​​Is a HELOC your best borrowing option now? Here's what experts say.

With inflation costs remaining elevated and many households facing rising expenses, more homeowners are turning to home equity borrowing to free up cash. A home equity line of credit, or HELOC, can offer flexibility, but experts say there's much to consider to determine if it makes sense for your personal financial situation. You will be leveraging your equity here, after all, but the much lower borrowing costs associated with the product can make it a worthwhile tool right now.

That raises a key question for homeowners: Is a HELOC your best borrowing option now? We asked experts for their thoughts on the product currently, with the interest rate climate cooling heading into 2026. Below, we'll break down what they say to know now.

See how low your current HELOC rate offers are here.

Is a HELOC your best borrowing option now?

"HELOCs are ideal for short-term borrowing that the homeowner intends to pay back quickly," says Melissa Cohn, regional vice president at William Raveis Mortgage. 

Cohn says borrowers should focus heavily on pricing when comparing options. "Rate, rate, rate," she said. "When looking for a new loan, compare the rates, closing costs and how long you need to borrow the money. A HELOC or home equity loan may be tax-deductible, while personal loans are not." 

The best option depends on how long you expect to carry the balance and how much payment volatility you can tolerate. Not sure if it makes sense for you right now? Here are some signs that indicate a HELOC could be the smart way to borrow currently:

You have a good amount of equity and reliable income

A HELOC typically is a better fit for homeowners with stable income and solid home equity. Borrowers can assess readiness by looking at how much home equity they currently have. Consistent income can help project how much you can repay over time. If you're able to repay your line of credit quickly, a HELOC can be an excellent value proposition right now.

Nicole Rueth, market leader at Movement Mortgage, agrees that HELOCs tend to benefit borrowers who can repay quickly: "A HELOC makes a ton of sense if you need flexible access to cash and plan to pay it back in a short period of time — think short-term renovations, tuition or bridging a liquidity gap." Beyond income and equity, how you plan to use the funds also affects whether a HELOC is the right fit.

Learn how much you could borrow with a HELOC here.

Your expenses are spread out over time

Because HELOCs allow borrowing in stages, they can be helpful for renovations, phased projects, tuition or significant recurring expenses. Many homeowners can use HELOCs to cover costs they otherwise couldn't afford or as a way to finance projects that will help boost their home's value further.

You expect rates to fall

Homeowners watching inflation trends often consider how rising inflation could affect future HELOC rates. If rates fall later, carrying a variable rate may be less costly. However, if rates don't decrease, borrowing could end up costing you significantly more over time. But with three Fed rate cuts issued in the final four months of 2025, this is a less pressing concern than it may otherwise normally be. 

Just don't get started assuming rates will continually decline, either. Rueth cautions against assuming rates will fall. "It can be risky if you can only pay the minimum required or if you're banking on rates staying low," she said. "HELOC's variable rates can climb fast and squeeze budgets."

You need flexible funds

Borrowers may rely on HELOCs when flexible financing is beneficial, especially if emergencies arise. Flexible access to funds helps borrowers manage a variety of circumstances with peace of mind. 

Bruce McClary, spokesman for the National Foundation for Credit Counseling, notes that flexibility is a key advantage when used strategically. "A HELOC is most effective when used to increase the value of a property or to bridge temporary financial gaps, provided there's a clear exit strategy in place," McClary notes.

Why a HELOC may not be the right move now

While the above factors may indicate that a HELOC is the smart way to borrow now, there are all some signs that it may be worth avoiding. Specifically, a HELOC may not be the right move now if:

You need to borrow too much

Borrowing aggressively during the draw phase can leave homeowners with sticker shock once principal payments begin. HELOC flexibility can be problematic if you don't have the discipline to borrow only within your means. Cohn says she has seen borrowers run into trouble when they treat a HELOC as long-term debt. "If you keep a HELOC beyond the 10-year draw period, the payment will increase sharply," she says. "That can create hardship if the borrower is not prepared."

You're consolidating debt without a payoff plan

Using a HELOC to pay off credit cards may lower interest costs and consolidate debt, but it also shifts unsecured debt onto your home. Without a clear repayment timeline, this can be risky. If you fall too far behind, you could put your home at risk of foreclosure. McClary warns that using a HELOC for lifestyle inflation or chronic overspending is especially dangerous: "A homeowner who treats their home equity like a bottomless piggy bank may encounter financial stress. Using a HELOC to support an unsustainable lifestyle is not a wise strategy."

Your income isn't consistent

Irregular earnings can make fluctuating payments harder to manage. HELOC payments rise and fall with rates, which can be tricky to plan around if your income varies. If rates climb and your income drops for a time, you could find yourself unable to make payments, and interest could accumulate faster than you can pay it off.

Home values in your area are softening

If property values fall, your available equity may shrink, reducing your ability to borrow or refinance later. Falling prices can reduce how much equity you have — or possibly leave you owing more than your home is worth. Homeowners should be aware of housing trends in their area to assess their risk. 

You prefer fixed terms

Fixed-rate home equity loans may be a better fit for borrowers who want predictable payments and a clear payoff timeline right now. Some homeowners may want to compare the costs of a fixed home equity loan and a HELOC for the same amount to decide between predictable payments and rate flexibility. 

HELOC payments can increase because the product's rate is variable. This uncertainty can strain budgets, especially during periods of economic volatility. If rates climb in the future, you could be stuck paying significantly higher amounts than you would with a fixed-rate loan.

Rueth says borrowers should prioritize structure over convenience if they're unsure about payment swings: "If stability is the goal, a fixed-rate home equity loan or even a personal loan may be smarter," she says. "But if you're disciplined and want flexibility, a HELOC can be a powerful tool."

The bottom line

A home equity line of credit can be a valuable tool now, but only for homeowners with stable finances and a clear repayment plan. Because missed payments can put your home at risk, be sure to compare alternatives and understand how your monthly costs may shift over time before tapping your equity.

"Homeowners should carefully consider the risk of foreclosure before using their home equity for a HELOC," McClary warns. "This risk is much greater than the consequences of missing a credit card payment."

It's a good idea to evaluate alternatives or consult a financial or housing expert before tapping into your home's equity. This can help you understand how variable payments could shift and the short- and long-term implications of opening a HELOC in today's evolving interest rate environment.