American homeowners are sitting on a record $32 trillion in home equity in 2026. A HELOC (Home Equity Line of Credit) lets you access that equity flexibly — but the variable rate structure creates risks that many borrowers underestimate.
How a HELOC works
A HELOC is a revolving line of credit secured by your home equity. Two phases:
- Draw period (typically 10 years): Access funds up to your credit limit. Pay interest-only on the amount drawn. Rate is variable (typically Prime + 0.5–2%).
- Repayment period (typically 20 years): No new draws. Repay principal + interest on outstanding balance. Payment increases significantly.
2026 HELOC rates
| Credit score | LTV | Rate range (2026) |
|---|---|---|
| 760+ | Under 80% | 7.5–8.5% |
| 720–759 | 80–85% | 8.5–9.5% |
| 680–719 | 85–90% | 9.5–11% |
HELOC vs home equity loan
| HELOC | Home Equity Loan | |
|---|---|---|
| Rate | Variable | Fixed |
| Access | Revolving line | Lump sum |
| Best for | Ongoing expenses, renovation in phases | One-time large expense |
| Payment certainty | Low (variable) | High (fixed) |
When a HELOC makes sense
- Home renovation that increases property value (kitchen, bathroom, addition)
- Emergency fund backstop for large predictable expenses
- Debt consolidation from higher-rate unsecured debt (with strong discipline)
When it doesn't
- Vacations, cars, or discretionary spending — you're converting unsecured consumer debt to secured home debt
- If your income is unstable — rising payments + job loss = foreclosure risk
- If you plan to move within 3 years — closing costs + fees may not be worth it
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About the author
Enrique 'Kike' Faúndez is an Information Systems and Management Control Engineer from Universidad de Chile, with master’s degrees in Finance from Universidad de Chile and Industrial Engineering from Pontificia Universidad Católica de Chile. He has 15+ years of experience in regulated financial services across finance, operations, and digital product development. He founded CashControlly in Santiago, Chile, with the conviction that personal financial control should not be a privilege, but an accessible and well-designed tool.
- Master's in Finance, Universidad de Chile
- Master's in Industrial Engineering, Pontificia Universidad Católica de Chile
- Information Systems and Management Control Engineer, Universidad de Chile
- AI and ITIL certifications
- 15+ years in regulated financial services
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