Who ranks for “home equity loan”

A home equity loan is a second mortgage that lets you borrow a single, lump-sum amount of money using the value of your home as collateral.

How Home Equity Loans Work

Lump sum: You receive all the borrowed cash at one time when the loan closes. Fixed rate: These loans usually feature a fixed interest rate, giving you predictable monthly payments. As of September 2026, national average rates hover around 8.13% according to surveys by Bankrate. Borrowing limits: Lenders generally let you borrow up to 80% or 85% of your home's total value, minus what you still owe on your first mortgage.

2026

Qualification Requirements

Equity: You typically need at least 15% to 20% equity built up in your home. Credit score: Most lenders look for a FICO score of 660 to 680 or higher. Debt-to-income (DTI): Your DTI ratio should generally be under 43% to 50%.

Pros and Cons

Pros: Lower interest rates than unsecured personal loans; fixed payments that make budgeting simple. Cons: Your house serves as collateral, meaning failure to pay can lead to foreclosure; closing costs apply.

If you'd like, let me know:What you plan to use the funds for (home repairs, debt consolidation, etc.) Your estimated credit score and home equity amount I can help you figure out if a home equity loan or a HELOC is a better fit.