Home equity loan borrowing costs have been consistently dropping over the past year.
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Borrowing $40,000 worth of home equity has often been achievable for a wide range of homeowners. And it's become more so in recent years after home equity levels in the country hit a record high and the amount of borrowable equity surged past $10 trillion, on average. With most lenders requiring owners to keep a 20% equity threshold in the home as a buffer, $40,000 is still relatively accessible considering the surge in equity amounts across the country. While the amount of equity to borrow from has risen, the costs of doing so have declined as well, making now an opportune time to leverage the equity under your roof.
And that's especially true for those considering borrowing their $40,000 with a home equity loan. This product employs a fixed interest rate that won't change unless the homeowner elects to refinance. Because of that, it's simple to budget with precision, which is important when leveraging your home because you could theoretically have it foreclosed on if you're ultimately unable to make repayments as agreed to. But that may be less of an issue now, as home equity loan costs have been consistently declining, as can be seen clearly with a $40,000 loan. So, how much more affordable is a $40,000 home equity loan now compared to 2025? That's what we'll outline below.
Start by seeing how much home equity you could borrow here.
Here's how much more affordable a $40,000 home equity loan is now compared to 2025
A home equity loan will provide borrowers with a lump sum of money up front. Monthly payments will begin afterward, typically spread out over two common repayment periods. Using today's average rate, here's what that looks like when borrowing $40,000, assuming no refinancing activity:
- 10-year home equity loan at 6.96%: $463.61 per month
- 15-year home equity loan at 6.96%: $358.64 per month
Here's how much more expensive it was in December 2025, following a Federal Reserve interest rate cut in the month:
- 10-year home equity loan at 8.18%: $489.12 per month
- 15-year home equity loan at 8.13%: $385.27 per month
And here's what it looked like in September 2025, following the Fed's first rate reduction of the year:
- 10-year home equity loan at 8.43%: $494.45 per month
- 15-year home equity loan at 8.31%: $389.45 per month
Finally, here's what it cost in February 2025, when rates were even higher than the previous three times outlined above:
- 10-year home equity loan at 8.57%: $497.44 per month
- 15-year home equity loan at 8.52%: $394.36 per month
Compared to February 2025, then, a $40,000 home equity loan is around $34 cheaper monthly for a 10-year loan and about $36 cheaper for a 15-year alternative. That's not an insignificant amount of money, as it equates to hundreds of dollars per year and thousands of dollars saved over the life of the loan.
It's also important to compare the interest rates home equity loans come with now against what can be obtained with personal loans (over 10%) and credit cards (over 20%). In this context, then, a home equity loan isn't just one of the cheapest ways to borrow equity; it's also one of the least expensive ways to borrow money overall.
Get started with a home equity loan online here.
The bottom line
Home equity levels are high, and home equity loan costs are declining, making now one of the better times in recent history to borrow $40,000 worth of equity. Payments on a loan of this size are down by more than $30 monthly, regardless of the repayment period in question. Just go into the process focused and strategic, and only borrow as much money as you need, not as much as you qualify for. By doing so, you'll boost your chances of borrowing success both now and in the months and years that follow.
Edited by Angelica Leicht
