How much will a $20,000 HELOC cost monthly now that rates are dropping?
When it comes to borrowing against your home's equity, a home equity line of credit (HELOC) offers some big benefits to borrowers right now — especially in terms of affordability. HELOC rates have been on a steady downward slide since the start of 2025 — so if you're thinking about tapping into your home's equity with this type of product, this may be an optimal time to do so. For example, the average HELOC rate was 8.36% at the start of the year. By early February, though, it had dipped slightly to 8.26%, and by the first week of March, it had dropped even further to an average rate of 8.06%. The downward momentum continued into early April, with rates falling to 7.90% by April 2.
There's been a small uptick in the average HELOC rate since then, but today's rates are still lower than they were earlier in the year. Right now, the average HELOC rate sits at 7.94%. A rate that low is a welcome one for prospective HELOC borrowers — but the declining HELOC rate environment can also benefit those with existing HELOCs since these lines of credit generally have variable rates that can change over time. So, when rates are trending lower, homeowners with HELOCs could see their monthly payments shrink over time, giving them more breathing room in their budgets.
And, if you're planning to open a HELOC soon, today's lower starting rate can make borrowing cheaper right out of the gate. But how much would a $20,000 HELOC cost per month now that rates are dropping?
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How much will a $20,000 HELOC cost monthly now that rates are dropping?
While HELOC rates are variable and subject to change over time, it's important to have an idea of what you could pay each month on your line of credit. Here's what your monthly payments would look like for 10- and 15-year HELOCs at today's average rates (assuming rates stay the same over time):
- 10-year HELOC at 7.94%: $242.02
- 15-year HELOC at 7.94%: $190.44
Here's how much more a $20,000 HELOC monthly payment would have been at the start of January 2025, when the average rate was 8.36%:
- 10-year HELOC at 8.27%: $246.48
- 15-year HELOC at 8.27%: $195.31
And, here's how much higher a $20,000 HELOC monthly payment would have been when the average rate was 9.99% in September 2024:
- 10-year HELOC at 9.99%: $264.19
- 15-year HELOC at 9.99%: $214.80
Find a low rate on a HELOC here.
Why a HELOC makes sense for spring projects
HELOCs are a popular way to pay for spring home projects for a few different reasons right now. For starters, you may be able to deduct a portion of the interest paid on your HELOC from your taxes next year if you use it to "buy, build, or substantially improve" your home, according to the IRS.
The borrowing flexibility a HELOC offers may also come in handy during the various phases of your project. Rather than having to take out a lump-sum loan all at once, you can draw from the line of credit as needed. Plus, you are typically only required to make interest-only payments during your HELOC's draw period. That can make the repayment process more affordable initially.
If you're planning to use your HELOC to fund a spring project, though, the general rule of thumb is borrowing between 5% to 10% more than the estimated cost. Having a cushion helps ensure that there's room in your line of credit to accommodate any unexpected costs that may arise.
The bottom line
With HELOC rates drifting lower this year — and the potential for even more declines over time — now could be a smart time to open a HELOC if you have projects or expenses on the horizon. Just remember that budgeting is key since HELOC payments can fluctuate over time. But by locking in a competitive rate now and planning carefully, you can take full advantage of today's market conditions and keep your borrowing costs manageable.
