Before you tap into your home equity with a $200,000 loan, make sure you understand the monthly payment obligations.
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American homeowners are sitting on record amounts of home equity right now, with the average property owner holding more than $300,000 in equity that they could potentially borrow against for any range of reasons. That substantial cushion has made home equity borrowing, and home equity loans, in particular, a popular way to fund everything from major renovations to debt consolidation. And, this type of borrowing has only become more enticing after the Federal Reserve's October interest rate cut, which pushed borrowing costs down even further from their recent peaks.
If you're considering tapping into your home's equity for a significant sum — let's say $200,000 — today's improved rate environment might seem like the perfect opportunity to do so. But a home equity loan of that size comes with substantial monthly obligations, and since your home serves as collateral, it's critical to know exactly what you're signing up for before moving forward. After all, making sure this type of borrowing fits comfortably within your budget is a crucial borrowing step you shouldn't skip in any situation.
So, if you're planning to take out a $200,000 home equity loan soon, what do the monthly payments look like at today's rates? That's what we'll examine below.
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What are the monthly payments on a $200,000 home equity loan after the October Fed rate cut?
One of the biggest advantages of a home equity loan is predictability. Unlike home equity lines of credit (HELOCs), which have rates that fluctuate with market conditions, a home equity loan locks in your interest rate for the life of the loan. You'll know your exact monthly payment from day one, making budgeting straightforward.
Rates have also dropped slightly in recent weeks, making home equity loans more affordable for borrowers. Right now, the average 10-year home equity loan rate is 8.20% while the average 15-year loan term comes with a rate of 8.15%. Here's what you can expect to pay monthly if you secure a $200,000 home equity loan at those average rates:
- 10-year home equity loan at 8.20%: $2,447.74 per month
- 15-year home equity loan at 8.15%: $1,928.66 per month
To put these numbers in perspective, it's helpful to look at what the same loan would have cost around a month ago. After the September Fed rate cut, average home equity rates were slightly higher at an average of 8.34% for 10-year terms and 8.21% for 15-year loan terms:
- 10-year home equity loan at 8.34%: $2,462.63 per month
- 15-year home equity loan at 8.21%: $1,935.63 per month
And back in March 2025, before the latest round of Fed rate cuts began, home equity loan rates were averaging 8.57% for 10-year loan terms and 8.52% for 15-year loan terms. Here's what the monthly costs would have looked like at that point:
- 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
The savings outlined above might not seem dramatic — we're talking about differences of around $35 per month between now and March. But over the full term of your loan, those small differences can add up. On a 15-year loan, you'd save thousands over the loan's term by locking in today's rates compared to what you would have gotten earlier this year. That's real money that could go toward other financial goals.
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What would a $200,000 HELOC cost monthly at today's rates?
HELOCs also tap into your home equity, but these lines of credit offer a different borrowing structure. Rather than receiving a lump sum, a HELOC functions more like a credit card secured by your home, giving you access to a line of credit you can draw from during the draw period, which typically lasts 10 years.
At today's average HELOC rate of 7.82%, if you drew the full $200,000 from the line of credit, you'd pay approximately $2,407.57 per month for interest and principal during the repayment period. That's less than the home equity loan payments for the same 10-year term, but there's a catch.
HELOCs come with variable interest rates that change with market conditions. That means if rates rise during your draw period, your monthly interest charges will increase accordingly. That unpredictability makes long-term budgeting difficult. You might start with that $2,407 payment, but it could end up substantially higher if the Fed reverses course and begins raising rates again.
The bottom line
A $200,000 home equity loan represents a significant financial commitment, with monthly payments ranging from roughly $1,929 to $2,448 depending on your term length and the current rate environment. Thanks to the Fed's recent rate cuts, home equity loan costs have declined modestly from where they stood earlier this year, making this a relatively favorable time to borrow if you need access to substantial home equity.
Before moving forward, make sure these payments fit comfortably within your budget not just now, but for the entire 10 or 15 years you'll be making them. Remember that your home serves as collateral, so falling behind on payments could ultimately put your property at risk. If these payment amounts feel too steep, consider whether you truly need the full $200,000 or if a smaller loan amount might serve your purposes while keeping your monthly obligations more manageable.
Edited by Matt Richardson
