HELOC and home equity loan rates today, Friday, August 28, 2026: Why understanding how rates work matters

Home equity loan and HELOC rates have been fluctuating, making it crucial to understand how they work. Lenders can set rates based on credit scores, loan amounts, and home value. The average rate for a variable-rate HELOC is now 7.16%, a 2026 low, and the average fixed-rate home equity loan is 7.35%, slightly higher than its June low.

Both rates apply to applicants with a minimum credit score of 780 and a CLTV ratio under 70%. Most HELOCs have variable rates tied to the prime rate, which banks charge their most creditworthy customers. Lenders add a margin to account for risk, with higher margins for riskier borrowers. Factors like credit score, debt-to-income ratio, and loan-to-value ratio determine the final rate.

Home equity loans and HELOCs are influenced by the federal funds rate and economic conditions, similar to primary mortgages. However, home equity loans are usually fixed-rate products while HELOCs are often variable. To get the best rate, shop multiple lenders and consider fees, such as origination and closing costs. HELOCs are best for those who can repay the balance quickly, while fixed-rate HELOCs are less common.

Consider the pros and cons before getting a HELOC, as it essentially becomes a longer-term loan with variable rates.