Home Equity
HELOC vs. Home Equity Loan
How a revolving line of credit compares to a lump-sum home equity loan, including rate structure and typical use cases.
By Vabasso EditorialReviewed by Vabasso Mortgage Advisor PanelUpdated Jul 30, 20266 min read
Written by the Vabasso Editorial · Reviewed against agency and federal sources · Read our editorial policy for how we research and review mortgage content
Direct answer
A HELOC is a revolving line of credit typically priced against a variable index, useful when you need flexible, ongoing access to equity. A home equity loan is a fixed-rate, lump-sum second mortgage, useful when you need a specific amount for a specific purpose.
Key takeaways
- HELOCs are variable-rate; home equity loans are usually fixed-rate.
- HELOCs have a draw period followed by a repayment period.
- Both are typically secured by your home, which has real consequences if unpaid.
Choosing between them
The choice usually comes down to whether you need flexibility (HELOC) or predictability (home equity loan).
Important limitations
- Mortgage guidelines, eligibility, loan limits, rates, fees, and program availability may change and can vary by lender, investor, property, occupancy, state, and borrower profile.
- This article is educational and does not constitute a commitment to lend, a rate quote, or personalized financial advice.
Frequently asked questions
- Are HELOC payments always interest-only?
- Many HELOCs begin with an interest-only draw period, then convert to fully amortizing payments during the repayment period.
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