HELOC vs a Home Equity Loan

A HELOC and a home equity loan both borrow against equity, which the Consumer Financial Protection Bureau describes as the value of the home minus the amount owed on it. They are not the same loan. A HELOC is an open-end line of credit. A home equity loan is usually a lump sum at a fixed rate. Neither page here is a lender offer.

By the YourHomeCosts editorial desk. Last updated October 19, 2026. General information, not personal advice.

Educational information only. This is not financial, tax, legal, lending, insurance, or appraisal advice. Loan documents, state law, and your servicer or assessor control. Confirm every figure before you act.

What a HELOC is

The CFPB’s HELOC page, last reviewed August 28, 2026, calls a home equity line of credit an open-end line of credit that lets you borrow repeatedly against home equity. During the borrowing period, also called the draw period, you can generally spend up to the credit limit. The CFPB says that period could last 10 years, for example. Draws are often made with checks or a card.

After the draw period, you generally cannot keep borrowing. The CFPB says the lender may set a schedule to repay the balance, often over 10 or 20 years, and that monthly payments are often significantly higher in that repayment period. In some plans the full balance is due when repayment begins. Those spans are the CFPB’s description of how plans are often set up. They are not a term this site promises a lender will offer.

HELOCs usually have a variable interest rate, so the payment can change. Some plans let you convert some or all of the balance to a fixed rate. The CFPB says that fixed rate is usually higher than the variable rate and is more predictable. A lender can charge fees. Some plans require a minimum draw, which the CFPB illustrates with $300, or a minimum outstanding balance, or an initial advance when the line is opened. If the home’s value drops a lot, or if the lender decides you may not be able to pay, the lender might freeze further draws.

What a home equity loan is

The CFPB’s home equity loan page, last reviewed September 11, 2024, says you receive the money as a lump sum and that the loan usually has a fixed interest rate, one that will not change. Equity is again the property’s current worth minus any existing mortgage. If you cannot pay the loan back, the lender could foreclose.

The same page says these loans may have upfront fees and costs, so the monthly payment is not the only number to compare. It also says borrowing against the home to pay off other debts, or to invest, can put the home at risk. This site does not rank lenders and does not quote a rate.

The difference that matters

A HELOC is revolving: the amount you have drawn, the variable rate, and the minimum the plan requires drive the bill during the draw. A home equity loan is closed-end: one advance, then a schedule, usually at a rate that stays put. Both are secured by the home. Falling behind can mean losing the home. A HELOC is not a cheaper version of a home equity loan, and a fixed rate is not by itself a reason to borrow.

The HELOC calculator page and the home equity loan calculator page explain the arithmetic and say the calculators are not built yet. A first mortgage payment that also includes taxes and insurance is a different calculation. That is the full-payment calculator.

Three business days to rescind

For many closed-end loans secured by a principal dwelling, 12 CFR 1026.23 gives each consumer whose ownership interest is subject to the security interest a right to rescind. The right runs until midnight of the third business day after the last of consummation, delivery of the rescission notice, or delivery of all material disclosures. Notice is written. Within 20 calendar days after receiving a rescission notice, the creditor must return money or property given in connection with the transaction and act to terminate the security interest.

If the required notice or the material disclosures are not delivered, the same section says the right expires three years after consummation, when the consumer transfers all interest in the property, or when the property is sold, whichever comes first. The rule lists transactions that are exempt. A HELOC secured by your principal dwelling has a similar three-business-day right to rescind under the open-end rule, 12 CFR 1026.15, which has its own exemptions. Read the disclosures for the loan you actually signed.

Questions people ask

Is a HELOC the same as a home equity loan?

No. The CFPB describes a HELOC as an open-end line of credit you can borrow against repeatedly, usually at a variable rate. It describes a home equity loan as a lump sum that usually has a fixed rate. Both use the home as collateral.

Can I lose my home with either loan?

Yes, if you do not repay as the contract requires. The CFPB says falling behind on a HELOC can mean losing the home, and that a lender could foreclose on a home equity loan you cannot pay back.

Does this page quote a HELOC rate or a home equity loan rate?

No. FHFA, Fannie Mae, Freddie Mac, and the CFPB pages cited here do not publish a single national rate for these loans. A rate in an ad is that creditor’s rate.

Sources checked October 19, 2026

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