Compare a variable-rate HELOC (interest-only draw period, then repayment) against a fixed-rate home equity loan — side by side, with live prime-rate pricing. See the real monthly payment and total interest of each so you can borrow against your home with confidence.
Variable line vs fixed loan
Both let you borrow against your home equity, but they behave very differently. A HELOC is a revolving line with a variable rate tied to the prime rate (prime + a margin). During the draw period (often 10 years) you typically pay interest only, then it converts to a fully amortizing repayment period. A home equity loan is a lump sum at a fixed rate, fully amortized from day one — predictable, but usually a slightly higher starting rate.
HELOCs win when you want flexibility or low early payments and expect rates to fall; home equity loans win when you want certainty and protection from rising rates. Because the HELOC's interest-only draw phase delays principal, its total interest is often higher even when the rate looks lower. This calculator uses the live prime rate to price the HELOC and shows total interest for both so you can see the real cost, not just the headline rate.
Rate moves with prime. Great if rates fall, risky if they rise. Interest-only draws keep early payments low.
One lump sum, fixed rate, fixed payment. No surprises, full amortization from the start.
Paying interest only during the draw period delays principal, which can raise total interest paid.
The lower headline rate doesn't always win. Compare total interest, which this tool does for you.
American homeowners are sitting on record home equity, and "HELOC vs home equity loan," "which is better, a HELOC or home equity loan," and "home equity rates 2026" are among the most-searched borrowing questions in the United States. Both let you tap equity for renovations, debt consolidation, or a major expense — but a HELOC is a variable-rate line of credit tied to the prime rate, while a home equity loan is a fixed-rate lump sum. This calculator prices both with the live prime rate and shows the real monthly payment and total interest of each.
A HELOC's interest-only draw period keeps early payments low, which is attractive — but it delays principal and can push total interest above a fixed home equity loan even at a similar rate. Run your own numbers to see which option costs less over the full term for your home and budget.
A homeowner borrows $50,000. A HELOC at 8.5% with a 10-year interest-only draw then a 20-year repayment racks up far more total interest than a 15-year fixed home equity loan at 7.75% — because the interest-only years delay principal. The calculator shows the fixed loan winning on total interest despite a lower headline HELOC rate.
U.S. homeowners financing a renovation, consolidating high-interest debt, paying tuition, or funding a large purchase who are weighing a variable home equity line of credit against a fixed-rate second mortgage.
Both products borrow against home equity, and the right choice turns on how you will use the money rather than on the rate. A home equity loan gives a lump sum at a fixed rate and amortizes immediately — predictable, and appropriate when you know the amount, such as a defined renovation. A HELOC is a revolving line at a variable rate, usually interest-only during a ten-year draw period, and you pay interest only on what you actually draw — appropriate for staged or uncertain costs. The HELOC's flexibility carries two risks the fixed loan does not: rate movement, and a payment shock when the draw period ends.
Home equity loan: fixed payment on the full amount from day oneHELOC draw period: payment = balance drawn × (prime + margin) ÷ 12HELOC repayment period: remaining balance amortized over the remaining termBoth limited by: (Home value × max CLTV) − first mortgagewhere:
Assumptions: Both are secured by the home and both reduce the equity available in a sale. HELOC lenders can freeze or reduce an undrawn line if property values fall, which happened widely in 2008.
Compare both products when only half the money is needed in year one.
ResultHELOC saves ~$2,330 in year one — but carries rate and reset risk
The staged draw is where the HELOC earns its keep: paying interest on $30,000 rather than $60,000 is a genuine saving with no offsetting cost. Once the full amount is drawn and the project is finished, the fixed loan's certainty is usually worth more than the flexibility you no longer need.