The 8 Best HELOC Rates of 2020

A Home Equity Line of Credit (HELOC), is a type of home equity loan that works like a credit card. A line of credit allows you to add to your balance and pay off the card many times throughout the life of the loan. Unlike a regular credit card, you get a lower interest rate on a HELOC because it is attached to your home, and compared to a personal line of credit or credit card loan, those interest savings can add up fast.

Like any loan, you should never rush into choosing a HELOC without doing your research. It is important to find a HELOC with a large enough credit line for your needs and at a bank or other lender you can trust. The most important thing to consider when it comes to a HELOC is the cost. You may run into two types of costs with a HELOC: interest rates and fees. The interest rate is the main cost of the HELOC and what you pay for borrowing on the line of credit. Some banks also charge application fees, new account fees, and other charges depending on how you use the account.

Below, we look at the best HELOC rates, which are also influenced by your credit and home equity. This is a great place to start, but always do a little more comparing before signing up to make sure you choose a HELOC with fees that make sense for you and your needs as well.

Connexus Credit Union

The lowest rate HELOC found in this analysis comes from Connexus Credit Union. This HELOC has a variable 3.49% APR with a 15-year draw and 15-year repayment period. Minimum payments are 1.5% of the total balance outstanding.

Connexus also offers an interest-only HELOC. This type of loan leads to lower payments but higher total interest costs. If you are able to afford it, it is best to avoid interest-only loans due to the long-term costs.

This credit union focuses on customers in Minnesota and Wisconsin, but with a $5 donation to the Connexus Association, anyone can join. Connexus also offers competitive checking and savings products worth considering.

Third Federal Savings and Loan

After a $65 fee, you can get up and running with one of the lowest-cost home equity lines of credit available today. In addition to a HELOC, Third Federal offers competitive adjustable and fixed rate home equity loans. But in the market today, the 3.74% APR (calculated as Prime rate - 1.01%) on the Third Federal HELOC is one of the best you can find.

Headquartered in Ohio, Third Federal offers HELOCs to homeowners nationwide. Third Federal is not a traditional bank or credit union, it is a savings and loan. This type of financial institution is not as popular as it once was, but when it comes to HELOCs it doesn’t really matter what type of institution issues the loan. The most important factors are the interest rate, fees, and overall reputation of the lender.

Third Federal tends to rank highly for both customer reviews and employee reviews. As long as you have qualifying credit and available equity in your home, you’ll have a tough time getting a better deal anywhere else.

Bethpage Federal Credit Union

Another great rate for a HELOC comes from Bethpage Federal Credit Union. After an impressive one-year introductory 3.99% APR, this HELOC charges 4.75% APR (the prime rate) for the lifetime of the loan up to $500,000. The loan charges no closing costs, but it does come with a required minimum draw of $25,000.

Based in Bethpage, New York, this credit union requires opening a savings account with a $5 balance to become a member. Membership is not currently open to borrowers in all states, so you’ll want to check your membership eligibility before going down the path of applying for a new loan.

Credit unions are a great option for HELOCs, as they are for many personal banking and borrowing needs. Unlike a traditional bank, credit unions are not-for-profit organizations. That means they don’t care about making as much money as possible. Instead, they pass on those savings to members in the form of more favorable interest rates and fees.

PenFed Credit Union

Formerly known as Pentagon Federal Credit Union, PenFed is a financial institution that serves customers around the country regardless of military connections. PenFed is offering a 3.49% Fixed APR until March 31, 2021, on an initial advance taken at closing. Lending begins at Prime +0.25​% or 5.50% APR. Depending on the size of your HELOC, rates go up to prime +1.5%, or 6.50%.

PenFed HELOCs are available from $10,000 to $400,000 and come with very low fees. If you don’t have a military connection in your immediate family, you can still join with a small donation to an affiliated nonprofit.

PenFed is on the upswing with higher profile home loan and credit card options, and like this HELOC, some are quite attractive. Depending on your loan needs, PenFed is certainly worth considering.

Flagstar Bank

This bank has an introductory rate of just 3.24% for the first six billing cycles. After the intro period ends, this HELOC charges variable rate interest based on market rates. The current rate is 4.99% APR.

Flagstar Bank is located in Troy, Michigan, in the Detroit metropolitan area. Lines are available from $10,000 to $1 million. There are no bank-imposed fees as long as you keep the account open for at least 36 months. This account allows repayment periods up to 20 years, making it flexible for any borrower’s needs. The variable interest rate on this HELOC is based on the popular Wall Street Journal prime rate.

Keep in mind that with most HELOC accounts, you can pay off the entire balance early to save on interest, and Flagstar Bank’s is no different. The shorter period of time you need to borrow funds, the less you’ll pay.

Bank of America

One of the largest banks in the world, Bank of America’s HELOC comes with a very low variable 3.24% introductory rate for 12 months (or 1.51% below Prime). It adjusts to a still-competitive 5.15% variable APR. Discounts are available with automatic payments (0.25%), for Preferred Rewards clients (0.375%), and in some cases with an initial withdrawal (up to 1.5%).

For lines up to $1 million, there are no closing costs, application fees, or annual fees. This makes Bank of America’s HELOC worth considering, even if you don’t like the fees it charges for checking and savings products.

Many tech-savvy web users don’t think of the big brick and mortar banks very often, but when they offer low fees and good rates, you shouldn’t count them out.

Homeside Financial

Another low rate currently comes from Homeside Financial. Homeside is a non-traditional lender with an online and offline focus. It currently has 22 branch locations and offers loans in 22 states and the District of Columbia. Homeside calls Columbia, Maryland, home.

Homeside loans do charge some fees. You’ll pay a $495 fee to get started and then the lender requires a minimum $10,000 draw. But unlike many traditional banks, Homeside is a tech savvy lender. The online application is quick and easy. Homeside also offers a friendly, user-oriented experience. Loan offices are called “mortgage mentors.”

While it isn’t the biggest lender on the block, Homeside carries a nearly five-star rating with over 1,800 reviews on Zillow and generally good reviews elsewhere.

Bank of the West

Tracing its roots back to 1874, Bank of the West has a long tradition of lending. Now a subsidiary of France’s BNP Paribas, Bank of the West offers competitive interest rates on home equity loans. Current HELOC rates start at 7.75% APR. These HELOCs have no origination or closing costs and are available for lines up to $2 million. Through March 31, 2020, get up to 1.75% off an initial draw up to $100,000.

During the draw period, you can convert your balance (or just a portion) to a fixed rate. Once you draw on the account, you can qualify for a 0.25% interest rate discount when paying with automatic payments. While the bank is headquartered in California and focused on the Western and Midwest states, it serves customers through offices as far away as Tokyo and Taipei.

If you live in an area with a Bank of the West location, you can head into your local branch to apply. But even if you live a distance from the nearest location, you can still apply for and manage your HELOC online.

Our Process

Our writers spent 3 hours researching the most popular HELOC rates on the market. Before making their final recommendations, they considered 12 different companies overall and read over 30 user reviews (both positive and negative). All of this research adds up to recommendations you can trust.