A home equity line of credit, or HELOC, is a revolving credit line secured by your home and uses the equity that is available. Unlike traditional installment loans that provide a fixed dollar amount at the start of the loan’s term, a HELOC establishes a line of credit. You control how much and how often you borrow, up to the maximum amount of your line. A HELOC can be used to pay for almost anything, from paying for major expenses such as home improvements or college tuition to consolidating higher-rate debt from other loans or credit cards.

During the first 10 years, also known as the draw period, the minimum monthly payment is your choice of either 1% or 2% of the outstanding balance, or interest only for those who qualify. At the end of the draw period, your entire outstanding line balance will transition into the repayment period. Principal plus interest payments are required during the 20-year repayment period.

More about home equity lines of credit

Because your home is used as collateral for a HELOC, there is less risk involved for banks, which typically offer lower interest rates on HELOCs than they do for unsecured loans.
 

Additional advantages of a HELOC include:

Convenient access to available funds

You have lots of options to access available funds. Use your HELOC convenience checks or transfer money to your U.S. Bank checking account and make purchases or pay bills – including higher interest rate credit card bills. You can also use your Visa® Access Card1 anywhere Visa® is accepted.

A safety net for emergencies

A home equity line is a ready source of money for unexpected expenses, such as a damaged roof or a flooded basement.

A more affordable form of credit

In addition to often having lower rates, there are no closing costs associated with a home equity line, so HELOCs often are a less expensive credit option than personal loans or credit cards.

Safety from rising rates

A Fixed Rate Option allows you to lock in a fixed rate on any portion of your outstanding variable balance during the draw period. You can have up to three fixed rate options in place at any time.

Interest rates and Annual Percentage rates (APRs) on HELOCs

HELOCs have a variable interest rate, which is tied to an index, such as the Wall Street Journal Prime rate. As a result, your monthly payments would change as the Prime rate rises or falls. For example, on a $50,000 HELOC balance, at an APR of 4.65%, the estimated interest-only payment would be $193.75. If Prime increased 0.25% to an APR of 4.90%, the estimated interest-only payment would be $204.17 – a difference of $10.42.

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Disclosures

  1. For HELOC accounts secured by property located in Connecticut, any advance made using a Visa® Access Card for purchases must be at least $1,000, and any advance using a Visa® Access Card for cash advances at an ATM is limited to a single withdrawal of $1,000 per day.

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Loan approval is subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rate and program terms are subject to change without notice. Mortgage, Home Equity and Credit products are offered through U.S. Bank National Association. Deposit products are offered through U.S. Bank National Association. Member FDIC.

U.S. Bank and its representatives do not provide tax or legal advice. Your tax and financial situation is unique. You should consult your tax and/or legal advisor for advice and information concerning your particular situation.

The Consumer Pricing Information disclosure lists fees, terms and conditions that apply to U.S. Bank personal checking and savings accounts and can be obtained by visiting a branch or calling 800-872-2657.

Home Equity Line of Credit: The Annual Percentage Rate (APR) is variable and is based upon an index plus a margin. The APR will vary with Prime Rate (the index) as published in the Wall Street Journal. As of November 8, 2024, the variable rate for Home Equity Lines of Credit ranged from 8.20% APR to 11.85% APR. Rates may vary due to a change in the Prime Rate, a credit limit below $50,000, a loan-to-value (LTV) above 60% and/or a credit score less than 730. A U.S. Bank personal checking account is required to receive the lowest rate, but is not required for loan approval. Clients in certain states are eligible to receive the preferred rate without having a U.S. Bank personal checking account. The rate will never exceed 18% APR, or applicable state law, or below 3.25% APR. Choosing an interest-only repayment may cause your monthly payment to increase, possibly substantially, once your credit line transitions into the repayment period. Repayment options may vary based on credit qualifications. Interest-only repayment may be unavailable. Loans are subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rates and program terms are subject to change without notice. Credit line may be reduced or additional extensions of credit limited if certain circumstances occur.

An early closure fee of 1% of the original line amount, maximum $500, will apply if the line is paid off and closed within the first 30 months. Property insurance is required. Other restrictions may apply. An annual fee of up to $75 may apply after the first year and is waived or discounted with an existing U.S. Bank Platinum Checking Package or with enrollment in our Smart Rewards Program. Annual fees are assessed based on the tier in our Smart Rewards Program on your HELOC anniversary date. Please refer to your Smart Rewards terms and conditions for more information on tier assignment.

Home Equity Line of Credit – Fixed Rate Option: A maximum of three active Fixed Rate Options are permitted on a Home Equity Line of Credit. Property insurance is required. Other restrictions may apply.