Mortgage

Home Equity Loan A lump-sum second mortgage you repay in fixed monthly payments at a fixed rate

Priya Shah By Priya Shah, Senior Mortgage Editor · Updated 2026-06-09
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A home equity loan is a lump-sum second mortgage borrowed against the equity in your home and repaid in fixed installments at a fixed interest rate. You receive the full amount upfront and pay it back on a set schedule, which makes your monthly payment predictable. This differs from a HELOC, which is a revolving line of credit you draw from as needed. Because it's secured by your home, the lender can foreclose if you default, so it carries real risk. Borrowers often use the cash for large, one-time expenses like renovations or debt consolidation, where the fixed rate and fixed payment offer stability. The exact rate, term, and amount you qualify for vary by lender, credit profile, and how much equity you hold.
Also Known As
Second mortgage HEL Equity loan Fixed-rate home equity loan
Used in Context
  1. She took out a home equity loan to cover a $30,000 kitchen remodel, locking in a fixed rate so her payment never changes.
  2. After comparing offers through Dreamy Leads, he chose a home equity loan over a HELOC because he wanted one lump sum and a predictable schedule.
  3. Their lender approved a home equity loan based on the equity they'd built up after several years of mortgage payments.
Related Terms
Mortgage HELOC (Home Equity Line of Credit) A revolving credit line secured by your home equity that you draw from as needed Mortgage Cash-Out Refinance Replace your mortgage with a bigger one and pocket the difference from your home equity Mortgage LTV (Loan-to-Value) The percentage of a property's value financed by a mortgage — key to rates and PMI Mortgage Amortization The schedule that shows how each loan payment splits between principal and interest over time Mortgage Reverse Mortgage A loan that turns home equity into cash for homeowners 62 and older with no required monthly payment
Frequently Asked Questions

What's the difference between a home equity loan and a HELOC?

A home equity loan gives you a lump sum upfront, repaid in fixed installments at a fixed rate. A HELOC is a revolving line of credit you draw from as needed, typically with a variable rate. Choose a home equity loan when you want predictable payments and a one-time amount.

Can I lose my home with a home equity loan?

Yes. A home equity loan is a second mortgage secured by your home, so if you default the lender can foreclose. Because your house is collateral, only borrow what you can comfortably repay alongside your primary mortgage and other obligations.

Is the interest rate fixed on a home equity loan?

Typically yes. A home equity loan carries a fixed rate and fixed installment payments, so your monthly amount stays the same over the life of the loan. The specific rate you get varies by lender, credit, and equity, but the structure is built around predictability.

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