$50,000 home equity loan vs. $50,000 HELOC: This is the cheaper option after the December Fed rate cut
Borrowing a large, five-figure amount of your home equity may not be the first thing you think of when in need of extra financing. But in today's continuously cooling interest rate climate, it may be worth considering. With options like home equity loans and home equity lines of credit (HELOCs), homeowners can gain access to a sizable portion of their equity either via a lump sum or as a revolving line of credit. And they can do so at a time when interest rates on both products are seemingly on a never-ending decline.
Home equity loan interest rates are now under 8%, on average, and HELOC rates are down by more than two full percentage points from where they were in September 2024. So both offer homeowners effective (and affordable) ways to borrow an amount like $50,000. But that's largely due to recent interest rate cuts courtesy of the Federal Reserve, the latest of which was issued on December 10. That said, these products don't work identically, either, and the interest rates accompanying each are a bit different. That variability should be clearly understood before formally applying for either, as the home serves as collateral with both.
Between a $50,000 home equity loan and a $50,000 HELOC, then, which will be the cheaper option now, post-December Fed rate cut? Below, we'll calculate the numbers (and detail the information) homeowners need to know to make an informed decision.
See how much home equity you'd be eligible to withdraw here.
$50,000 home equity loan vs. $50,000 HELOC: Which is the cheaper option after the December Fed rate cut?
Home equity loans and HELOCs have both responded positively to recent Fed rate cuts, of which there were three in 2025. Here's how much each would cost if the homeowner wanted to withdraw $50,000 now, calculated against today's average rates and the same repayment periods:
$50,000 home equity loans:
- 10-year home equity loan at 8.18%: $611.40 per month
- 15-year home equity loan at 8.13%: $481.59 per month
$50,000 HELOCs:
- 10-year HELOC at 7.81%: $601.63 per month
- 15-year HELOC at 7.81%: $472.36 per month
So the HELOC is around $10 cheaper monthly than a home equity loan now, for both repayment periods. But these monthly numbers don't tell the whole story that homeowners will need to know to better determine which is right for them.
They should also remember that HELOC rates are variable and subject to change monthly (home equity loan rates are fixed). That means today's cheaper HELOC rate could easily become tomorrow's expensive one should market conditions change. At the same time, these payments were calculated on the assumption that the full HELOC will be utilized immediately and that repayments on the full amount will then begin. But homeowners often don't use HELOCs in this way, and, even if they did, HELOCs typically mandate interest-only periods for the initial draw period (approximately 10 years).
In other words: A $50,000 HELOC is cheaper than a $50,000 home equity loan right now, but it may not stay that way for much longer.
Compare your top HELOC and home equity loan options here to learn more.
The bottom line
Following the December 2025 Fed rate cut, a $50,000 HELOC is cheaper than a $50,000 home equity loan. But the details here matter and your borrowing approach should depend more on just what rates are at this minute. By carefully comparing and contrasting both products, understanding how they operate and being realistic about their long-term costs, you can boost your chances of choosing the right one – and more effectively pay for the expenses you needed the home equity for in the first place.
