HELOC
A home equity line of credit — a revolving, variable-rate loan secured by your home, with a draw period (typically 10 years) followed by a repayment period (10–20 years).
Quick answer
HELOC: A home equity line of credit — a revolving, variable-rate loan secured by your home, with a draw period (typically 10 years) followed by a repayment period (10–20 years). Typical cost: 7–9% variable APR in 2025; $0–$500 origination; $50–$100 annual fee on some lenders..
Why it matters
HELOCs are the cheapest mainstream way to fund renovations when you already have 15–20% equity. Interest is often tax-deductible when used for home improvements.
Typical cost
7–9% variable APR in 2025; $0–$500 origination; $50–$100 annual fee on some lenders.
Pros
- • Pay interest only on what you draw
- • Lower rate than personal loans
- • Reusable line of credit
- • Interest may be tax-deductible
Cons
- • Variable rate exposure
- • Home is collateral
- • Rate caps still allow large swings
- • Closing process takes 3–6 weeks
Common uses
- • Kitchen and bath remodels
- • Roof and HVAC replacement
- • Emergency repairs
- • Debt consolidation (not deductible)
Alternatives
Home equity loan (fixed)Cash-out refinanceRenovation loanPersonal loan
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Frequently asked questions
- How much can I borrow on a HELOC?
- Most lenders cap combined loan-to-value at 80–90%. On a $400k home with $200k owed, that's $120k–$160k available.
- Is HELOC interest tax-deductible?
- Yes, when proceeds are used to buy, build, or substantially improve the home that secures the loan, and you itemize.
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