Here's how much a $25,000 HELOC costs monthly now that the Fed's cutting rates again

Homeowners should carefully calculate their potential monthly costs before borrowing equity with a HELOC. Kseniya Ovchinnikova/Getty Images

If you have a good credit score and a reliable employment history, securing a credit card with a borrowing limit of $25,000 may be relatively easy to do. But, right now, it's not particularly affordable.

With the average credit card interest rate hovering around 22% now, just under a record high reached last year, it's more expensive than ever to borrow with a card. And with rate relief unlikely to be issued in a material amount anytime soon, it's likely to continue to remain so for the foreseeable future.

Fortunately, if you're a homeowner now, you likely have access to an amount of funding that's many times higher than this $25,000. With a home equity line of credit (HELOC), in particular, you can borrow equity with a product that has an interest rate more than three times cheaper than a credit card. And with the Federal Reserve recently issuing an interest rate cut and with others likely for later in October, it's set to become even less expensive thanks to its variable interest rate that responds monthly to market conditions.

Still, borrowing from your home equity should always be done judiciously, and payments here will need to be affordable to avoid foreclosure risk. But what will a $25,000 HELOC cost monthly now that the Fed's cutting rates again? Below, we'll do the math.

Start by seeing how much home equity you'd be eligible to borrow here.

Here's how much a $25,000 HELOC costs monthly now that the Fed's cutting rates again

It can be hard to calculate the exact repayment costs of a HELOC since the rate here can and will change monthly based on market conditions. Calculate your costs, then, against a variety of different rate scenarios to better determine long-term affordability. For reference, here's how much a $25,000 HELOC costs now, tied to today's rates and traditional repayment periods (assuming the rate remains constant over time):

• 10-year HELOC at 7.89%: $301.87 per month
• 15-year HELOC at 7.89%: $237.33 per month

And here's what it would have cost in February, when rates were a bit higher:

• 10-year HELOC at 8.28%: $307.03 per month
• 15-year HELOC at 8.28%: $242.97 per month

Going back a full year, here's what a $25,000 HELOC would have cost monthly in October 2024:

• 10-year HELOC at 8.73%: $313.05 per month
• 15-year HELOC at 8.73%: $249.57 per month

So a $25,000 HELOC is both cheaper than it was in February and less expensive than it was around this point last year, too. Before formally applying, however, take the time to calculate costs against all of the above rates and a few others (both higher and lower) to better determine long-term costs and affordability.

Compare your current HELOC rate offers here.

Take advantage of interest-only payments

Today's HELOC rates are on a downward trend, but that doesn't mean that you should wait to take advantage of the repayment structure the line of credit utilizes. 

You can make repayments here in two primary ways: by immediately repaying the full line of credit you've used each month (the figures shown above) or by electing to make interest-only payments during the initial draw period (typically up to 10 years). If you choose the latter, your payments will be even lower than the ones calculated above, and hopefully, when it comes time to make the full repayments in the future, the interest rate climate will be even cooler than it is now. 

There is no uniform approach to repaying your HELOC, however, so analyze both to determine which makes the most sense for your budget both now and in the future.

The bottom line 

A $25,000 HELOC comes with monthly payments ranging between $237 and $302 now, making it one of the cheaper times to borrow this much equity in recent history. But rates can and will fluctuate over time, so it's critical to budget for variability before submitting an application. That said, with rates here already low and with other rate cuts looming, this could still be one of the better ways to borrow a large, five-figure sum of money now.