HELOC vs Home Equity Loan
A **home equity loan** pays a lump sum with fixed payments. A **HELOC** works like a revolving line—draw, repay, redraw during the draw period, then amortize.
Step by step
1. Match project cash flow
Steady renovation budget vs uncertain draws favors different products.
2. Compare APR types
HELOCs are often variable; equity loans may fix the rate.
3. Plan end of draw
Payment shock when HELOC enters repayment phase.
HELOC vs equity loan
Both use home equity as collateral—default risk is real if values fall.
- HELOC: Flexible draws; variable rate common.
- Home equity loan: Fixed lump sum; predictable payment.
Use our calculators
Common mistakes
- Treating HELOC like permanent income
- Ignoring closing costs on both
FAQ
Is interest tax-deductible?
Rules vary—confirm with a tax pro for your use.