How much does a $250,000 home equity loan cost monthly in 2025?
Borrowing money comes with major concerns in today's economic environment, thanks to a frozen federal funds rate that has kept costs high on everything from mortgages to personal loans and more. One borrowing option that has remained relatively affordable, however, is reserved for homeowners via home equity loans and home equity lines of credit (HELOCs). And in the current climate in which home prices are high, there's an average of $313,000 worth of equity to utilize. That said, you won't necessarily be able to borrow all of that money.
Most home equity lenders limit borrowers to 80% of their equity when applying for a home equity loan or HELOC. In the average scenario, that equates to just over $250,000. Still, your home is generally your most important financial asset, so borrowing from it should always be approached judiciously, and even more so if you're contemplating borrowing a quarter of a million dollars. To better prepare for this decision, then, it helps to calculate the potential monthly repayment costs tied to the home equity loan rates readily available for qualified borrowers in early 2025. Below, we'll do the math.
Start by seeing how low of a home equity loan rate you could qualify for here.
How much does a $250,000 home equity loan cost monthly in 2025?
To determine the monthly costs of a home equity loan, potential borrowers will need three figures: the amount being withdrawn (in this case, $250,000), the interest rate available (assuming the lowest rates for qualified borrowers), and the repayment period (typically 10- or 15-years). Here, then, is what a $250,000 home equity loan would cost monthly if secured now, in March 2025:
- 10-year home equity loan at 8.50%: $3,099.64 per month
- 15-year home equity loan at 8.44%: $2,453.06 per month
While those rates are the averages for those specific repayment periods, the overall home equity loan median rate is a bit lower at 8.37% now. Here's what payments spread over that same period would then look like:
- 10-year home equity loan at 8.37%: $3,082.29 per month
- 15-year home equity loan at 8.37%: $2,442.84 per month
It's also important to remember that, unlike HELOCs that have a draw period before repayments are required, home equity loans function differently. Since the funds will be provided up-front via one lump sum, borrowers will be expected to make the above payments right away. So it's important to determine affordability before applying, as you'll be expected to start paying back your lender immediately. And, if you fail to do so, you could risk losing your home to the lender in the process.
Review your current home equity loan options carefully here.
The bottom line
Whether you're borrowing $25,000 worth of home equity via a loan or ten times that amount, it's always important to first calculate your potential repayment costs. This is especially important to do now, with interest rates unpredictable and the impacts of years-long inflation still making it difficult to cover many daily expenses. By doing the math, and understanding what you can and can't afford, you'll determine if a home equity loan is truly beneficial for you now or if you should instead consider alternative borrowing sources.
