A home equity loan is the fixed-rate cousin of a HELOC. One lump sum, fixed rate, fixed term (5-20 years), fully amortizing from day one. You get predictability — same monthly payment, same payoff date. You lose flexibility — you cannot draw more later.
Worked example: $75,000 home equity loan at 9.0% for 15 years. Monthly payment = $760. Total interest over 15 years = $61,800.
Home equity loan vs HELOC
Choose home equity loan when: you know the exact amount you need; you want payment predictability; you plan to pay it off on a schedule. Choose HELOC when: the amount is uncertain; you want flexibility to redraw; you can handle rate variability.
Typical rates and terms in 2026
- 5-year fixed: 7.5-8.5% for prime borrowers, 80% CLTV
- 10-year fixed: 8.25-9.0%
- 15-year fixed: 8.75-9.5%
- 20-year fixed: 9.25-10.0%
Compare to cash-out refi. If you already have a 3-4% first mortgage, never cash-out refi to get equity — use a home equity loan or HELOC and preserve the low first-mortgage rate.
Tax deductibility
Interest is deductible only if proceeds are used to buy, build, or substantially improve the home securing the loan. Standard deduction is $14,600 single / $29,200 married for 2026, so many homeowners do not itemize and the deduction is irrelevant.