Is a HELOC or a home equity loan the better option this April?

Borrowing against your home rarely looks as appealing as it does right now. After years of higher-than-average interest rates that made tapping home equity feel like a financial gamble, the calculus has shifted — and shifted meaningfully. For example, the average rate on a home equity line of credit (HELOC) has fallen more than two percentage points since September 2024, and home equity loan rates have followed a similar trajectory. At the same time, homeowners are sitting on trillions in tappable equity, allowing the average borrower to tap into the funds they need without refinancing their homes.

That last point matters more than it might seem on the surface. Today’s mortgage rates are still hovering near 6.5%, so homeowners who secured a home loan when rates were sitting at historic lows of about 3% have little incentive to refinance in order to access cash. A second mortgage, though, whether in the form of either a HELOC or a home equity loan, sidesteps that problem entirely. With these borrowing tools, you keep your existing mortgage intact and simply borrow against your equity at rates that are far below what personal loans and credit cards are charging.

So the question isn’t really whether to tap your home equity. For many homeowners, the math already favors it. The harder question is which home equity borrowing product makes sense to use right now.

Find out how affordable your home equity borrowing options could be here.

Is a HELOC or a home equity loan the better option this April?

Both HELOCs and home equity loans draw from the same well, but they work differently, carry different rate structures and serve different financial needs. Here’s what to weigh if you’re trying to decide between them this April:

HELOCs: Lower rates but less certainty

For many borrowers, HELOCs are currently the more attractive option, at least on paper. The average HELOC rate is hovering just above 7% currently, with some lenders offering rates closer to the mid-6% range for well-qualified borrowers. That makes HELOCs slightly cheaper than home equity loans right now, but the real appeal is this borrowing tool’s flexibility. A HELOC works like a revolving credit line, allowing you to borrow only what you need, when you need it, during a draw period that can last up to a decade. This structure can be especially useful in the current environment for a few reasons, including the following:

• Rates have been trending downward recently: HELOC rates have declined over the past year and are now at multi-year lows.
• You benefit if rates fall further: Because HELOCs have variable rates tied to the prime rate, your borrowing costs could decrease if the Fed eventually cuts rates again.
• Lower upfront costs for staged borrowing: If you’re funding a project over time, like renovations that don’t have a fixed cost, you won’t pay interest on any unused funds.

That flexibility comes with risk, though. If inflation persists or the Fed delays rate cuts, HELOC rates could rise again quickly, driving up the price of your line of credit. That variable-rate exposure is the trade-off for today’s lower starting cost.

Compare your home equity borrowing options online today.

Home equity loans: Stability in an uncertain rate environment

Home equity loans, by contrast, are built for predictability. The average rate is currently sitting just under 8%, which is about 1% higher than you’d pay for the average HELOC. Those rates are fixed, though, meaning your monthly payment won’t change over time. And, that stability is becoming more valuable in April’s climate. Here’s why some borrowers may be leaning toward fixed-rate home equity loans now:

• Rate volatility is still a risk: Mortgage rates have risen again recently due to ongoing inflation issues and global uncertainty, signaling that borrowing costs can still move higher in this landscape.
• Fed policy is less predictable: Markets aren’t fully aligned on whether additional cuts will come in 2026, which adds risk to variable-rate products like HELOCs, making home equity loans preferable for some borrowers.
• Budget certainty matters: With household costs still elevated, locking in a predictable payment on your home equity loan can make long-term planning easier.

Home equity loans can be particularly useful if you know exactly how much you need and want to eliminate rate uncertainty. However, that fixed-rate predictability means you won’t benefit from lower rates if the overall rate environment eases (unless you refinance your loan).

How to decide which option is best now

Right now, the better option often depends less on the rate itself and more on how you plan to use the funds.

A HELOC may make more sense if:

• You need ongoing access to funds, not a lump sum
• You expect rates to decline further over the next 12 to 24 months
• You want lower initial payments (especially during the draw period)

A home equity loan may be the better fit if:

• You want predictable, fixed payments from day one
• You’re concerned about rates rising again
• You’re using the funds for a single, defined expense

It’s also worth noting that the spread between the two products isn’t particularly wide right now, at about one percentage point. That means the decision between these two borrowing tools is less about chasing the lowest rate and more about managing risk.

The bottom line

There’s no clear-cut winner between HELOCs and home equity loans this April, and that’s largely because the broader rate environment remains unsettled. HELOCs offer slightly lower rates and flexibility that could pay off if borrowing costs continue to ease, but they also expose you to future rate increases. Home equity loans, on the other hand, come with a modestly higher rate overall but deliver something increasingly valuable right now: certainty. For homeowners who prioritize stable payments and want to avoid surprises, that trade-off may be worth it.