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How much would a $200,000 home equity loan cost per month?

Make sure you can afford to make the monthly payment before you take out a home equity loan. Getty Images

A home equity loan can be a good way to borrow money at a low rate for a variety of purposes. You can use it to fund a small business, to consolidate your debt or to make improvements to your home

When you borrow money with a home equity loan, you're using your house as collateral, meaning you may be able to get a better interest rate than you could with other unsecured types of loans. But that also means that failure to repay your loan can lead to your home being foreclosed on, so it's very important to make sure you have enough money budgeted for the monthly payments. 

Luckily, you can calculate in advance what your monthly payment on a home equity loan will be based on the amount of money, the term and the interest rate tied to your loan.

Find out the home equity loan rates you could qualify for here.

How much would a $200,000 home equity loan cost per month?

Read on to see how much you'd pay on a $200,000 home equity loan with a few different loan terms.

Example 1: 10-year fixed-rate home equity loan at 9.07%

The current average rate nationwide for a 10-year home equity loan is 9.07%. If you take out a loan for $200,000 with those terms, your monthly payment would come to $2,541.10.

You would end up paying $104,931.81 in interest for a full payment of $304,931.81. And, because most home equity loans have a fixed interest rate, your monthly payment will be consistent, no matter what happens with interest rates moving forward.

Start your search for a home equity loan online now.

Example 2: 15-year fixed-rate home equity loan at 9.09%

The average national interest rate for a 15-year home equity loan is just slightly higher than for the 10-year option at 9.09%. Taking out a $200,000 loan with these terms would result in monthly payments of $2,039.25. Your total interest payments over the life of the loan would be $167,065.89, meaning all in you would pay $367,065.89.

The choice between the 10- and 15-year options comes down to a smaller monthly payment or a smaller total payment. If you can afford to reliably pay the higher monthly payment, it could make sense to take the shorter loan term and save money in the long run. On the other hand, if you think the higher monthly payment would strain your budget too much, it may be worth considering taking the longer-term option.

Example 3: Take out a HELOC

There is another option for borrowing against your home equity: a home equity line of credit (HELOC). With a HELOC, you get access to a line of credit you can borrow money from as you need during the draw period, much like using a credit card. This can be a good option if you're unsure how much you need to borrow.

Right now, the average national interest rate for a HELOC is 10.03%. Unfortunately, it's impossible to predict a monthly payment for a HELOC because the rate is variable, meaning it changes frequently throughout the term of the loan.

The bottom line

Taking out a $200,0000 home equity loan is a big commitment, but it can be a smart way to fund a project with a low interest rate. For a 10-year fixed-rate loan right now, you'd pay just over $2,500 per month with the current average interest rate. For a 15-year loan, the monthly payment would come to just over $2,000 with today's average rate. That said, your home equity loan rate will be based on numerous factors, like your credit score, borrower profile and income, so it's likely to differ from the average. But no matter what your rate is, you should make sure you have room in your monthly budget before taking out a home equity loan.

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