American homeowners are sitting on roughly $34.5 trillion in home equity as of mid-2026 — near record territory, and about $302,000 per homeowner on average. What has changed this year is the cost of reaching it: HELOC rates dropped 78 basis points in January to a three-year low, and average around 7.25% at mid-year.

Why the HELOC is 2026's default equity tool

The math that made cash-out refinancing popular in 2020 is inverted. Most homeowners hold first mortgages far below today's ~6.5% market rate; a cash-out refinance would reprice the entire balance upward to extract the equity. A HELOC leaves the cheap first mortgage untouched and prices only the new borrowing — and you pay interest only on what you actually draw.

At ~7.25%, a HELOC also undercuts the alternatives for big expenses: average personal loans run around 13–14%, and interest-accruing credit cards above 22%. For renovations, the interest may also be tax-deductible when the funds substantially improve the home securing the line — confirm specifics with a tax professional.

The honest risk list

  • Your house is the collateral. A HELOC converts unsecured problems into secured ones. Consolidating card debt into a HELOC only makes sense with the spending fixed first.
  • The rate floats. Most HELOCs track the prime rate. The Fed is on hold and its next move is genuinely uncertain — 2026 projections have flagged a hike as possible. Budget the payment at a rate a point or two higher than today's.
  • Draw-period complacency. Interest-only minimums during the draw years feel painless; the repayment-period jump surprises people a decade later. Pay principal from day one.

Sizing it

Lenders typically cap combined loan-to-value around 80–85%, so usable equity is meaningfully less than the headline number. The home equity calculator gives you the real figure in a minute. From there, compare HELOC offers against a fixed home equity loan — better for a one-time known expense — and, for homeowners 62 and older weighing retirement cash flow, against a reverse mortgage. Current rates across all of these live on the Rate Index.