Understanding HELOC Rates in February 2026: What Homeowners Need to Know

With the Federal Reserve pausing further rate cuts for now, homeowners are reassessing their options for accessing home equity. HELOC and home equity loans remain attractive vehicles for those looking to leverage their property’s accumulated value without refinancing their primary mortgage. Here’s what you need to know about current market conditions and how to make the right borrowing decision.

Market Environment for HELOC and Home Equity Borrowing

After reaching peak levels in late 2023, interest rates on second mortgages have generally declined. The Federal Reserve’s decision to hold rates steady rather than cut further is expected to stabilize HELOC and home equity loan rates going forward. This pause creates a meaningful moment for homeowners: with mortgage rates hovering around 6% and substantial home equity available, accessing funds through a second mortgage can be more appealing than refinancing, which would reset your rate to current market levels.

The Federal Reserve estimates that American homeowners collectively hold approximately $34 trillion in home equity—a significant reservoir of wealth many homeowners could potentially tap into. For those with low-rate primary mortgages, a HELOC or home equity loan offers a strategic way to unlock this value while preserving your favorable mortgage terms.

Current HELOC Rate Data and Benchmarks

According to Curinos, a real estate analytics firm, the nationwide landscape shows:

• Average HELOC rate: 7.25%
• Average home equity loan rate: 7.56%

These figures reflect borrowers with strong credit profiles (credit scores of 780 or above) and conservative combined loan-to-value ratios (CLTV) below 70%. However, rates can vary significantly among lenders, ranging from approximately 6% to as high as 18%, depending on your credit history, debt load, and how thoroughly you shop around.

HELOC vs. Home Equity Loan: Which Is Right for You?

The choice between these two products depends on your borrowing needs and preference for payment structure:

HELOC (Home Equity Line of Credit): Provides revolving credit access, much like a credit card. You draw funds as needed from your approved credit line, making it ideal if you have ongoing or uncertain borrowing needs. You pay interest only on what you borrow.

Home Equity Loan: Delivers a lump sum upfront with a fixed repayment schedule. This works best if you have a specific, known expense—such as home renovation or debt consolidation—and prefer the certainty of fixed monthly payments.

For flexibility, HELOCs typically edge ahead. For budgeting predictability, home equity loans are simpler since you receive all funds immediately and rates remain fixed throughout the loan term.

How HELOC Interest Rates Are Determined

HELOC rates operate differently from primary mortgage rates. Lenders calculate HELOC rates by adding a margin to a reference index—typically the prime rate, which currently sits at 6.75%. For example, a lender might add a 0.75% margin to the prime rate, creating an initial HELOC rate of 7.50%.

In contrast, home equity loans usually feature a fixed rate set at origination and locked in for the entire repayment period. This explains why introductory “teaser” rates—temporary below-market offers—are standard for HELOCs but uncommon for home equity loans.

Key Factors Affecting Your HELOC Rate

Several elements influence the rate you’ll receive:

• Credit Score: Higher scores qualify for better rates
• Debt-to-Income Ratio: Lower ratios are more attractive to lenders
• CLTV Ratio: Borrowing against a smaller percentage of your home’s value reduces lender risk and improves your rate
• Lender Discretion: Individual lenders have considerable flexibility in pricing, making comparison shopping essential

Important HELOC Consideration: Many lenders offer promotional rates below market average for the first 6–12 months. After this introductory period expires, your rate converts to variable and may increase substantially. Understand both the teaser rate and the post-promotional rate before committing.

Comparing HELOC Lenders and Introductory Offers

When evaluating HELOC providers, prioritize:

• Competitive fee structures—some lenders charge annual maintenance fees, origination fees, or early closure penalties
• Fixed-rate options—not all HELOCs offer fixed-rate periods, but some do
• Generous credit limits—higher limits provide more flexibility
• Transparent rate disclosures—know what your rate will be after the introductory period

For instance, FourLeaf Credit Union currently advertises a 5.99% APR for the first 12 months on lines of credit up to $500,000. After year one, the rate becomes variable—so you’d need to understand the margin and index terms for the ongoing period.

With a HELOC, you benefit from the ability to borrow, repay, and reborrow as needed. However, pay attention to minimum draw requirements—the lender’s policy on the minimum amount you must initially withdraw when opening the line. Home equity loans typically have no such requirements since you receive the full amount upfront.

Common Questions About HELOC Borrowing Today

Q: Is 7.25% expensive for a HELOC right now?

No—this is near the lower end of the historical range for the past two years. However, rates vary widely by lender and borrower profile. Shop across multiple institutions; a difference of 0.5% can save thousands in interest over the loan’s life.

Q: Should I open a HELOC now?

If you have substantial home equity, a low-rate primary mortgage, and potential near-term expenses (home improvements, education costs, major repairs), now is a reasonable time to explore your options. A HELOC locks in access to funds without forcing you to use them immediately, which can be valuable insurance.

Q: What’s the monthly payment on a $50,000 HELOC?

At a 7.50% interest rate and using the full $50,000 during a 10-year draw period, your monthly payment would be approximately $313. Keep in mind that variable rates can increase over time, particularly if the prime rate rises. A HELOC’s total lifespan can extend 30 years (typically 10 years of draws plus 20 years of repayment), so factor in long-term costs if you plan to carry a balance.

Bottom Line: HELOC products offer flexibility and competitive rates in the current environment. Compare offers carefully, understand rate structures, and consider whether the revolving nature of HELOCs aligns with your borrowing goals and risk tolerance.