Here’s what a $40,000 HELOC costs per month in 2025
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If you need to borrow a five-figure sum of money right now, there are few cost-effective ways to do so. Thanks to the lingering impacts of inflation and a higher federal funds rate, the average personal loan rate is closing in on 13%. And interest rates on credit cards are still hovering around 23%, a record high for rates on that product. But homeowners can secure rates multiple points lower simply by borrowing their home equity with a home equity line of credit (HELOC).
HELOC interest rates hit an 18-month low in January and followed that by dropping to a two-year low in February. Now, at just 8.12%, HELOCs are almost three times cheaper than credit cards. And thanks to a variable rate, these products could become even less expensive if interest rate cuts resume later in 2025, as many experts expect.Ā
This all makes borrowing with a HELOC advantageous now, particularly for those homeowners looking to withdraw $40,000 worth of equity. With the average equity amount at about $313,000 right now, that $40,000 line of credit will give homeowners access to a large amount of money while also maintaining a healthy portion of their equity to use in the future. Before getting started, however, prospective borrowers should first calculate the potential monthly payments. Considering that the home functions as collateral in these borrowing exchanges, it’s critical to get the numbers right first. Below, we’ll do the math.
See how much home equity you could borrow with a HELOC here.
Here’s what a $40,000 HELOC costs per month in 2025
Not sure if a $40,000 HELOC would be affordable right now? Here’s what it could cost per month if applied for at today’s rate, tied to two common repayment periods (on the assumption that rates remain constant):
- 10-year HELOC at 8.12%: $487.85 per month
- 15-year HELOC at 8.12%: $385.04 per month
Since HELOC rates change monthly, however, it would be a mistake to assume that these will always be the monthly payments. Here, then, is how they could change if today’s rate drops by 50 basis points:
- 10-year HELOC at 7.62%: $477.32 per month
- 15-year HELOC at 7.62%: $373.54 per month
And here’s what they would be if they increase by the same amount from today’s average:
- 10-year HELOC at 8.62%: $498.51 per month
- 15-year HELOC at 8.62%: $396.71 per month
Still, it’s important to remember that these figures are based on specific rates. HELOC rates can adjust by smaller or larger degrees based on the economy and market conditions (they were above 10% at the start of 2024), so it’s important to calculate your potential payments based on a variety of rates and, if you’re unsure, it may also be helpful to investigate fixed-rate home equity loans, too.
Compare your HELOC and home equity loan options here today.
The bottom line
A $40,000 HELOC comes with affordable monthly payments now that could become even cheaper later in 2025 if rates decline. But rates here could also rise just as easily, making this a potentially risky borrowing option for some homeowners. It’s also important to remember that the above averages are for those homeowners with good credit scores. If your credit needs to be improved then you’ll want to work on that before applying and getting offered a higher rate. Just be sure to calculate all realistic payment scenarios in advance to precisely determine the affordability and benefits of borrowing with a HELOC right now.
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