How much will a $25,000 home equity loan cost monthly in 2025?
Home equity lenders typically offer borrowers much lower interest rates than they would receive with a credit card or personal loan. Since the latter two types are unsecured and the former is secured via the borrower's home, home equity loan interest rates are often much more affordable. That's been evident in recent years, as inflation and a higher rate climate made borrowing more difficult. As a result, personal loan rates are nearing 13%, while credit cards are hovering near a record 23%. Home equity loans, in the meantime, are in the 8% range, making them almost three times cheaper than credit cards.
To truly determine the cost-effectiveness of this unique product, however, prospective borrowers should first calculate their potential costs. With the average home equity amount now sitting around $320,000, a $25,000 loan would leave plenty of equity to potentially use in the future – and it would give homeowners a five-figure sum to pay for major expenses now. But what would a $25,000 home equity loan cost monthly now, at the start of 2025? Below, we'll do the math.
Start by seeing how much home equity you'd be eligible to borrow here.
How much will a $25,000 home equity loan cost monthly in 2025?
Home equity loan rates dropped by more than half a percentage point over the last year, on average, although they've moderated slightly in recent days. Here's how much a $25,000 home equity loan would cost monthly if applied for now, tied to two traditional repayment periods:
- 10-year home equity loan at 8.57%: $310.90 per month
- 15-year home equity loan at 8.52%: $246.48 per month
If homeowners wait to borrow and rates continue to fall, it helps to know how these payments could be impacted. Here's how much a $25,000 home equity loan would then cost each month if rates fell by 25 basis points:
- 10-year home equity loan at 8.32%: $307.56 per month
- 15-year home equity loan 8.37%: $244.28 per month
Waiting for home equity loan rates to drop in today's rate climate, however, is a mistake worth avoiding. To start, there's no guarantee that rates will continue their decline as the Federal Reserve just paused interest rate cuts and there's no clear indication about when those may resume. Delaying the financing will also delay paying for expenses that may need attention immediately. And even if rates do fall in the future, borrowers could simply refinance their loan then. So if you know you need the money and have decided on a home equity loan, it makes sense to lock in a low rate now.
Get started with a home equity loan here.
The bottom line
In early February 2025, a $25,000 home equity loan will come with monthly payments somewhere between $247 and $311. But those payments will only be applicable for borrowers with clean credit histories and high credit scores, so if you don't have both, consider working on that first. And don't forget to explore your home equity line of credit (HELOC) options, too, which could be favorable for borrowers if interest rate cuts resume later this year. Finally, be sure to only borrow an amount of money you can comfortably afford to pay back – regardless if it's a home equity loan or HELOC. Overborrowing could make payments difficult and, if you can't maintain the payments as agreed upon, you could risk your homeownership in the process.
