough equity in your home, a low credit score, and a high debt-to-income (DTI) ratio. Lenders usually require at least 20% equity in your home and a credit score of 680 or higher, although some prefer a score over 700. A DTI ratio of 43% or less is also typically required. Additionally, not having adequate property insurance, particularly in flood-prone areas, can also disqualify you. To improve your chances, consider increasing your credit score, paying down your current debts, and making sure your property is well-insured.
What are the benefits of a home equity loan?
Home equity loans are a smart choice for many reasons. They come with fixed interest rates and predictable monthly payments, which makes budgeting easier. If you’re thinking about a major expense like home renovations, college tuition, or consolidating debt, a home equity loan could be just what you need. The best part? The interest rates are usually lower than unsecured loans because your home is the collateral. And there’s a potential tax perk: The interest you pay on home equity loans used for home improvements might be tax-deductible (up to certain limits). Just remember to consider the risks, like the potential for foreclosure, before you take the leap.
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.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
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.
SOHL-Q324-283
More home equity resources.
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What is a Home Equity Line of Credit
-
Different Types of Home Equity Loans
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HELOC vs Home Equity Loan: How They Compare
Turn your home equity into cash. Call us for a complimentary consultation or get prequalified online.
Mortgage Preapproval Calculator
Mortgage Preapproval Calculator
By Timothy Moore | Updated July 1, 2025
A mortgage preapproval calculator is a helpful tool for understanding how much money a lender is likely to allow you to borrow when you’re buying a house. This can give you a good frame of reference in the early stages of house shopping, when you’re not quite ready to submit to a hard credit check with a lender and get a preapproval letter.
Use our mortgage preapproval calculator to get a better idea of how much of a mortgage you can get based on your income and debts.
Key Points
• A mortgage preapproval calculator estimates borrowing power for a home purchase.
• Using a preapproval calculator doesn’t require a credit check. It’s fast and easy to get results.
• Preapproval amounts depend on the borrower’s income and debt levels.
• Tips for getting a formal preapproval letter from a lender include checking your credit and comparing different lenders’ rates.
• A preapproval calculator helps borrowers understand home affordability and monthly payment amounts.
*Actual preapproval amount may vary from the estimated preapproval amount noted in the calculator.
Calculator Definitions
Before you dive into using our mortgage preapproval calculator, it’s important to understand the terms involved:
• Mortgage preapproval: The mortgage preapproval process is a formal step in home-buying wherein a lender reviews your credit and financial history to determine the maximum amount it is willing to loan you. If you’re preapproved, you’ll receive a mortgage preapproval letter with the loan amount and interest rate. It’s not a guarantee, but it’s a solid sign that you can qualify for the loan.
• Annual income: Your annual income refers to the amount of money you make in a year before taxes. If you have multiple sources of income, you should add these together, including salary, hourly pay from a part-time job, income as a self-employed contractor, or government benefits. If you’re buying the house with a second person, such as your spouse, you can combine your income.
• Loan term: This refers to the length of the mortgage. Typically, a conventional mortgage lasts 30 years, but some buyers may get a 15-year mortgage. Though less common, borrowers can also get 5-, 10-, 20-, and 25-year mortgages.
• Interest rate: While you won’t know the exact interest rate you’ll be offered until you move forward with an official preapproval, you can estimate based on current rates.
• Monthly debt payments: The home loan preapproval calculator asks you to input monthly debt payments, because this is something a lender will review. Add up all your monthly obligations, including credit card payments, personal loan payments, car payments, student loan payments, and payments from any existing mortgages.
How to Use the Mortgage Preapproval Calculator
Using the mortgage preapproval calculator is easy. Here’s how:
1. Calculate and enter your annual income: Add up all your relevant sources of income (pre-tax), including your own income and that of any other applicants. Insert that number in the first field.
2. Calculate and enter your monthly debt payments: Sit down with your bank statement or budget to figure out your monthly debt obligations (how much you spend each month on your debts). Add these together and type the number in the second field.
3. Determine the term of the loan: Use the slider to indicate the ideal mortgage term length (between five and 30 years). Remember that 30 years is the standard; a shorter loan term length can result in significantly higher monthly payments — but less interest paid over the life of the loan.
4. Research current interest rates: Look at the current mortgage rates and input the rate you’re most likely to be offered based on the loan term you’re considering.
5. Look at your results: Based on the information you provide, you’ll be able to see the estimated maximum monthly mortgage payment you should consider, as well as the estimated preapproval amount.
Remember: The mortgage preapproval calculator is an estimate only, intended to help you get a sense of how much house you might be able to afford as you begin to shop. If you live somewhere with a high cost of living, your personal budget may vary accordingly. When you’re getting closer to the offer stage, you’ll want to get a real preapproval letter for a home loan.
Recommended: Finding Down Payment Assistance
What Is a Mortgage Preapproval Calculator?
A mortgage preapproval calculator is an online tool that gives you an idea of what size loan a lender is likely to approve you for when buying a house. It can also show you the highest monthly payment you can likely afford. It’s a useful tool, especially if you are buying your first home and haven’t been through the process before.
The calculator is only an estimate. Before you officially make an offer on a house, you may want to get a mortgage preapproval letter from a lender. The letter shows buyers that you’re serious about your offer and you have taken steps to secure financing.
Benefits of Using a Mortgage Preapproval Calculator
• Fast and easy: You can use a preapproval calculator from the comfort of your couch. One minute, you’re using the calculator and the next, you can be scrolling for house listings.
• No credit check: When the time comes, you’ll need to get an official preapproval, which will require a hard credit check. But if you’re not yet serious about making an offer on a house, a mortgage preapproval calculator sets a good frame of reference as you start saving for a down payment and eyeing the market — without requiring a credit check.
• No expiration: An official mortgage preapproval lasts only 30 to 90 days, depending on the lender. That means you shouldn’t get one until you’re sure you’ll be making an offer in the coming weeks or months. The estimate provided by a mortgage preapproval calculator, however, has no expiration date.
Types of Mortgage Preapproval
People throw around the term “mortgage preapproval” quite freely, but it’s actually a distinct term from “mortgage prequalification” and “fully underwritten,” which are different stages in the process. Here’s a look at mortgage prequalification vs. mortgage prequalification vs. fully underwritten:
• Mortgage prequalification: Getting prequalified with a mortgage lender is a less formal process than getting preapproved or underwritten. You provide a few details (your estimated income, debts, and credit score), and the lender will let you know how large a loan you’d likely be approved for, if you did apply. This is just an estimate, but it’s enough to help you start thinking about the home-buying process.
• Mortgage preapproval: When you’re more serious about making an offer, you’ll want a mortgage preapproval. You’ll consider different types of loans and think about the term of your mortgage. The lender will check your credit and require documentation to verify all the information you provided. Once your stats are reviewed, the lender can offer a preapproval letter with the amount of money you can likely borrow and at what interest rate.
• Fully underwritten: Once you make an offer on a house — and that offer is accepted — you can apply for the mortgage. At that point, the lender reviews your application more thoroughly (this is the underwriting process) and, assuming everything is as it should be, approves you for the mortgage, pending an appraisal.
Examples of Mortgage Preapproval
The table below shows various mortgage preapproval examples for a 30-year fixed-rate loan at 6.50%. You can see how big an impact annual income and monthly debt payments have on estimated preapproval amounts by putting your own numbers into the mortgage preapproval calculator.
| Annual Income | Monthly Debt Payments | Estimated Preapproval Amount |
|---|---|---|
| $50,000 | $0 | $187,580 |
| $50,000 | $600 | $89,653 |
| $50,000 | $1,200 | Cannot be preapproved |
| $75,000 | $0 | $276,869 |
| $75,000 | $600 | $181,943 |
| $75,000 | $1,200 | $87,016 |
| $100,000 | $0 | $369,159 |
| $100,000 | $600 | $274,233 |
| $100,000 | $1,200 | $179,306 |
| $150,000 | $0 | $553,738 |
| $150,000 | $600 | $458,812 |
| $150,000 | $1,200 | $363,885 |
| $200,000 | $0 | $738,318 |
| $200,000 | $600 | $643,391 |
| $200,000 | $1,200 | $548,465 |
Mortgage Preapproval Tips
Here are some quick tips for a successful mortgage preapproval process:
• Check your credit score and save for a down payment: Before focusing on preapproval, make sure your credit score is strong enough to qualify for a loan. (Here are the basic credit score requirements for a mortgage.) You should also figure out how much money you are willing to put down at signing and start saving, as needed.
• Use a calculator or get prequalified: Before requesting a preapproval, get a general idea of what you can expect to borrow. You can obtain an estimate from a mortgage preapproval calculator or get one by prequalifying with a lender.
• Shop around: Just because a seller accepts your offer with a preapproval letter from a specific lender doesn’t mean you have to apply for the mortgage with that lender. You’re free to seek multiple offers to find the lowest rate and fees.
Recommended: Do You Qualify as a First-Time Homebuyer
The Takeaway
Using a mortgage preapproval calculator can give you a good idea of what size loan you could be approved for. While it’s not a guarantee of approval, the estimate can be quite accurate, as long as you input all the correct information. When you’re ready to buy a house, however, you should get a true preapproval letter from a mortgage lender.
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 you need for a $500,000 mortgage?
The income needed for a $500,000 mortgage is around $150,000 a year. However, if you have a fair amount of debt, you may need to make even more money to afford a $500,000 home. Remember, a lender may approve you for a $500,000 mortgage based on your income, but you need to look at the estimated monthly payments to make sure you’re comfortable spending that much each month for the next three decades.
How much mortgage can I get with $70,000 salary?
The amount of house you can afford on $70,000 a year is around $200,000, but much of that depends on the size of your down payment, the length of the loan, and your monthly debt obligations. If you make $70,000 and have no monthly debt payments, you could afford a $250,000+ house with a 6.5% interest rate. But if you pay $1,000 a month between student loans and a car loan, you should aim for a house closer to $100,000.
How much income do you need to be approved for a $400,000 mortgage?
The income needed for a $400,000 mortgage is at least $130,000 a year, but much of that depends on your debt obligations and the size of your down payment. Interest rates, property taxes, homeowners insurance costs, and loan term length can all impact salary requirements for affordability.
How much income do you need to be approved for a $400,000 mortgage?
The income needed to be approved for a $300,000 mortgage is around $90,000. This estimate assumes you don’t have other sources of significant debt. Other factors, like how much you have saved for a down payment and your credit history, will also impact how much money you should make to get a $300,000 mortgage.
Can I afford a $250k house on a $50k salary?
You probably can’t afford a $250,000 house on a $50,000 salary. Though it depends on other factors, including your monthly debts and your credit score, the typical income needed for a $250,000 mortgage is $76,000. That said, if you have no monthly debt obligations (no student loans, no car loans, etc.) and have saved up a significant down payment (like $50,000 or $100,000), you may be more likely to be approved for a $250,000 house.
What is the 28/36 rule?
The 28/36 rule is a simple tool to use to determine how much house you can afford. While everyone’s situation is unique, conventional wisdom states that total housing costs should not account for more than 28% of your monthly gross income, and your overall debts (car, house, personal loan, student loans, credit cards, etc.) should not account for more than 36% of your takehome pay.
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.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
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.
SORL-Q225-247
Preparing to buy a house? Call us for a complimentary mortgage consultation.
Current Home Equity Loan Rates in New York City, NY Today
ALBANY HOME EQUITY LOAN RATES TODAY
Current home equity loan
rates in Albany, NY.
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 Albany.
Key Points
• Home equity loan rates in New York City are determined by your credit score, your debt-to-income ratio, and other factors.
• To secure the best rates, aim for a credit score of 700 and a debt-to-income (DTI) ratio under 36%.
• The rates you may be offered by lenders are impacted by the prime rate, Federal Reserve policy, and your personal financial profile.
• Even a small difference in home equity loan rates can add up to substantial savings over the life of your loan.
• The interest you’ll pay on a home equity loan could be tax-deductible if you use the money for home improvements.
• Other options, like HELOCs and cash-out refinances, come with their own set of perks and pitfalls.
Introduction to Home Equity Loan Rates
What is a home equity loan? What’s most important to know is that it’s a great way for you, as a homeowner, to access the value you’ve built in your home. It’s an option many people who’ve built equity in their properties use to relieve pressure when they need cash.
In this article, we’ll cover everything you need to know about home equity loans. We’ll discuss factors affecting loan rates and give you tips that will help you get the best rate possible. We’ll also explain the different types of home equity loans, including home equity lines of credit (HELOCs) and cash-out refinances, along with the pros and cons of each.
Whether you’re planning a home renovation, working to consolidate high-interest debt, or making a major purchase, getting an understanding of home equity loan rates in New York City can help you make smart financial decisions and set you up for a bright economic future.
How Do Home Equity Loans Work?
A home equity loan is a second mortgage. You receive a lump sum of cash, which you then repay, usually in fixed monthly installments, over five to 30 years. The loan is secured by your home, and that can give you access to lower interest rates than you would get with an unsecured personal loan.
One important thing you’ll want to keep in mind: In order to draw on the equity in your home, you have to actually have built equity in your home. You can still be working to pay off your mortgage, but the amount you owe shouldn’t be greater than the house’s worth. Typically, lenders will want you to have 20% equity at the minimum in your home to qualify.
HELOCs vs. Home Equity Loans
Looking at a HELOC vs a home equity loan is where many homeowners begin their comparisons to find the right financing tool for their situation. Here’s how the two loan types compare if you use them to pull equity out of your home.
| HELOC | Home Equity Loan | |
|---|---|---|
| Type | Revolving line of credit | Installment loan |
| Interest Rate | Usually variable-rate | Usually fixed-rate |
| Repayment | Repay only what you borrow plus interest; you may have the option to make interest-only payments during the draw period. | Starts immediately at a set monthly payment |
| Disbursement | Charge only the amount you need | Lump sum |
If you have been diligently paying off your mortgage and are wondering how to get equity out of your home, a home equity loan may be the right option for you.
Where Do Home Equity Loan Interest Rates Originate?
The rates you might be offered when shopping for a home equity loan are the product of many influences, from the broad economic landscape to your own financial standing.
Federal Reserve policy — including changes to the federal funds rate — can send ripples through the lending market, causing changes that impact the prime rate. When the prime rate moves up or down, so do home equity loan rates.
Keep an eye on these factors. You’ll be better prepared to anticipate rate shifts and make confident decisions about when you should pursue a home equity loan.
On a personal level, your credit score and DTI ratio are also key drivers in the rates you’ll be quoted as a potential borrower. You have more control over these things, so try to prepare for applying for a home equity loan by working to improve them.
How Interest Rates Impact Affordability
The interest rate on your home equity loan can make a world of difference in how affordable it is over time, as you pay it down. You should know that even a seemingly small difference in the rate can lead to significant savings or extra costs.
To demonstrate just how much your interest rate can impact your loan costs, the chart below shows monthly payment amounts and the total interest you’d pay for a $75,000 home equity loan with a 20-year repayment term. We’ve calculated both the monthly payment and the total interest you’ll pay at several rates.
If you have an 8.00% interest rate, your monthly payment is approximately $627 and the total interest over the loan’s term adds up to $75,559. If the interest rate is one percentage point lower, at 7.00%, your monthly payment would be about $581 and your total interest $64,554. That means the lower rate could save you $11,005 in interest.
| Interest Rate | Monthly Payment | Total Interest Paid |
|---|---|---|
| 8.00% | $627 | $75,559 |
| 7.50% | $604 | $70,007 |
| 7.00% | $581 | $64,554 |
Fixed vs Adjustable Interest Rates
Home equity loans tend to come with fixed interest rates. But some New York City lenders may offer adjustable rates, and different home equity loans like home equity lines of credit (HELOCs) and cash-out refinances also offer adjustable rates. That’s why it’s a good idea to consider which you might prefer.
A fixed rate never changes through the loan’s life. That gives you the assurance of consistent monthly payments over the duration of the loan. Such predictability is a great tool for your budgeting and financial planning.
Adjustable rates tend to start off slightly lower than fixed rates, but after an initial period, they change in accordance with market rates. That can lead to higher payments and create some uncertainty about what to expect over the term of the loan.
When you’re thinking about home equity loan rates, it’s smart to consider the merits of fixed versus adjustable rates, taking into account your financial standing and comfort with risk.
Home Equity Loan Rate Trends
Predicting interest rate movements is something like a day at the races – it’s all but impossible to know what will happen with certainty. But by looking at the trends in recent history, you can get a better sense of what sort of movement might be coming.
Let’s take a look at the prime rate, a pivotal driver in the home equity loan rate game. Its recent timeline shows just how volatile it is. As you can see in the chart below, it dropped to 3.25% in 2020, then steadily rose to 8.50% in 2023.
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.
Source: TradingView.com
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
As we have mentioned, these kinds of fluctuations impact the rates you might encounter in New York City. But despite some unpredictability, staying in the know about financial trends and working on your financial standing can help you time your application to sync with favorable economic conditions. With some luck, this can help you score competitive rates.
How to Qualify for the Lowest Rates
To secure the most competitive home equity loan rates in New York City, you’ll want to keep in mind a few factors when shopping for a HELOC vs. a home equity loan. Take the following steps before beginning the application process, and you’ll be positioned to land an interest rate and term that are not just favorable, but smart and manageable.
Accrue Home Equity
To qualify for a home equity loan, you need at least 20% equity in your home. To figure out your equity, subtract the outstanding balance on your mortgage from the estimated value of your home. Divide the answer you get by your home’s estimated value to arrive at a percentage of equity. The higher that percentage is, the better off you are.
Build a Strong Credit Score
To land the best available home equity loan rate, you also need a robust credit score. Lenders often look for a score of 680 or higher, and many require a score above 700. A higher credit score is viewed by lenders as a sign of financial savvy. It can open the door to favorable loan terms. If you focus on making timely payments, reducing credit card balances, and steering clear of new debt, you may succeed in boosting your credit score and your chances of qualifying for a home equity loan with a lower interest rate.
Manage Debt-to-Income Ratio
Your DTI ratio is an important factor when it comes to qualifying for a home equity loan and getting a good rate. Lenders typically want to see a DTI ratio of 50% or less. If yours is 36% or lower, you may qualify for the lowest interest rates. How can you manage your DTI effectively in New York City? Try to pay down your existing debt, increase your income, or achieve some combination of the two.
Obtain Adequate Property Insurance
Property insurance is a must-have if you want to qualify for a home equity loan. Insurance is a safety net for both you and the lender should damage occur, so make sure your coverage is comprehensive.
Tools & Calculators
Online tools and calculators can ease your quest for the best home equity loan rates by making calculations and budgeting simple. You can choose among multiple tools.
Here’s one to explore: A home equity loan calculator shows you how big a loan you might qualify for. It’s a nifty tool that can give you a clear picture of what to expect and make sure you won’t overextend yourself financially.
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
When it comes to the cost of closing on a home equity loan, expect to pay 2% to 5% of the loan amount. Keep in mind that everything seems to cost more in New York City. The table below shows some typical prices on the menu of costs.
| Service | Typical Fees |
|---|---|
| Appraisal | $300-$500 |
| Credit report | $30-$50 or more |
| Document prep | $100-$500 |
| Loan origination | 0.5%-1.0% of the loan amount |
| Notary | $20-$100 |
| Title insurance | 0.5%-1.0% of the loan amount |
| Title search | $75-$250 or more |
Tax Deductibility of Home Equity Loan Interest
The interest you pay on your home equity loan may be tax-deductible if you use the funds to improve your home. For single filers, interest on the first $375,000 of loan debt is deductible. Married couples who file jointly can deduct interest on up to $750,000 of debt. Just remember, you’ll need to itemize if you want to take advantage of this option. A tax advisor can help you figure out what will make the most sense for your situation.
Alternatives to Home Equity Loans
A home equity loan isn’t the only way to leverage your property’s value. You might also want to consider a cash-out refinance or a home equity line of credit (HELOC). A cash-out refinance involves taking out a new mortgage for a larger sum than your existing home loan. You receive the difference as a lump sum. With a HELOC, on the other hand, you apply for a credit limit, secured by your home, that you can borrow against as needed. You’ll pay interest only on the cash you draw out.
Learn more about cash-out refinance vs. home equity line of credit similarities and differences, and you can understand the options and make the best choice.
Home Equity Line of Credit (HELOC)
What is a home equity line of credit? A HELOC is a lot like a credit card, offering homeowners the freedom to borrow up to a set limit and pay interest solely on what they use. Usually, you can pull out funds during an initial “draw” period, followed by a repayment period in which you must repay the principal and remaining interest. Rates on HELOCs are generally adjustable. Unlike a home equity loan, a HELOC is about flexibility. Then again, adjustable interest rates mean your rate and your payments can fluctuate, potentially impacting your costs down the line.
Qualifying for a HELOC often requires a credit score of 680 or higher (700 is better) and a DTI ratio that’s ideally below 36% (but at the most 50%). HELOCs may allow you to borrow up to 90% of the equity you have in your home. To see how the loan would look as you pay it down, load some hypothetical numbers into a HELOC repayment calculator.
Just want to know how much the monthly payments would be on your hypothetical HELOC? Run some figures on a HELOC monthly payment calculator. You can play around with different interest rates and terms to find out how they might affect your payments, and how much of a loan you can afford. And if you’d like to calculate how much interest you’d have to pay during the “draw” period of a HELOC, try out a HELOC interest-only calculator.
Cash-Out Refinance
A cash-out refinance is a strategic mortgage refinance. You swap your original mortgage for one that’s larger than what you currently owe — then receive the difference in a lump sum. Rates on cash-out refis may be fixed or adjustable. It’s usually easier to qualify for a cash-out refi than it is for a home equity loan or a HELOC. Lenders have different standards, but often, cash-out refis require a 620 minimum credit score and a DTI ratio of 43% or less.
Recommended: HELOC Repayment Calculator
The Takeaway
If you’re thinking about applying for a home equity loan in New York City, it’s smart to build an understanding of key factors that tend to drive interest rates. Your credit score, DTI ratio, and equity level all play a role in the kind of rate you’ll qualify for. Simply shopping around can also go a long way toward getting yourself the best available rate. And if a home equity loan isn’t a fit, remember that HELOCs and cash-out refinances have their own benefits.
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.
FAQ
What are the common uses of a home equity loan?
Funding home improvements and consolidating high-interest debt are two popular reasons why people tend to apply for home equity loans. If you decide to pursue a home equity loan, remember to use funds wisely and make sure the loan fits into your long-term financial plan.
What would monthly payments look like on a $50,000 loan?
Your monthly payment after you take out a $50,000 home equity loan can vary depending on the interest rate and the loan term. For example, if you pull out equity at a 7.00% interest rate over a 15-year term, the monthly payment would be about $449. At a 9.00% interest rate over 15 years, the payment would be around $507. A loan calculator can help you figure out what your monthly payments would be with an array of variables.
What might prevent you from qualifying for a home equity loan?
A number of factors might get in the way of your securing a home equity loan. First, lenders typically require a minimum credit score, generally around 680 or more, and having a lower one could disqualify you. A high debt-to-income (DTI) ratio — usually above 50% — might also impede your loan eligibility. And having less than 20% equity in your home could be a red flag for lenders, too. Potential lenders will also look at how stable your home’s value is and how comprehensive a property insurance policy you carry. Qualifications vary lender-by-lender, but these are common disqualifiers.
What are a home equity loan’s biggest benefits?
Home equity loans often carry fixed interest rates. They therefore have predictable monthly payments, and that can make budgeting easier and rule out surprises. They usually have lower rates than unsecured personal loans, and that makes them a cost-effective option for significant one-time expenses, such as home improvements or debt consolidation. Be sure to balance benefits with potential risks, including the threat of foreclosure on your home if you fall behind on payments.
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.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
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.
SOHL-Q225-294
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 Houston, TX Today
HOUSTON HOME EQUITY LOAN RATES TODAY
Current home equity loan
rates in Houston, TX.
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 Houston.
Key Points
• Home equity loan rates are influenced by Federal Reserve policy, borrower creditworthiness, and market competition.
• It’s a good idea to keep at least 20% equity in your home whenever possible.
• A credit score of 700+ and a debt-to-income ratio below 36% are your ticket to the best rates out there.
• Property insurance is a must, particularly if your home is in a flood zone.
• Online tools and calculators can help you estimate monthly payments and your borrowing capacity.
• The interest on a home equity loan may be tax-deductible.
Introduction to Home Equity Loan Rates
What is a home equity loan? First and most important, it’s a great way for homeowners to access the value they have built in their homes. It’s also an option many use to relieve the pressure when they need cash.
In this article we’ll cover everything you need to know about home equity loans. We will discuss the factors that affect loan rates and provide tips for getting the very best rate possible. We’ll even explain the different types of home equity loans, including home equity lines of credit (HELOCs) and cash-out refinances, so you’ll be aware of the alternatives available, along with their pros and cons.
Whether you’re planning a home renovation, working to consolidate high-interest debt, or making a major purchase, understanding Houston home equity loan rates can help you make smart financial decisions and get you set up for a successful economic future.
How Do Home Equity Loans Function?
A home equity loan is a type of second mortgage. It allows you to tap into your home’s equity to receive a lump sum of cash, which you then repay, usually in fixed monthly installments over a period of five to 30 years. The loan is secured by your home, and that can mean you’ll have access to lower interest rates than you’d get with unsecured personal loans.
One important thing to keep in mind: In order to draw on the equity in your home, you have to actually have equity in your home. You can still be paying off your mortgage, but the money you currently owe should not be more than the house is worth. Typically, lenders will want you to have a minimum of 20% equity in your home to qualify.
HELOCs vs. Home Equity Loans
Here’s how the two types of financing compare if you use them to take equity from your home.
| HELOC | Home Equity Loan | |
|---|---|---|
| Type | Revolving line of credit | Installment loan |
| Interest Rate | Usually variable-rate | Usually fixed-rate |
| Repayment | Repay only what you borrow plus interest; you may have the option to make interest-only payments during the draw period. | Starts immediately at a set monthly payment |
| Disbursement | Charge only the amount you need | Lump sum |
If you’ve been paying your mortgage diligently and now you are wondering just how to get equity out of your home, a home equity loan may be a particularly good option for you.
The Origin of Home Equity Loan Interest Rates
Multiple factors determine what the home equity loan rates in and near Houston look like, including both big-picture economic conditions and your individual financial profile.
Federal Reserve policies affect lenders’ base rates and thus the rates they charge borrowers. Increases in the federal funds rate and the prime rate, for instance, lead to rises in home equity loan rates. Understanding these influences can enable borrowers to anticipate rate fluctuations and make informed decisions about all kinds of home loans, including home equity loans.
Your credit score and debt-to-income ratio also influence what rate you are offered by lenders. Additionally, the amount of your loan and the length of your repayment term will have an impact on your rate. Generally, larger loans and longer terms will have higher rates — this is due to the increased risk for lenders.
How Do Interest Rates Impact Home Equity Loan Affordability?
As you see, it pays to look for the best available interest rates, whether you’re shopping for a home equity loan or a HELOC. Your interest rate is a major factor when it comes to how affordable your home equity loan will be. As of late June 2025, the average home equity loan interest rate was 8.26%.
The chart below shows a $75,000 home equity loan with a 20-year repayment term, with payments and interest paid calculated at several different interest rates. If you have an 8.00% interest rate, your monthly payment would be $627, and the total interest you’d pay over the loan’s full term would add up to $75,559. But with a rate just one percentage point lower, at 7.00%, your monthly payment would be $581, and the total interest would drop to $64,554. The lower rate could ultimately save you $11,005 in total extra interest.
| Interest Rate | Monthly Payment | Total Interest Paid |
|---|---|---|
| 8.00% | $627 | $75,559 |
| 7.50% | $604 | $70,007 |
| 7.00% | $581 | $64,554 |
Fixed vs Adjustable Interest Rates
Unlike HELOCs, home equity loans often have fixed interest rates. Your monthly payments will not change — they’ll stay the same for the entire length of the loan. A fixed rate may start off higher than an adjustable rate, but its stability can give you peace of mind, because you’ll know that your payments won’t suddenly spike.
Adjustable rates, on the other hand, might seem more attractive, but after a defined period, the rates “adjust” to follow a market index — and may be higher than the initial rate. Since the rates can change quite a bit over the life of an adjustable-rate loan, your payments may feel unpredictable.
When deciding between the two kinds of rates, think carefully about your financial goals, how flexible your budget can be, and how much risk you feel comfortable with.
Home Equity Loan Rate Trends
As you’re thinking about how to get equity out of your home, you can try to time your loan application to achieve the lowest possible rate. But predicting the prime rate is a bit like trying to forecast the weather, and not all borrowers have time to wait for low points. If you need a loan, focus on comparing offers from different lenders, and positioning yourself to get the best possible rate.
The prime rate has seen its fair share of ups and downs, as you can see from the graphic and chart below.
Source: TradingView.com
| 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
How to Qualify for the Lowest Rates
To secure the most competitive home equity loan rates in Houston, there are a few factors to keep in mind, whether you’re shopping for a HELOC vs. a home equity loan. Take the following steps before you begin the application process, and you’ll be positioned to land a home equity loan with an interest rate and term that are not just favorable, but smart and manageable.
Maintain Sufficient Home Equity
You need at least 20% equity in your home to qualify for a home equity loan. To figure out your equity, subtract your outstanding mortgage balance from the estimated value of your home. Then simply divide the answer you get by the estimated home value to arrive at a percentage of equity. The higher that percentage is, the better off you’ll be.
Build a Strong Credit Score
To land the best available home equity loan rate, you’ll want a robust credit score. Lenders often look for a score of 680 or higher, with many requiring a score over 700. A higher credit score is a sign of financial savvy and can often open the door to more favorable loan terms. By focusing on timely payments, reducing credit card balances, and steering clear of new debt, you can boost your chances of qualifying for a home equity loan with a lower interest rate.
Manage Debt-to-Income Ratio
Your DTI ratio is an important factor when it comes to qualifying for a home equity loan and getting a good rate. Lenders typically want to see a DTI ratio of 50% or less, and if yours is 36% or lower, it will help you qualify for the lowest interest rates. Manage your DTI effectively by paying down your existing debt, increasing your income, or achieving some combination of the two.
Obtain Adequate Property Insurance
Property insurance is a must-have if you want to get a home equity loan. This insurance is a safety net for both you and the lender should damage occur, so make sure your coverage is up to snuff.
Tools & Calculators
Online tools and calculators can be a big help in your quest for the best home equity loan rates. You can choose among multiple tools. Here’s just one: A home equity loan calculator lets you enter info about a particular loan and learn what the monthly payments would be, giving you a clear picture of what you can expect. It’s a nifty tool to make sure you won’t overextend yourself. Plus, you can play around with different interest rates and terms to find out how they might affect your payments.
Run the numbers on your home equity loan.
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Home Equity Loan Calculator
Enter a few details about your home loan and we’ll provide you your maximum home equity loan amount.
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HELOC Payment Calculator
Punch in your HELOC amount and we’ll estimate your monthly payment amount for your HELOC.
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HELOC Interest Only Calculator
Use SoFI’s HELOC interest calculator to estimate how much monthly interest you’ll pay .
Using the free calculators is for informational purposes only, does not constitute an offer to receive a loan, and will not solicit a loan offer. Any payments shown depend on the accuracy of the information provided.
Closing Costs and Fees
When it comes to closing costs for home equity loans, you’re looking at 2% to 5% of the loan amount. The table below shows some typical closing costs.
| Service | Typical Fees |
|---|---|
| Appraisal | $300-$500 |
| Credit report | $30-$50 or more |
| Document prep | $100-$500 |
| Loan origination | 0.5%-1.0% of the loan amount |
| Notary | $20-$100 |
| Title insurance | 0.5%-1.0% of the loan amount |
| Title search | $75-$250 or more |
While some lenders offer no-closing-cost loans, they often come with higher rates.
Tax Deductibility of Home Equity Loan Interest
The interest on your home equity loan may be tax-deductible if you’ll be using the funds to improve your home. For single filers, interest is deductible on the first $375,000 of loan debt. Married couples filing jointly can deduct the interest on up to $750,000 of debt. Just remember that you’ll need to itemize if you want to take advantage of this. A tax advisor can help you figure out what will make the most sense for your situation.
Alternatives to Home Equity Loans
Home equity loans aren’t the only way to leverage your home’s value. You might also consider a home equity line of credit (HELOC) or a cash-out refinance vs. home equity line of credit.
Home Equity Line of Credit (HELOC)
What is a home equity line of credit? A HELOC is akin to a credit card, offering homeowners the freedom to borrow up to a set limit and pay interest solely on what they use. Usually, there’s an initial “draw” period during which they can withdraw funds, followed by a repayment period in which they repay principal and remaining interest. Rates are generally adjustable.
Unlike a home equity loan, a heloc-repayment-calculator is all about flexibility. Keep in mind that adjustable interest rates mean that payments can fluctuate, potentially impacting your costs down the line.
Qualifying for a HELOC generally requires a credit score of 680 or higher (700 is even better) and a DTI ratio under 50% (ideally below 36%). HELOCs often permit you to borrow up to 90% of your home’s equity. Check out this HELOC monthly repayment calcuclator to help you see how the loan would look as you pay it down.
And if you’d like to calculate how much interest you’d have to pay during the “draw” period of a HELOC, try a HELOC interest-only calcuclator.
Cash-Out Refinance
A cash-out refinance is a strategic mortgage refinance in which you swap your original mortgage for one that’s larger than what you owe — and then take the difference in a lump sum. The rates on cash-out refis can be fixed or adjustable.
If you’re evaluating the benefits of a cash-out refinance vs. a home equity line of credit, it’s worth noting that it’s usually easier to qualify for a cash-out refi than for a home equity loan or a HELOC. While lenders can have different standards, cash-out refinances often require a minimum credit score of 620 and a DTI ratio of 43% or less.
The Takeaway
To get the best home equity loan rates in Houston, you’ll want to work on building your credit, managing your debt-to-income ratio, and securing property insurance. You can use online tools to estimate your payments and the amount you can borrow, but be sure to factor in closing costs as you make your decision. If a home equity loan isn’t the best fit for you, a HELOC or a cash-out refinance could also be an option. Be sure to weigh the benefits and risks of each to find the one that works best for your financial goals and situation.
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.
FAQ
What are the common uses of a home equity loan?
Some popular reasons why people apply for home equity loans are to pay for home improvements and to consolidate high-interest debt. If you decide to pursue a home equity loan, remember to use the funds wisely and make sure the loan fits into your bigger financial picture.
What would monthly payments look like on a $50,000 loan?
The amount of your monthly payment for a $50,000 home equity loan can vary depending on the interest rate and the loan term. For example, if you got your loan at 7.00% interest over 15 years, your monthly payment would be about $449. At a 9.00% interest over 15 years, the payment would be around $507. A loan calculator can help you figure out what your monthly payments would be with different variables.
What might prevent you from getting a home equity loan?
A number of factors could get in the way of your securing a home equity loan. First, lenders typically require a minimum credit score, generally around 680 or more, so having a lower one could disqualify you. A high debt-to-income (DTI) ratio – usually above 50% – might also nix your loan. And having less than 20% equity in your home could be a red flag for lenders, too. Potential lenders will also look at how stable your home’s value is and how comprehensive your property insurance is. Qualifications vary by lender, but these are some common disqualifiers.
What are a home equity loan’s biggest benefits?
Home equity loans often come with fixed interest rates. They therefore have predictable monthly payments, which can make budgeting easier. They also usually have lower rates than unsecured personal loans, making them a cost-effective option for significant one-time expenses, such as home improvements or debt consolidation. Just be sure to balance the benefits with the potential risks. These include the threat of foreclosure on your home if you fall behind on payments.
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.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
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.
SOHL-Q225-291
More home equity resources.
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What is a Home Equity Line of Credit
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Different Types of Home Equity Loans
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HELOC vs Home Equity Loan: How They Compare
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