HELOC vs home equity loan vs renovation loan
Three different products, three different shapes. Pick the one that matches how your project actually spends — not just the headline rate.
Key takeaway
HELOC for unknown scope. Home equity loan for fixed-bid jobs. Renovation loan when you don't have the equity or you're financing the purchase and the work in one shot.
| Product | Typical rate | Rate type | Requirements | How funds release | Tax treatment | Best for |
|---|---|---|---|---|---|---|
| HELOC | 7–9% variable APR typical in 2025 | Variable | 15–20% equity remaining after the line, 620+ FICO typical | Revolving line, draw as needed | Interest may be tax-deductible when used on the home | Phased projects, unknown final cost, contractor draws |
| Home Equity | 8–10% fixed APR typical in 2025 | Fixed | 15–20% equity remaining, 620+ FICO typical | Lump sum at close | Interest may be tax-deductible when used on the home | One-shot remodel with a fixed bid |
| Renovation Loans | 7–9% APR plus 1–2% in fees typical | Fixed | Based on after-improved value; minimum 3.5% down on FHA 203k | Disbursed against draws / inspections | Generally not deductible | Buying a home that needs work, or scope above available equity |
Rate ranges reflect typical 2025 pricing for well-qualified borrowers. Tax treatment depends on use of funds and IRS rules — confirm with a tax professional.
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