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A report released earlier this month showing home equity levels rising by 6% year-over-year may not have come as a surprise, but it was still welcome news for homeowners. Now at around $313,000, many homeowners may find their accumulated equity high enough to warrant borrowing from it via a home equity loan or home equity line of credit (HELOC). Interest rates on both borrowing products are materially lower than they were a year ago and, with a home equity loan in particular, that rate will be fixed, meaning that borrowers can budget their future repayments with certainty. That’s a major advantage in today’s hard-to-predict interest rate climate.
Still, borrowing from your home equity should always be approached strategically. If you can’t make your repayments you could lose your home to the lender. And this approach should be made even more cautiously when withdrawing a large sum of money, like $200,000 or more. To ensure borrowing success, then, homeowners should calculate their repayment costs before applying. Fortunately, this is simple to do thanks to the fixed rate that home equity loans come with.
So, how much does a $200,000 home equity loan cost per month now, in the interest rate environment of early 2025? That’s what we’ll break down below.
See how much home equity you’d be eligible to withdraw here.
How much does a $200,000 home equity loan cost per month in 2025?
Home equity loan monthly payments are determined by three primary factors: the interest rate, the loan amount and the repayment period. Here, then, is what a $200,000 home equity loan would cost per month if opened in March 2025, tied to the average rates for each repayment period (assuming that the borrower has good credit):
- 10-year home equity loan at 8.52%: $2,481.85 per month
- 15-year home equity loan at 8.45%: $1,963.62 per month
While many homeowners may prefer the security of a fixed rate, particularly when borrowing such a large amount of equity, HELOC rates have been lower than home equity loans this year. So it can be helpful to calculate costs tied to that variable rate, too, for context:
- 10-year HELOC at 8.04%: $2,430.78 per month
- 15-year HELOC at 8.04%: $1,915.93 per month
So while the difference between both home equity products is around $50 per month, HELOCs could soon become cheaper, while home equity loan payments will remain the same. At the same time, it’s important to remember that HELOC rates can rise as easily as they can fall so that volatility should be accounted for before borrowing there.
Compare your home equity loan and HELOC options here to learn more.
$200,000 home equity loan risks to know
Borrowing $200,000 worth of home equity via a loan comes with serious ramifications if you can’t make your repayments. As mentioned, you could easily lose your home to the lender if you fail to pay back all that’s been borrowed. And with such a large amount of equity withdrawn, this could be a realistic scenario compared to borrowing a smaller sum.
But withdrawing this amount, even if you can pay it back, will make a significant dent in your existing home equity, too. This should be considered carefully, particularly for homeowners who intend to leave their homes to beneficiaries in the event of their death. There may be little to no money left once the home equity loan obligations are met in full.
However, a home equity loan is one of the cheapest ways to borrow money right now, with rates multiple points lower than personal loans and around three times cheaper than credit cards. So if you need to borrow a six-figure sum of money and don’t want to deal with exorbitant interest rates to secure it, this could still be one of your better borrowing options.
The bottom line
Right now, a $200,000 home equity loan comes with monthly payments between $1,964 and $2,482, approximately, for qualified borrowers. So, if you need to borrow that much money this may be the most cost-effective way to do so. Just be cognizant of the risks involved, particularly when borrowing a six-figure sum of money from your most prized financial asset. By crunching the numbers closely and making plans to comfortably make repayments, homeowners can better ensure long-term borrowing success.
