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If you’ve built significant equity in your home, a home equity loan lets you borrow a lump sum against that value — often at rates far lower than personal loans or credit cards. Whether you’re funding a major renovation, consolidating high-interest debt, or covering a big expense, the right home equity loan can save you thousands in interest over the life of the loan.
We’ve researched and compared the top home equity loan lenders of 2026 based on interest rates, fees, loan amounts, terms, and customer satisfaction. Here’s everything you need to find the best home equity loan for your situation.
What Is a Home Equity Loan?
A home equity loan — sometimes called a second mortgage — lets you borrow against the difference between your home’s current market value and what you still owe on your mortgage. You receive the money as a lump sum with a fixed interest rate and predictable monthly payments over a set repayment period (typically 5–30 years).
How it differs from a HELOC: While a home equity line of credit (HELOC) works like a revolving credit line with variable rates, a home equity loan offers a fixed rate and a single disbursement — making it ideal for one-time expenses where you know exactly how much you need. For more details, see our guide on what a HELOC is and how it works.
Best Home Equity Loans of 2026 at a Glance
| Lender | APR Range | Loan Amounts | Max LTV | Terms | Best For |
|---|---|---|---|---|---|
| U.S. Bank | 6.49%–13.14% | $15K–$750K | 90% | 5–30 years | Overall best rates |
| Bank of America | 6.99%–13.40% | $25K–$500K | 85% | 5–30 years | Existing customers |
| TD Bank | 7.24%–12.99% | $10K–$500K | 89.99% | 5–30 years | No closing costs |
| Discover | 6.99%–14.24% | $35K–$300K | 90% | 10–30 years | Zero fees |
| Spring EQ | 7.49%–14.99% | $25K–$500K | 95% | 5–30 years | High LTV |
| BMO | 7.05%–13.49% | $10K–$350K | 80% | 5–20 years | Midwest/online convenience |
In-Depth Lender Reviews
U.S. Bank — Best Overall Rates
U.S. Bank consistently offers some of the lowest home equity loan rates in the market. Current customers with auto-pay can qualify for an additional 0.25% rate discount. With loan amounts up to $750,000 and terms stretching to 30 years, it’s one of the most flexible options available.
Pros: Competitive rates, generous LTV, rate discount for existing customers, long terms available.
Cons: Not available in all states, closing costs apply (typically 2%–5% of loan), requires strong credit for the best rates.
Bank of America — Best for Existing Customers
Bank of America rewards loyalty with interest rate discounts of up to 0.50% for Preferred Rewards members. The application process is streamlined for existing banking customers, and you can manage everything through their mobile app.
Pros: Preferred Rewards discounts, strong mobile experience, established brand reliability.
Cons: Higher minimum loan amount ($25K), lower max LTV (85%), APRs slightly above market leaders.
TD Bank — Best for No Closing Costs
TD Bank covers closing costs on many of its home equity products, which can save borrowers $2,000–$6,000 upfront. That makes it an excellent choice if you want to minimize out-of-pocket costs, especially for smaller loan amounts where closing fees eat into your savings.
Pros: No closing costs (in many cases), competitive rates, available online and in branches (East Coast).
Cons: Geographic limitations (eastern U.S. only), may require a minimum draw, rates may be slightly higher to offset fee waivers.
Discover — Best for Zero Fees
Discover charges no application fees, no origination fees, and no appraisal fees on their home equity loans — a rarity in the industry. While the minimum loan amount is higher at $35,000, the zero-fee structure means your total borrowing cost is lower than many competitors advertising slightly lower APRs.
Pros: No origination fees, no appraisal fees, no cash due at closing, dedicated loan advisors.
Cons: Higher minimum loan amount, online-only (no branches), not available in all states.
Spring EQ — Best for High LTV
If you have less equity built up, Spring EQ stands out with a combined loan-to-value (CLTV) ratio up to 95%. That means you can borrow almost all of your available equity, which is helpful for homeowners who bought recently or live in areas with slower appreciation.
Pros: Industry-leading 95% CLTV, flexible underwriting, available in most states.
Cons: Higher rates for high-LTV loans, newer company with a smaller track record, closing costs apply.
BMO — Best for Midwest and Online Convenience
BMO provides a competitive home equity product with a solid digital application experience. Borrowers in the Midwest benefit from branch access, while anyone can apply online with a streamlined process that often closes within 30 days.
Pros: Competitive rates, quick closing timeline, good online tools and support.
Cons: Lower max LTV (80%), smaller maximum loan amounts, limited availability in some states.
How to Choose the Best Home Equity Loan
1. Compare APRs — Not Just Advertised Rates
The APR includes both the interest rate and any lender fees, making it a more accurate comparison tool. A loan with a 7.00% rate but $4,000 in closing costs may cost more overall than one at 7.25% with no fees.
2. Understand LTV Limits
Most lenders cap your combined loan-to-value ratio (CLTV) at 80%–90%. If your home is worth $400,000 and you owe $250,000, you have $150,000 in equity. At 80% CLTV, you could borrow up to $70,000; at 90%, up to $110,000.
3. Factor in Closing Costs
Home equity loan closing costs typically run 2%–5% of the loan amount. On a $100,000 loan, that’s $2,000–$5,000. Some lenders (like TD Bank and Discover) waive or cover these costs — a significant savings you should weigh against the APR.
4. Choose the Right Term Length
Shorter terms (5–10 years) mean higher monthly payments but less total interest. Longer terms (20–30 years) lower your monthly payment but increase total costs. If you’re refinancing your mortgage, consider whether a home equity loan or cash-out refinance makes more sense given current rates.
5. Check Prepayment Penalties
Most home equity loans today don’t charge prepayment penalties, but always confirm. You want the flexibility to pay off the loan early if your financial situation improves.
💡 Pro Tip: Get quotes from at least three lenders before committing. Even a 0.25% rate difference on a $100,000 loan saves you over $4,500 in interest over 15 years. Use those competing offers to negotiate — many lenders will match or beat a competitor’s rate.
Home Equity Loan vs. HELOC vs. Cash-Out Refinance
| Feature | Home Equity Loan | HELOC | Cash-Out Refinance |
|---|---|---|---|
| Disbursement | Lump sum | Revolving credit line | Lump sum |
| Rate Type | Fixed | Variable (usually) | Fixed or variable |
| Best For | One-time large expense | Ongoing or uncertain costs | Replacing existing mortgage |
| Typical Rates | 6.49%–14.99% | 7.00%–18.00% | 6.50%–8.50% |
| Closing Costs | 2%–5% | 0%–2% | 2%–6% |
For a deeper comparison of home equity loans and HELOCs, read our guide: Home Equity Loans vs. HELOCs: Which Is Right for You?
Home Equity Loan Requirements
Qualifying for a home equity loan requires meeting several criteria:
- Equity: Most lenders require at least 15%–20% equity in your home
- Credit score: Minimum 620 for most lenders; 740+ for the best rates
- Debt-to-income ratio: Typically 43% or lower (some lenders allow up to 50%)
- Stable income: Documented income to support the additional monthly payment
- Property appraisal: A professional appraisal to confirm your home’s current value
If your credit score needs work before applying, check out our guide on how to raise your credit score — even a 20-point improvement can qualify you for significantly better rates.
When a Home Equity Loan Makes Sense
A home equity loan is typically the right choice when you:
- Need a specific amount: Home renovations with contractor quotes, debt consolidation with a known balance, or a major purchase
- Want payment predictability: The fixed rate means your payment never changes
- Have substantial equity: At least 20% equity for the best terms
- Plan to stay in your home: The closing costs make sense if you’ll be in the home for several more years
If you’re considering using a home equity loan for debt consolidation, compare it against personal loans as well — they’re unsecured (no risk to your home) and may be better for smaller amounts.
Tax Deductibility of Home Equity Loan Interest
Under current tax law, interest on a home equity loan is tax-deductible only if the funds are used to buy, build, or substantially improve the home securing the loan. This means:
- ✅ Using the loan for a kitchen remodel or adding a room — interest is deductible
- ✅ Using the loan to build a home addition — interest is deductible
- ❌ Using the loan for debt consolidation, vacations, or tuition — interest is not deductible
The deduction applies to combined mortgage debt up to $750,000 ($375,000 if married filing separately). Keep detailed records of how you use the funds in case of an IRS audit.
💡 Pro Tip: If you’re using the funds for home improvements and plan to deduct the interest, keep all contractor invoices, receipts, and before/after photos. Document the connection between the loan proceeds and the qualifying improvements.
Frequently Asked Questions
How long does it take to get a home equity loan?
Most home equity loans close in 2–6 weeks. The timeline depends on your lender, the appraisal process, and how quickly you submit documentation. Some online lenders and credit unions can close faster.
Can I get a home equity loan with bad credit?
It’s possible but difficult. Most mainstream lenders require a minimum 620 credit score. Some credit unions may work with scores as low as 580, but expect higher rates and lower LTV limits. Consider improving your score first for better terms.
What happens if I can’t make payments on my home equity loan?
Because your home serves as collateral, failing to make payments could lead to foreclosure. If you’re struggling, contact your lender immediately — most offer hardship programs, forbearance, or loan modification options before resorting to foreclosure proceedings.
Can I have a home equity loan and a HELOC at the same time?
Yes, as long as your combined loan-to-value ratio stays within the lender’s limits. Some homeowners use a home equity loan for a large one-time expense and a HELOC as a flexible emergency backup.
Is a home equity loan a good idea right now?
Home equity loan rates in 2026 are competitive, especially compared to personal loans and credit cards. If you have a low mortgage rate locked in and need funds for a major expense, a home equity loan typically makes more sense than a cash-out refinance (which would replace your favorable mortgage rate).
Common Mistakes to Avoid with Home Equity Loans
Home equity loans are powerful tools, but misusing them can put your home at risk. Avoid these common pitfalls:
- Borrowing more than you need: Just because you can access $150,000 in equity doesn’t mean you should. Borrow only what’s necessary for your specific project or goal, and leave a cushion of equity in case home values decline.
- Ignoring the total cost: A 7% rate sounds reasonable, but over 20 years on $100,000, you’ll pay over $86,000 in interest alone. Always calculate the total repayment amount before signing.
- Using home equity for depreciating assets: Financing a vacation or new car with your home equity is risky — you’re securing a 20-year debt against your home for something that loses value immediately.
- Not shopping around: The first offer isn’t always the best. Credit unions often beat big banks on rates, and online lenders may offer streamlined processes with lower fees. Get at least three quotes.
- Forgetting about variable costs: Property taxes, insurance, and maintenance costs can change. Make sure your budget can handle the home equity payment even if other housing costs rise.
Bottom Line
The best home equity loan for you depends on how much you need to borrow, how long you need to repay, and how much equity you’ve built. U.S. Bank leads on rates, Discover wins on fees, and Spring EQ offers the most flexibility for homeowners with less equity. Compare at least three lenders, factor in total costs (not just APR), and make sure the monthly payment fits comfortably in your budget.