How much does a $200,000 HELOC cost per month in 2025?
With plenty of equity in their home (on average) and low HELOC interest rates, homeowners looking for funding are in a good position to borrow money from their equity — even six-figure amounts such as $200,000. HELOCs provide an affordable way to do that, offering a revolving line of credit you can borrow from as needed (up to your limit) at rates that are lower than home equity loans, personal loans and credit cards right now.
If you've got big expenses coming up or a plan requiring a six-figure sum and need to access $200,000 from your home's equity, it helps to first know what the monthly payments on a $200,000 HELOC could cost if applied for now. Below, we'll do the calculations.
See how low your HELOC rate could be here.
How much does a $200,000 HELOC cost per month in 2025?
When you're making a financial decision about a six-figure sum of money, it's crucial to understand how much it will cost each month to borrow. This can be difficult to determine with a HELOC since it has a variable rate subject to change over time. Still, calculating potential costs as today's rates can help give you a rough estimate of what to expect. Here's what you can expect to pay monthly in 2025 for a $200,000 HELOC at today's rates (assuming rates are constant):
10-year HELOC at 8.06%: $2,432.90
15-year HELOC at 8.06%: $1,918.24
To demonstrate the cost-effectiveness of borrowing with a HELOC now, here's how much a $200,000 HELOC would've cost monthly at rates from March 2024 (assuming rates were constant):
10-year HELOC at 8.99%: $2,532.43
15-year HELOC at 8.99%: $2,027.34
So, today's rates for 10- and 15-year $200,000 HELOCs are around $100 per month compared to rates from one year ago but those payments could become even cheaper soon if the downward trend in HELOC rates continues.
Find out how much home equity you can borrow here.
Should you borrow $200,000 worth of home equity?
With such a large amount of money at stake, it's important to consider if it's worth it to take out a $200,000 HELOC.
Real estate agent James Magill, owner of Area 361 Hospitality, a commercial real estate firm, says he often sees homeowners use HELOCs for pool installations, a move that can be worth it since pools tend to increase home values and give a boost to your quality of life.
However, he generally cautions against using a HELOC for something that isn't going to produce a return, such as a boat or RV.
"Essentially, it's not great to create more debt for recreational vehicles or something that isn't producing any income or reducing your overall debt-to-income ratio," Magill says. "I wouldn't recommend increasing your debt-to-income ratio on something that isn't going to give a return on your investment."
Because there's such a large amount of money at stake with a $200,000 HELOC, you have to be sure you can afford your monthly payments, notes Matthew Teifke, principal at TR3 Capital, a residential property management firm.
"[You have to] have some kind of additional income to pay for that monthly payment," Teifke says. "It comes down to being able to afford it through a secure investment or another source of income."
If you're considering using your HELOC to start a small business or fund an investment opportunity, don't go in blindly. Use the money for an opportunity you're familiar with, Teifke says.
"Be competent in the investment you're looking at," he says. "Don't jump into a tech startup if you haven't done that before. If you know real estate, look at investing in an apartment complex. It can go bad fast, so be very diligent [about] where you're putting the money and why."
The bottom line
Taking out a $200,000 HELOC requires a clear sense of what your monthly borrowing costs will be, what you'll use the money for and how you plan to pay the money back. Keep in mind that HELOCs have two phases: draw and repayment. During the draw period, you can withdraw money from your line of credit but will usually be required to make monthly interest-only payments. Once your draw period ends, you're required to make monthly payments on your principal and interest, which means your monthly payment will increase considerably.
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Yahoo
5 hours ago
- Yahoo
Which is better: $50k HELOC or $50k credit card?
If you've got a big, five-figure expense coming up – maybe a home renovation or a medical bill – you may be staring down two options: a HELOC (home equity line of credit) and a high-end credit card. Both are types of revolving, or open-ended credit, meaning you can borrow funds from them, pay back, and borrow again – at a variable interest rate. Right now, with HELOC rates at their lowest levels in months and credit card rates holding close to a record high, the home equity product would seem to have the edge. But there are other considerations, ranging from your credit score to your need for the funds. So, let's parse the differences between a $50,000 HELOC or a $50,000 credit card: their features, their real costs, and when one might be better than the other. How does a HELOC work? A HELOC is essentially a line of credit backed by the equity in your home. The size of your credit line is based primarily on the size of your homeownership stake, along with your income and credit score. Generally, though HELOCs come in considerable amounts. For example, Bank of America, a leading lender, offers HELOCs of a minimum of $25,000 up to a maximum of $1 million. Shop Top Mortgage Rates Personalized rates in minutes A quicker path to financial freedom Your Path to Homeownership 'A HELOC is similar to a credit card in that you can draw what you need, as you need, up to the limit your lender sets,' says Kyle Enright, president of California-based home equity lender Achieve. 'And, like a credit card, you pay interest just on what you've used.' However, while a HELOC starts out behaving like a credit card, it eventually turns into a loan. You can withdraw funds for a set period (typically 5 to 10 years). Then, you pay back interest and principal in the repayment period (usually 10 to 20 years). Advantages of HELOCs Borrowers typically open HELOCs to finance large home renovations or projects. However, they can be used for almost anything – including, ironically, paying off high-interest credit card debt. Their main benefits include: Lower interest rates: As of mid-2025, average HELOC rates run in a range of 4.99 percent to 12.25 percent – their lowest levels in months, according to Bankrate's weekly survey of lenders. That is well below most credit card APRs and personal loan rates. High borrowing limits: HELOCs are serious money loans. The average credit line limit is almost $150,000. Last year, the average HELOC balance was over $45,000, according to Experian. Potential tax deduction: Interest may be deductible if used for home improvements (check the details with a tax pro). Ability to freeze interest rate: Many HELOC lenders let you lock in the rate on all or a portion of your balance, so you pay interest at a fixed rate, rather than the usual fluctuating one. Get more from your home Keep your financial options open and put your equity to use with a flexible HELOC. Explore HELOC offers Disadvantages of HELOCs HELOCs do have their downsides, of course. The biggest one: Your home acts as collateral for the debt. That means borrowers 'risk foreclosure should payments not be made regularly,' says Chris Parks, loan officer at Churchill Mortgage, a home equity loan lender based in Tennessee. Aside from the danger of losing your home, HELOC disadvantages include: Upfront expenses: HELOCs often come with application fees, appraisal fees and other closing costs; these can amount to as much as 5 percent of your credit line, or hundreds of dollars, to be paid out-of-pocket. Slow funding: Since it's a type of mortgage, applying for a HELOC can be a lengthy, month-long process. Limited access window: Once the draw period ends, you can no longer borrow funds. So the clock is ticking when it comes to using the HELOC. Sudden jump in payments: Many HELOCs let you pay back just interest during the draw period (similar to the minimum payment on a credit card). Unfortunately, 'interest-only payments will not move the needle very quickly,' in terms of your overall debt, as Parks says. Result: a big jump in your monthly bill – which will include paying back principal – when the repayment period begins. How does a high-end credit card work? With high-end or premium credit cards, it's not unheard of to have limits of $100,000 or more. The thing is, getting one can be a bit of a mystery: You can't shop for a card with a specific balance, because lenders typically don't disclose your credit limit until after you apply and are approved. And, while your credit score and annual income are the chief factors in getting approved, card issuers typically don't disclose requirements for those either. That said, travel-oriented cards and rewards-oriented cards tend to offer these larger credit lines. Advantages of credit cards Credit cards are completely open-ended and ongoing — as long as you make minimum payments, you can handle repayment on your own schedule. In addition: Quicker access: It's typically a faster and easier process to be approved for a credit card, as it requires less financial documentation than a HELOC. No collateral: Credit cards are unsecured. So you aren't at risk of losing your home, as with a HELOC. Rewards and cash-back: These cards offer a long list of perks, like travel and dining credits, as well as luxury hotel benefits. You can earn cash back at a generous clip, too. Intro 0% APR offers: Some premium cards offer 12–21 months of zero interest charges on purchases or balance transfers. HELOCs, at best, offer an introductory interest rate a few points lower than prevailing rates – for 6-12 months. Disadvantages of credit cards Everything about a premium credit card is high – and that includes the cost of carrying a balance on it. 'You're never going to see a [premium] credit card that has a rate lower than 15 to 18 percent,' says Benet Wilson, lead credit card writer at Bankrate. And those terms are for people with extremely strong credit scores. In general, the premium cards' interest rates range from 19 to 30 percent. Here are some other reasons you may want to think twice before you swipe: Temptation to overspend: A large credit limit and ongoing term can encourage unnecessary purchases, leading to unmanageable debt. Annual fees: Premium perks come at a price. HELOC annual fees can range from $5 to $250, while fees for a high-end card can easily cost double that, even reaching into the four figures. The Chase Sapphire Reserve, one of the most popular high-tier cards, charges a $795 annual fee, for example. Credit score requirements: You need a near-perfect credit score in the 800s to be approved. A 740 is often the rock-bottom minimum. Impact of missed payments: 'The credit card may not be able to foreclose on your house, but they can make life difficult with liens or garnishments,' says Parks. Bankrate's take: HELOC rates, currently averaging 8.12 percent, have been declining since autumn 2024. In contrast, average credit card rates — over 20 percent currently — are holding close to a record high. HELOCs vs. high-end credit cards Feature HELOC High-End Credit Card APR 4.99%–12.25% 15%–26% Annual Fee $5–$250 $0–$795+ Approval Speed Weeks Hours (sometimes minutes) Collateral Your home None Funds Availability 5–10 years No time limit Rewards None Points, miles, cash-back Tax Deductible Interest Possibly for home improvements No Closing Costs 1%-5% of total loan amount None Risk Foreclosure if unpaid Credit damage if unpaid HELOC vs. credit card: How much would each cost per month? Let's put the $50,000 in perspective by looking at how much HELOCs and credit cards would cost monthly and over time. 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On the other hand, credit cards are a type of revolving debt and credit utilization ratio plays a bigger role. 'The credit card is not friendly to your credit if you are carrying higher balances,' says Parks. 'Any time you're running balance is over 50 percent used on the credit card, it will affect your credit.' For those aiming for a high score, utilization at 10 percent or below is ideal. Final word on $50K HELOC vs. $50K credit card There's no one clear winner in the $50K HELOC vs. $50K credit card debate. The HELOC will almost always be cheaper, in terms of borrowing costs. And it's arguably less of a burden on your credit report. 'I'm not sure I would even use a card with a $50,000 limit as a replacement for a HELOC,' says Wilson. 'I wouldn't risk taking on a card with 20-plus percent interest at a $50,000 limit. As that debt can pile up, it can hurt your credit score and your credit utilization.' That said, a HELOC takes longer to get, and puts your home on the line. And it requires a significant equity stake to qualify. If you lack one, but have a high credit score and income – and have the self-discipline to pay off your balance – a high-limit credit card could be the better move. Plus, it won't 'expire' the way a HELOC will. 'Caution should be used with each,' Parks advises. 'Either option has a strategic value, but also carries an equally heavy risk.'
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How to calculate HELOC payments
HELOCs, or home equity lines of credit, give homeowners a way to leverage the growing value of their house for anything from renovations to college tuition — and enjoy 10 years of interest-only payments. Plus, unlike with a home equity loan, they only have to repay what they use, rather than a large lump sum. Rates on HELOCs have been decreasing precipitously since last summer, according to a Bankrate survey: On Aug. 6, 2025, the average was 8.13% for a $30,000 HELOC, compared to 8.25% for the same-sized home equity loan. Thinking about a HELOC? Here's how to calculate your payments during both the draw and repayment periods. A HELOC is a revolving line of credit secured by the borrower's house. Typically, homeowners have 10 years to draw on the account and only make interest payments. If they do make principal payments during the draw period, though, they can tap that credit again. Once the draw period ends, they'll begin making full principal-and-interest payments during the repayment phase, which usually lasts 20 years. Lenders can approve HELOCs from $10,000 to $100,000, and some will go considerably higher. The funds can be used for any purpose, but the interest is only tax-deductible if the money goes toward home improvements. Since it's a secured loan, interest rates on a HELOC are lower than with other kinds of financing. On Aug. 6, 2025, the average HELOC interest rate was 8.13%, compared to 12.58% for personal loans and 23.99% for credit cards. But being secured also means the lender can foreclose if the homeowner fails to make on-time payments on their HELOC. The monthly payment on a home equity line of credit is determined by the loan amount and the interest rate. It also depends on whether the borrower is in the draw period or the repayment period. We'll illustrate how to calculate both with this example: A homeowner who has withdrawn $45,000 from a HELOC with a fixed 8.3% interest rate, a 10-year draw and a 20-year repayment period. For the first 10 years, the borrower only has to make payments on the interest that's accrued. Here's the equation to use to determine the monthly payment. Interest-only annual payment = amount owed x interest rate ÷ 12 $3,735 = $45,000 x 0.083 ÷ 12 Using the example above, the borrower would owe $3,735 annually during the draw period, or about $311 a month. Calculating payments in the repayment phase requires two equations, one for the total balance and another for the amount due each month. Assume the borrower has remained current on their interest payments and is now starting with a principal of $45,000. First, calculate their total balance owed, including interest: Total balance = principal amount (1+ (interest rate x number of years in repayment)) To calculate your monthly payment, divide the balance owed by the number of monthly payments. (In the case of a 20-year repayment term, there will be 240 monthly payments.) Minimum monthly payment = total balance ÷ months in repayments Divide $119,700 by 240 to get $498.75, the minimum monthly payment for 20 years. Money matters — so make the most of it. Get expert tips, strategies, news and everything else you need to maximize your money, right to your inbox. Sign up here. A HELOC is a line of credit backed by the value of a borrower's home. They can withdraw however much they need, up to the maximum credit limit, for 10 years. During that draw period, they only pay interest. Once the draw period ends, they'll begin the repayment phase and make full principal and interest payments for the remainder of the term (typically 20 years). A HELOC is a revolving line of credit, while a home equity loan is a lump sum of funding. With a HELOC, borrowers have 10 years to withdraw from the line of credit, up to its maximum, and during this time, they'll only make interest payments. Then, a 20-year repayment period begins. Borrowers with a home equity loan start making payments as soon as they get the funds, typically for 30 years. If you pay more than the minimum required, you'll pay less in interest over time and earn equity in your home faster. That means you'll get a larger share of the sale price when you sell and your credit score will rise faster, too. If you pay more than the minimum, however, make sure to tell your lender that the funds should go to the principal and not interest. It typically takes two to six weeks to close on a HELOC, but some lenders promise closing in as little as five days. At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every mortgage article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of mortgage products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.
Yahoo
17 hours ago
- Yahoo
HELOC rates today, August 19, 2025: Don't wait for a 4% HELOC, get it now
HELOC interest rates remain under 9%. However, introductory home equity line of credit rates are as low as 3.99% APR for six months to one year. Many of the lowest offers we've found are from credit unions. Dig deeper: Is now a good time to take out a HELOC? This embedded content is not available in your region. HELOC rates Tuesday, August 19, 2025 According to Bank of America, the largest HELOC lender in the country, today's average APR on a 10-year draw HELOC is 8.72%. That is a variable rate that kicks in after a six-month introductory APR, which is 6.49% in most parts of the country. The national HELOC rate spread runs from a low of 8.05% APR to a high of 9.59%. Homeowners have a substantial amount of value tied up in their houses — more than $34 trillion at the end of 2024, according to the Federal Reserve. That's the third-largest amount of home equity on record. With mortgage rates lingering in the high 6% range, homeowners are not likely to let go of their primary mortgage anytime soon, so selling the house may not be an option. Why let go of your 5%, 4% — or even 3% mortgage? Accessing some of the value locked into your house with a use-it-as-you-need-it HELOC can be an excellent alternative. How lenders determine HELOC interest rates HELOC interest rates are different from primary mortgage rates. Second mortgage rates are based on an index rate plus a margin. That index is often the prime rate, which today is 7.50%. If a lender added 1% as a margin, the HELOC would have a rate of 8.50%. Lenders have flexibility with pricing on a second mortgage product, such as a HELOC or home equity loan, so it pays to shop. Your rate will depend on your credit score, the amount of debt you carry, and the amount of your credit line compared to the value of your home. And average national HELOC rates can include "introductory" rates that may only last for six months or one year. After that, your interest rate will become adjustable, likely beginning at a substantially higher rate. How a HELOC works You don't have to give up your low-rate mortgage to access the equity in your home. Keep your primary mortgage and consider a second mortgage, such as a home equity line of credit. The best HELOC lenders offer low fees, a fixed-rate option, and generous credit lines. A HELOC allows you to easily use your home equity in any way and in any amount you choose, up to your credit line limit. Pull some out; pay it back. Repeat. Meanwhile, you're paying down your low-interest-rate primary mortgage like the wealth-building machine you are. This embedded content is not available in your region. Look for introductory rates, but be aware of a rate adjustment later Today, FourLeaf Credit Union is offering a HELOC rate of 6.49% for 12 months on lines up to $500,000. That's an introductory rate that will convert to a variable rate later. When shopping lenders, be aware of both rates. And as always, compare fees, repayment terms, and the minimum draw amount. The draw is the amount of money a lender requires you to initially take from your equity. The power of a HELOC is tapping only what you need and leaving some of your line of credit available for future needs. You don't pay interest on what you don't borrow. HELOC rates today: FAQs What is a good interest rate on a HELOC right now? Rates vary so much from one lender to the next that it's hard to pin down a magic number. You may see rates from nearly 7% to as much as 18%. It really depends on your creditworthiness and how diligent a shopper you are. Is it a good idea to get a HELOC right now? For homeowners with low primary mortgage rates and a chunk of equity in their house, it's probably one of the best times to get a HELOC. You don't give up that great mortgage rate, and you can use the cash drawn from your equity for things like home improvements, repairs, and upgrades. Of course, you can use a HELOC for fun things too, like a vacation — if you have the discipline to pay it off promptly. A vacation is likely not worth taking on long-term debt. What is the monthly payment on a $50,000 home equity line of credit? If you take out the full $50,000 from a line of credit on a $400,000 home, your payment may be around $395 per month with a variable interest rate beginning at 8.75%. That's for a HELOC with a 10-year draw period and a 20-year repayment period. That sounds good, but remember, it winds up being a 30-year loan. HELOCs are best if you borrow and pay back the balance in a much shorter period of time.
