Best Home Equity Loan Rates for 2020

Home equity loans are second mortgages that use a percentage of the equity you’ve built up in your current home to give you access to a lump sum of funds you can borrow to finance large home renovation projects, pay off bills, or a number of other uses. The loan is secured by your home, meaning you have to use your home as collateral in case you don’t borrow it back. Given that the loan is secured, you’re more likely to get a lower interest rate on a home equity loan than other loan products, but this makes it risky to borrow if you’re unsure you can pay it back according to the loan terms.

Still, while somewhat risky, this borrowing tool is a great way for many homeowners to gain access to a large lump sum of cash quickly, and at a much more affordable rate than you’ll get with other loans or credit cards. If you’re considering a home equity loan, it’s important to take the time to find the best home equity loan rates before moving forward in the borrowing process.

In this article

    The 8 best home equity loan rates of 2020

    • Citi — Best for HELOCs
    • U.S. Bank — Best for borrowers with good credit scores
    • Discover — Best for low interest rates
    • TD Bank — Best for borrowers who need large loans
    • PNC — Best for borrowers who need small loans
    • BBVA — Best for low closing costs
    • DCU — Best for pre-payment on loans
    • Northwest Bank — Best for borrowing larger percentages of equity

    The 8 best home equity lenders of 2020

     APRAdditional Rate DiscountsLoan Amount
    Citi6.59%–8.79%VariesVaries
    U.S. BankAs low as 4.89%VariesUp to $750,000
    Discover3.99%–11.99%None$35,000 – $200,000
    TD BankVaries0.25%Up to $1,500,000
    PNCVaries0.25%Starting at $1,000
    BBVA4.04%–9.09%NoneVaries
    DCUAs low as 3.74%NoneUp to $50,000
    Northwest BankVariesNoneUp to $500,000

    Best for HELOCs – Citi

    Citi, a bank that’s been around since the early 1800s, offers many options for homeowners looking to gain access to more funds.

    J.D. Power Rating
    4/5
    Min. Credit
    Not specified
    Fees
    1
    SimpleScore
    4.4 / 5.0
    close
    SimpleScore Citi 4.4
    Max APR 5
    Max Loan Amount 5
    Customer Satisfaction 4
    Product Variety 4
    Fees 4

    The bank offers fixed rate home equity loans with APRs as low as 6.59%, and additional rate discounts are available, so if you’re applying with Citi you should inquire about them during the application process.

    Citi also offers home equity lines of credit, or HELOCs, for borrowers looking to have access to funds that act like a revolving line of credit rather than a lump sum loan. If you haven’t fully decided on a home equity loan or a HELOC, Citi makes both options available for easy comparison.

    Annual Fee: $50

    Best for good credit scores – U.S. Bank

    U.S. Bank offers home equity loans for 2020 at very competitive rates, which start as low as 4.89%.

    J.D. Power Rating
    3/5
    Min. Credit
    730
    Fees
    3
    SimpleScore
    4.3 / 5.0
    close
    SimpleScore U.S. Bank 4.3
    Max APR N/A
    Max Loan Amount 5
    Customer Satisfaction 3
    Product Variety 5
    Fees 4

    he bank also offers some no closing cost options for qualified applicants to help sweeten the deal. Still, while U.S. Bank has some great options for home equity loans, you’ll have to have great credit in return to qualify. U.S. Bank requires a minimum 730 FICO score — which is in the good/very good/excellent range — for loan approval, and you also must have a personal checking or savings account with the bank to qualify.

    Fees:

    • Origination: $0
    • Closing Costs: $0
    • Annual Fee: $90

    Best for low rates – Discover

    While Discover’s credit cards have been the most notable offerings over the years, this lender also offers very competitive home equity loan rates.

    J.D. Power Rating
    N/A
    Min. Credit
    620
    Fees
    4
    SimpleScore
    4.3 / 5.0
    close
    SimpleScore Discover 4.3
    Max APR N/A
    Max Loan Amount 5
    Customer Satisfaction 3
    Product Variety 5
    Fees 4

    Customers can secure financing up to $200,000 at rates as low as 3.99% APR (as of March 2020), which is far better than many of the other available options from other lenders. Remember, the actual rate you receive will be contingent on your creditworthiness, loan terms and how much money you borrow, along with the other requirements this lender has in place.

    Fees:

    • Application: $0
    • Origination: $0
    • Appraisal: $0
    • Cash at closing: $0

    Best for large loans – TD Bank

    The TD Bank website does an incredible job laying out your lowest possible rates broken down by location, term length and the size of your loan.

    J.D. Power Rating
    3/5
    Min. Credit
    660
    Fees
    6
    SimpleScore
    4.3 / 5.0
    close
    SimpleScore TD Bank 4.3
    Max APR N/A
    Max Loan Amount 5
    Customer Satisfaction 3
    Product Variety 5
    Fees 4

    For those looking for a larger loan to purchase a second home, the bank offers options up to $1.5 million, but only on second homes. The maximum loan amount for those utilizing the money for other purposes will vary based on your financial situation and the other loan requirements and parameters in place by TD Bank.

    Fees:

    • Origination: $99
    • Closing Costs: $750 to $1350
    • Appraisal Fee: Up to $1500
    • Credit Report Fee: Up to $15
    • Annual Fee: $50
    • Flood Determination Fee: Up to $25

    Best for small loans – PNC Bank

    While many lenders won’t work with borrowers who want small loans, PNC has home equity loans starting as low as $1,000, which is significantly lower than a lot of other banks offer for this type of product.

    J.D. Power Rating
    N/A
    Min. Credit
    Not specified
    Fees
    4
    SimpleScore
    3.8 / 5.0
    close
    SimpleScore PNC Bank 3.8
    Max APR N/A
    Max Loan Amount 5
    Customer Satisfaction 3
    Product Variety 5
    Fees 2

    Regardless of the size of the loan you choose through PNC, this lender makes your funds available on the fourth business day after you sign your documents. Additionally, the bank has several flexible repayment options you can choose from, with term lengths up to 30 years.

    Fees: 

    • Property Search Fee: Up to $50
    • Annual Fee: $50
    • Recording Fee: Varies based on location
    • Satisfaction Fee: Varies based on location

    Best for closing costs – BBVA

    BBVA offers home equity loans for residents living or looking to buy in Alabama, Arizona, California, Colorado, Florida, New Mexico and Texas.

    J.D. Power Rating
    N/A
    Min. Credit
    620
    Fees
    2
    SimpleScore
    3.8 / 5.0
    close
    SimpleScore BBVA 3.8
    Max APR 4
    Max Loan Amount 4
    Customer Satisfaction N/A
    Product Variety 5
    Fees 2

    This lender offers some of the lowest possible home equity loan rates available, so potential borrowers with access to BBVA should reach out to the lender for more information. BBVA also mentions that borrowers taking out between $10,000 and $500,000 may qualify for bank-paid closing costs if they meet the list of criteria, but you’ll have to talk to BBVA to find out what those criteria are and whether you qualify.

    Fees:

    • Annual Fee: $75
    • Advance Fee: $75 per withdrawal

    Best for prepayment – Digital Federal Credit Union

    Not only does Digital Federal Credit Union, or DCU, offer some of the best rates for 2020 — as low as 3.74% APR — but it doesn’t charge borrowers any penalties or fees for early payment on their loans.

    J.D. Power Rating
    N/A
    Min. Credit
    Not specified
    Fees
    Not specified
    SimpleScore
    5 / 5.0
    close
    SimpleScore Digital Federal Credit Union 5
    Max APR N/A
    Max Loan Amount N/A
    Customer Satisfaction N/A
    Product Variety 5
    Fees 5

    If you’ve got plans to try and pay off your loan early to save on interest payments, you may want to consider securing your home equity loan through DCU. Keep in mind though, that DCU is a credit union, so you’ll have to join in order to take advantage of the rates it offers. There are a number of ways to join, though, including becoming a member of the organizations DCU supports.

    Fees: Not specified

     

    Best for borrowing larger percentages of equity While – Northwest Bank

    While many banks and credit unions will only let you borrow up to around 70% or 80% of your home’s equity or value, Northwest bank lets qualified applicants borrow up to 95% of their home’s value.

    J.D. Power Rating
    N/A
    Min. Credit
    Not specified
    Fees
    1
    SimpleScore
    4.3 / 5.0
    close
    SimpleScore Northwest Bank 4.3
    Max APR N/A
    Max Loan Amount 5
    Customer Satisfaction N/A
    Product Variety 4
    Fees 4

    Tie this in with minimal closing costs — which generally range from $60 to $500 — and extensive flexibility on repayment, and you have a viable home equity loan option. Be aware that Northwest Bank is not available everywhere in the U.S., however. You’ll have to live in one of the areas it serves to qualify.

    Fees:

    • Closing Costs: $60 to $500

    What is a home equity loan rate?

    Homeowners who choose to take out a second mortgage using the equity they’ve built up in their home as leverage are taking out what is known as a home equity loan. The interest rate that you’re charged on that loan — which is part of how the lender makes money — is your home equity loan rate. Typically, that rate will be higher than the interest on your first mortgage, but will be lower than what you might see using credit cards or other lending products.

    [Read: The Simple Dollar Home Loans Guide]

    How should I choose the right home equity loan rate?

    Choosing the right rate for your home equity loan should involve an extensive shopping around process. While you’re not able to dictate the loan rate offered to you by a lender, you are able to choose which lender you go with. Different lenders will be willing to offer you a loan at different rates based on your creditworthiness, credit score, desired loan terms and overall financial picture. Take the time to check with multiple lenders to see who can provide you the best rate possible.

    Make sure not to get tunnel vision from the interest rate you’ll receive. Choose a loan that has favorable terms, is offered through a company you trust and has the right monthly amount for repayments to fit your financial goals.

    We welcome your feedback on this article and would love to hear about your experience with the home equity loans we recommend. Contact us at inquiries@thesimpledollar.com with comments or questions.

    Methodology

    SimpleScore

    The SimpleScore is a proprietary scoring metric we use to objectively compare products and services at The Simple Dollar.

    For every review, our editorial team:

    • Identifies five measurable aspects to compare across each brand
    • Determines the rating criteria for each aspect score
    • Averages the five aspect scores to produce a single SimpleScore

    Here’s a breakdown of the five aspect scores and their rating criteria for our review of the best home equity loans of 2020.

    We want to make sure the SimpleScore is as helpful and accurate as possible because we know making any home lending decision — big or small — is tough. With that in mind, we created unique criteria for each category for a fair and honest comparison at The Simple Dollar. 

    Why do some brands have different SimpleScores on different pages?

    Keep in mind that most brands have multiple products and services, and they are scored differently depending on the categories we’re evaluating on a given page. The same product or service may have multiple SimpleScores depending on the categories being evaluated. For example, if we’re comparing U.S. Bank according to our criteria for mortgage origination, it scores a 4 out of 5. But when we compare the same brand based on criteria for home equity loans, it scores higher at a 4.25 out of 5. We adjusted each category’s methodology to account for differences in products in order to cover the most important factors and standards that you might consider.

    APR

    We awarded higher scores to home equity lenders that offered lower rates

    Loan Amounts

    We gave lenders with higher available loan amounts higher scores. The higher the loan amount — or even no maximum — the higher the aspect score.

    Fees

    We doled out higher aspect scores to lenders that kept the fees to a minimum — or eliminated them entirely.

    Customer Satisfaction

    We used the J.D. Power Mortgage Origination Satisfaction Study℠ to see how customers rated their experience with each lender. If a lender wasn’t included in J.D. Power’s study, we skipped this aspect and averaged the four remaining aspect scores.

    Product Variety

    If a lender had more than just one product, we awarded it a higher score, because customers should have all available options for loans.

    Jason Lee

    Contributing Writer

    Jason Lee is a U.S.-based freelance writer with a passion for writing about dating, banking, tech, personal growth, food and personal finance. As a business owner, relationship strategist, and officer in the U.S. military, Jason enjoys sharing his unique knowledge base and skill sets with the rest of the world. Follow Jason on Facebook here