HELOCs are a type of revolving credit secured by the home. They allow you to borrow up to your credit limit, repaying it over time with interest.
HELOCs are usually variable rate, which means that they change with the market. With a HELOC with fixed rates, you can draw money from your credit line at a rate that is fixed, which protects you against possible interest rate hikes.
The HELOCs that have fixed rates are less frequent and they may require different conditions than those with variable rate HELOCs. Let’s look at the fixed-rate HELOCs and some of the lenders who offer them, to see if they are right for you.
Is the rate of a HELOC fixed or variable?
Interest rates for HELOCs can vary. Some lenders will let you fix an interest rate on a portion or the entire credit line. A variable rate HELOC has interest rates that fluctuate according to the prime rate. They may also increase or decrease during the period the line of credit is active.
Your monthly payment can vary because your rates are subject to change. Your monthly payment increases when rates rise, and decreases when they fall.
The variable interest rate of a HELOC is what sets it apart. Home equity loans have fixed rates of interest, while HELOCs allow you to borrow from the equity in your house. The loan is repaid in monthly equal installments with interest.
The fixed rate HELOC allows you to have the predictability and flexibility of both.
HELOCs vs. Home equity loans
Is it possible to get a HELOC at a fixed interest rate?
Some lenders do offer fixed rate options, but not all. Some lenders offer fixed rates right away, while others allow you to convert a portion of your HELOC variable rate to a fix rate after you withdraw money.
You must meet certain minimum requirements to qualify for the fixed rate. If you don’t meet the minimum amount required by the lender, then you will be charged the variable rate.
You may find that your initial interest rate is higher if you select the fixed rate option than if you chose to go with a variable rate. If the HELOC variable rate rises, however, you will be protected.
Some lenders may restrict the number of loans with fixed rates you can take out at a time, and charge an additional fee for locking in a rate. Some lenders will convert your loan at no cost. You may be able, once you have locked your rate in place, to unlock it and lock it again to benefit from future interest rate reductions.
The variable interest rate of the HELOC will be applied to any amounts that you do not convert into a fixed-rate.
Five HELOCs that offer a fixed rate
HELOCs with fixed rates are more rare than those that have variable rates. Check out some of the lenders who offer HELOCs with fixed rates.
Bank of America HELOCs
You can change a HELOC at Bank of America from variable to fixed rates by converting a minimum of $5000 up to 90% of the credit line. No conversion fee is charged, and up to three rates can be locked at once.
The bank offers discounts to Preferred Rewards members, autopay and initial withdrawal, as well as no application or annual fees.
Learn more by reading our Bank of America HELOC Review.
Figure
No need to change from variable rate to fixed. Figure provides fixed-rate HELOCs up front. At the loan’s closing, you will receive your full loan (minus an origination charge).
You can lock in lower rates if the interest rate falls as you pay down the remaining balance. You can get credit lines from Figure ranging between $15,000 and $400,000 and prequalify without impacting your credit score to find out what you would pay and at what rate.
Learn more by reading our Figure HELOC Review.
U.S. Bank HELOCs
You can get a HELOC with U.S. Bank and lock in the rate for some or all money borrowed when you withdraw at least $2,000 of your credit limit. You can lock and unlock your rate at no cost during the draw period.
Learn more by reading our U.S. Bank HELOC Review.
BECU has HELOCs up to $500,000. Rates can be locked on any amount of $5,000 and above. You may have three rates locks active at once. No fees are charged for locking or unlocking. You can select a repayment term of up to 15 years when you lock in your rate.
BECU does not charge an application fee, origination fees, annual fees or prepayments. However, you will be charged a re-conveyance payment when your HELOC expires.
Learn more by reading our BECU HELOC Review.
Truist
This large bank allows you to have five rate locks at once on amounts over $5,000. The setup fees for each rate lock are $15. You can select repayment terms from five, 10, 15 or 20 years.
Learn more by reading our Truist HELOC Review.
Do I need a HELOC with a fixed rate?
A fixed-rate mortgage can protect you against future increases in rates.
A fixed-rate HELOC is a good option if you have equity in your house and are looking for cash to pay for renovations or any other expenses. You can use these questions to determine if you should consider a HELOC with a fixed rate.
- What is the equity in your house?
- What amount do you require to borrow? Is it a minimum rate fixed?
- What are your plans for the money?
- What is the best option: a HELOC or a personal loan?
- Do you like the uncertainty of monthly payments or prefer to have them predictable?
- How would you describe your credit rating?