If you’re a homeowner in California, you might consider tapping into your equity with a home equity line of credit (HELOC). A HELOC offers a revolving line of credit that you can draw on as needed, making it a useful financing option for variable or unpredictable expenses.
HELOC rates may be fixed or variable, and you only pay interest on the amount you borrow. You can use HELOC funds for almost any expense, with common ones including home improvements, debt consolidation, and college tuition.
California homeowners have a variety of options for HELOCs, including national banks, community banks, and credit unions for California residents. If you’re interested in taking out a HELOC in California, read on for a closer look at your options.
About HELOC rates in California
California has some of the highest home values in the country, and homeowners can tap into this valuable equity if they need to borrow money. The rate you get on a HELOC in California will be based on several factors, including the following:
- Your financial profile: Borrowers with strong credit, steady income, and a low debt-to-income (DTI) ratio tend to qualify for the best rates. A good credit credit score starts at 670 on the FICO scoring model, while a score of 800 or above is considered exceptional.
- Variable vs. fixed rates: Variable rates may start lower than fixed ones, but they could increase over time depending on market conditions. Some lenders also offer introductory rates that start low but increase when the promotional period is over.
- Interest rate discounts: Some lenders offer rate cuts or other incentives, particularly to existing customers.
Before taking out a HELOC, make sure you understand the risks involved. Since a HELOC is secured by your home (it’s a type of second mortgage), a lender can foreclose on your home if you don’t pay back your HELOC.
In California, lenders are required to make this disclosure clearly within three business days of a customer applying for a HELOC, as per the Home Equity Loan Disclosure Act in the California Civil Code.
The best HELOC rates in California
We’ve ranked and reviewed lenders with the best HELOC rates in California. Here’s a summary of our top picks:
| APR | |
| Figure | 8.95% – 16.90% (fixed) |
| Spring EQ | Not disclosed |
| Bethpage FCU | 6.99% introductory APR for 12 months if your credit score is 720 or higher; variable rate starting at 8.50% after that with the option to switch to a fixed-rate loan |
| California Bank & Trust | 9.40% – 11.68% (variable) |
Figure: Best HELOC overall
LendEDU rating: 4.9 out of 5
- Fixed-rate HELOCs available for up to $400,000
- Easy online application process
- Option to prequalify with a soft credit inquiry
Figure is a fintech company that offers a streamlined online application process for HELOCs up to $400,000. While many HELOCs have variable rates, Figure assigns fixed rates to its HELOCs, which can range from 8.95% to 16.90% APR.
You won’t encounter too many fees on a Figure HELOC, though you may have to pay a one-time origination fee on your initial draw. You can draw on your HELOC for five years and choose repayment terms from five years all the way up to 30 years.
Figure’s HELOCs in California are licensed by the Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act and Finance Lenders Law
- APR: 8.95% – 16.90% (fixed)
- Loan amount: $15,000 – $400,000
- Minimum credit score: 680
- Repayment terms: Draw period of five years, repayment terms of five, 10, 15, or 30 years
- Fees: One-time origination fee of 0% to 4.99% of the initial draw; no application, maintenance, or late fees; no prepayment penalties
Spring EQ: Best multi-product application
LendEDU rating: 4.3 out of 5
- Both HELOCs and home equity loans available
- Allows a loan-to-value (LTV) ratio of up to 95%
- Can fund a HELOC as fast as 14 days
Spring EQ offers HELOCs between $25,000 and $500,000, as well as home equity loans for borrowers who prefer to borrow a lump sum amount upfront. When you apply with Spring EQ, you can see offers for both HELOCs and home equity loans so you can compare the two.
Spring EQ doesn’t disclose its APR range upfront, so you’ll need to submit an application to check your rates. This lender may also charge a variety of fees that could add to your costs of borrowing, including an administration fee and annual maintenance fees.
- APR: Not disclosed
- Loan amount: $25,000 – $500,000
- Minimum credit score: 680
- Repayment terms: Draw period of 10 years, repayment term of 20 years
- Fees: Loan administration fee, annual maintenance fee, credit report fee, and others
Bethpage FCU: Best credit union
LendEDU rating: 4.2 out of 5
- Offers HELOCs up to $1 million
- Competitive introductory APR for VantageScores 720 and up
- Does not charge application, origination, or appraisal fee
Bethpage Federal Credit Union offers HELOCs starting at $10,000 and going all the way up to $1 million. If you have a VantageScore of 720 or higher and open a HELOC for $25,000 or more, you could qualify for an introductory APR of 6.99%.
Bethpage FCU also offers an interest rate discount if you schedule payments from a Bethpage checking or savings account. Anyone who’s a U.S. citizen or permanent resident can join this credit union by opening a Bethpage savings account and depositing $5.
- APR: Introductory APR of 6.99% for 12 months if your credit score is 720 or higher; variable rate starting at 8.50% after that (with the option to switch to a fixed-rate loan)
- Loan amount: $10,000 – $1 million
- Minimum credit score: 670
- Repayment terms: 10-year draw period, 20-year repayment period
- Fees: No application, origination, or appraisal fees; may charge fee of $500 to $15,000 for early closure before 36 months; third-party fees may apply
California Bank & Trust: Best for large loan amounts
Not rated by LendEDU
- Offers HELOCs up to $2,500,000
- Repayment period of 20 years
- Charges a fee for closing HELOC early
California Bank & Trust has been providing financial services to California residents and businesses for the past 70 years. This Golden State bank offers HELOCs as large as $2,500,000, subject to credit approval.
The bank allows a maximum LTV of 80% and requires interest-only payments during the 10-year draw period. Alternatively, you can choose to pay principal and interest during your draw period. You can apply for a California Bank & Trust HELOC online and will need to provide information on your employment, property, and mortgage.
- APR: 9.40% – 11.68% (variable)
- Loan amount: $10,000 – $2,500,000
- Minimum credit score: Not disclosed
- Repayment terms: Draw period of 10 years, repayment period of 20 years
- Fees: Early closure fees from $500 – $1,000
When comparing HELOC rates among different lenders in California, consider three things: 1) If and how much do I need to borrow and for how long? 2) Are rates rising? If so, go with fixed rates. Are they falling? Go with variable. 3) Limit fees—particularly if the HELOC is to be used as emergency reserve. – Michael Menninger, CFP
How your HELOC rate affects your overall loan cost
It’s worth comparing HELOC options from multiple lenders, since the rate you get can have a major impact on your overall loan cost. Let’s say, for example, that you have a balance of $25,000 when your 20-year repayment period begins.
With a fixed interest rate of 8%, you’d have to make monthly payments of $209 and pay $25,186 in interest overall. If your interest rate was higher at 12%, you’d pay $275 each month and have total interest charges of $41,065.
Estimating your long-term costs on a HELOC can be tricky if your rate is variable, since you can’t predict how it will change over the long-term. You may also reduce costs if you make principal and interest payments during your draw period, rather than paying interest charges alone.
How to get the lowest HELOC rates in California
Here are some tips for accessing the lowest HELOC rates in California:
- Work on your credit. Borrowers with the best credit scores tend to get the lowest HELOC rates. You can try to improve your score by making on-time payments on your loans, paying down debts, and decreasing your credit utilization. It’s also worth reviewing a free copy of your credit report from AnnualCreditReport.com. If you spot any reporting mistakes, try disputing them to have them removed.
- Reduce your DTI. Your DTI compares your monthly debt payments with your gross income. Try to pay off debts to reduce your DTI, as lenders prefer a ratio under 36%.
- Compare variable and fixed rates. You may get to choose between a variable and fixed rate, as well as the option to lock in a fixed rate after borrowing the HELOC. Consider which type of rate would net you the more affordable loan.
- Don’t max out your LTV. LTV compares the size of your loan with the value of your house. While some lenders allow an LTV up to 95%, they may charge higher interest rates on high-LTV loans. Borrowing less may get you a better rate.
It’s also a good idea to shop around with multiple lenders, including your current bank or credit union, to find the best rate. Some HELOC lenders let you prequalify online, allowing you to check your offers without harming your credit score.
If you can’t prequalify, try to keep your applications within a few weeks to a month to avoid damaging your credit score with too many hard inquiries.
How to apply for a HELOC in California
While the specific application process will vary by lender, here are the general steps you’ll need to take to apply for a HELOC in California:
- Calculate your home equity. Equity is the difference between the value of your home and the debt you owe on it. Knowing how much equity you have can help you estimate your HELOC eligibility.
- Check your credit. Since credit plays a large role in the HELOC approval process, it’s worth checking your score and reviewing your credit report before you start applying.
- Prequalify, if possible. As mentioned, some lenders let you check your HELOC rates online with no impact on your credit score. You can provide a few basic pieces of information to view your offers.
- Choose a HELOC and apply. Submit a formal application with your personal and financial information, as well as any required documents. These might include pay stubs, tax returns, bank statements, property tax bills, mortgage statements, and a copy of your homeowners insurance policy. After you apply, the lender will likely run a hard credit check, which could ding your score by a few points.
Some lenders may also require you to get a drive-by or in-person appraisal of your home, though some can complete a simple desktop appraisal online.
FAQ
What is the lowest HELOC rate in California?
The lowest HELOC rates in California currently fall around 9% APR, but you may get lower or higher rates depending on your credit, income, and DTI. Some lenders also offer lower introductory rates for a certain period of time to qualifying borrowers.
What HELOC has the highest rates in California?
HELOC rates in California may go up to around 17% APR or higher, depending on the lender, your credit profile, and other factors.
What is the current average HELOC rate in California?
While there are no official data available on the current average HELOC rate in California, we calculated an average rate range of 7.80% to 15.56% APR based on the rates disclosed by 10 HELOC lenders.
Will my California HELOC have insurance requirements?
Your California HELOC will likely require that you have a homeowners insurance policy already in place. Flood insurance may also be required, depending on where you live.
Do any lenders not offer HELOCs in California, and why not?
A lender may not offer a HELOC in California if it doesn’t have a license to lend in that state. Hitch, for example, provides HELOCs in Colorado, Florida, Oregon, Utah, and the District of Columbia, but it doesn’t currently lend in California.
