Home Equity Loan vs HELOC Guide (2026) - Borrowing Comparison
Home equity loan vs HELOC comparison: fixed vs variable rates, lump sum vs line of credit, tax deduction rules, and best use cases.
Summary
Home equity loan: lump sum, fixed rate, fixed term. HELOC: line of credit, variable rate, draw period. Tax deduction only for home improvement. Compare rates and terms.
Key Steps
- 1Home equity loan: lump sum payout, fixed rate (typically 7-9%), fixed repayment term.
- 2HELOC: revolving line of credit, variable rate, draw period (5-10 years), repayment period.
- 3Tax deduction: interest deductible only if used for home improvement (not other purposes).
- 4Best use: loan for one-time expense, HELOC for ongoing/flexible needs.
- 5Compare rates: check both options, HELOC often lower initial rate but variable.