$200,000 home equity loan vs. $200,000 HELOC: Which is less expensive now?
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Before borrowing hundreds of thousands of dollars worth of home equity, owners should calculate their potential repayment costs.
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The average home equity level has been consistently rising in recent years, and according to recent reports, it has remained at a steadily high level. The cumulative home equity level in the United States hit a record high of $17.6 trillion in the first quarter of 2025, based on a report released earlier in June. The average homeowner, meanwhile, has over $300,000 worth of equity that they can borrow from with a home equity loan or home equity line of credit (HELOC). Accounting for the 20% equity threshold many lenders prefer borrowers maintain in their home at all times, that still leaves more than $200,000 worth of equity to utilize right now. And with inflation stubborn, if significantly cooled, interest rates still high and economic concerns broad now, this could be one of the better ways to borrow a large, six-figure sum of money.
To ensure borrowing success, however, which is critical when utilizing your home as the funding source, you should first calculate your potential repayment costs. Failure to pay here could result in your home being foreclosed on. So you'll want to know exactly what you'll pay long term. And with rates on home equity loans and HELOCs different, both in how high they are and how they're structured, it's particularly important to compare the potential costs of both before getting started. But which is less expensive now: a $200,000 home equity loan or a $200,000 HELOC? That's what we'll examine below.
Start by seeing how much home equity you could potentially borrow here.
$200,000 home equity loan vs. $200,000 HELOC: Which is less expensive now?
In June 2025, the repayment costs of a home equity loan and HELOC, no matter the amount borrowed, are essentially the same. With the median home equity loan rate at 8.25% and the average HELOC rate at 8.25%, you won't see a material difference in repayments right now. But that's this month, not long-term. Since home equity loan rates have fixed rates that won't change until refinanced and HELOCs have variable rates that change over time, this similarity is not likely to stay consistent. Here's what they would look like calculated against 10- and 15-year repayment periods now, assuming the HELOC rate remains unchanged:
10-year home equity loan at 8.25%: $2,453.05 per month
$2,453.05 per month 15-year home equity loan at 8.25%: $1,940.28 per month
10-year HELOC at 8.27%: $2,455.18 per month
$2,455.18 per month 15-year HELOC at 8.27%: $1,942.61 per month
And here's how they would compare if HELOC rates decline by 25 basis points during this time:
10-year home equity loan at 8.25%: $2,453.05 per month
$2,453.05 per month 15-year home equity loan at 8.25%: $1,940.28 per month
10-year HELOC at 8.02%: $2,428.67 per month
$2,428.67 per month 15-year HELOC at 8.02%: $1,913.61 per month
And here's what they would look like if HELOC rates rise by 25 basis points from today's averages:
10-year home equity loan at 8.25%: $2,453.05 per month
$2,453.05 per month 15-year home equity loan at 8.25%: $1,940.28 per month
10-year HELOC at 8.52%: $2,481.85 per month
$2,481.85 per month 15-year HELOC at 8.52%: $1,971.82 per month
In short, a $200,000 home equity loan is marginally less expensive than a $200,000 HELOC is now. But that dynamic can and almost assuredly will change over a multiple-year repayment period. Borrowers will need to weigh those changes, then, against what they can lock in with a fixed home equity loan rate instead. And remember that home equity loans and HELOCs can always be refinanced in the future, should the rate climate or your borrowing needs change, so don't get too focused on long-term rate change scenarios, either.
Compare your HELOC and home equity loan rate offers here to learn more.
The bottom line
$200,000 home equity loans and HELOCs come with similar payments now but they may not stay that way for very long, thanks to the latter's variable rate. That noted, HELOCs come with interest-only payment requirements for borrowers who want to utilize their equity that way during the draw period, so interest rates may be less of a concern than they'd be with a home equity loan which requires full monthly repayments immediately thanks to the disbursement of the funds in a single, lump sum. Compare both options carefully before getting started, then, to better ensure borrowing success both now and in the years to come.
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