HELOC vs. Home Equity Loan: What's the Difference?
Both products let you borrow against your home equity. The key difference is structure: a HELOC is a revolving line of credit; a home equity loan is a lump-sum installment loan.
Side-by-Side Comparison
| Feature | HELOC | Home Equity Loan |
|---|---|---|
| Structure | Revolving line — borrow, repay, borrow again | Lump sum — one disbursement at closing |
| Rate | Usually variable (some fixed digital options) | Usually fixed |
| Payment | Varies with balance drawn; may be interest-only during draw | Fixed principal + interest from day one |
| Flexibility | Draw what you need, when you need it (within draw period) | Receive full amount at closing regardless of need |
| Best for | Ongoing projects, phased spending, emergency access | One-time large expense with known amount |
When a HELOC May Make More Sense
A HELOC is generally better when you don't know exactly how much you'll need, when you'll need it in phases, or when you want ongoing access to equity without taking a large lump sum. The revolving structure means you only pay interest on what you've actually drawn.
When a Home Equity Loan May Make More Sense
A home equity loan is generally better when you have a specific, known expense — a renovation with a fixed budget, a debt payoff, a one-time purchase. The fixed rate and fixed payment provide certainty.
HELOC guidelines change frequently. This content is educational and is not a loan approval, commitment or guarantee.