Here's how much a $25,000 home equity loan costs monthly post-Fed rate cut

Borrowing from your home equity could be smart now that the Federal Reserve is cutting interest rates again. Getty Images/iStockphoto

While $25,000 can help pay for a variety of items – from home repairs and projects to high-rate credit card debt to college education – accessing it isn't always easy. Or cheap.

Right now, the average credit card interest rate is just under a record high of 23%. And that's assuming you could even qualify for a credit line that high. Personal loan interest rates, meanwhile, are just under 13%, meaning you'll pay around $13 for every $100 borrowed.

But home equity loan interest rates, however, are low and declining again. With the average home equity amount comfortably over $300,000 right now – and the total home equity levels recently hitting a record high – this is likely the most affordable and accessible way to borrow $25,000 right now. 

Following an interest rate cut from the Federal Reserve this week, and additional cuts possible for when the central bank meets again in October and December, it's positioned to become even cheaper. With your home functioning as collateral, however, it's important to determine costs here before proceeding. So, how much will a $25,000 home equity loan cost monthly now, post-Fed rate cut? That's what we'll break down below.

Start by seeing how much equity you may be eligible to borrow here.

Here's how much a $25,000 home equity loan costs monthly post-Fed rate cut

Calculating the monthly costs of a home equity loan is simple to do thanks to the product's fixed interest rate. Unlike a home equity line of credit (HELOC), which will see rates change monthly for borrowers, a home equity loan's rate and monthly payments will remain the same unless refinanced. Here, then, is what a $25,000 home equity loan will cost monthly now, post-Fed rate cut, calculated against two common repayment periods:

• 10-year home equity loan at 8.43%: $309.03 per month
• 15-year home equity loan at 8.31%: $243.41 per month

For reference, here are the costs associated with a $25,000 home equity loan last October, after the Fed issued a 50-basis point cut in September:

• 10-year fixed home equity loan at 8.50%: $309.96 per month
• 15-year fixed home equity loan at 8.41%: $244.87 per month

And here's what the same loan amount cost in February 2025, after rates had risen again:

• 10-year home equity loan at 8.57%: $310.90 per month
• 15-year home equity loan at 8.52%: $246.48 per month

So costs here are lower, but currently only by a negligible amount. Still, with alternative accounts so much more expensive and HELOCs with variable rates that will be stressful to manage long-term, this can still be one of the better ways to borrow $25,000 right now. Additionally, if you use the funds for eligible home projects, you may qualify to deduct the interest paid from your taxes for the years in which it was used, making concerns over today's interest rates less of an issue.

Learn more about your current home equity loan options here.

What about cash-out refinancing?

With the interest rate climate cooling, a cash-out refinance can be tempting now. This occurs when you take out a mortgage loan larger than your balance and proceed to pay off the old loan with the new one, keeping the difference between the two as cash for yourself. The issue here now, however, is that this will require swapping your current mortgage rate for a new one. And though mortgage rates have declined recently, they haven't likely dropped low enough to make the switch cost-effective. Instead, consider alternative ways to borrow home equity without refinancing, which a home equity loan is just one of.

The bottom line

A $25,000 home equity loan is less expensive than it was this past February and even slightly more affordable than it was in fall 2024. And with rate cuts in play for the remaining months of 2025 and, potentially, 2026, it's positioned to become even cheaper, making it one of the better ways to borrow a five-figure sum of money right now. Consider contacting a lender, then, to learn more about your potential costs and options to better determine if this unique product fits your needs right now.