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Home Equity Options

HELOC, home equity loan, cash-out refi, home equity investment or 401(k) loan: what each costs for your cash.

Step 1 of 4: Your home and mortgage

Current mortgage rate 3%

Enter your mortgage, the cash you need and how many years until you repay it or sell. The calculator prices every way to get that cash on the same footing and shows which costs the least per year, what each does to your monthly payment, and the limits and risks.

  • Free, no sign-up
  • Six options side by side
  • Limits and risks

Your home equity options compared

Close call: the HELOC, home equity loan and 401(k) loan each cost about 8.0% a year for $50,000 over 10 years. At these rates the price is about the same, so the choice comes down to the monthly payment and the risks listed below. All figures are estimates, not offers.

OptionMonthlyCost, 10 yrsPer yearOwed after 10 yrsFits the limit?
HELOC$1,519$40,0008.0%$221,671Yes
Home equity loan$1,792$22,7978.0%$171,671Yes
Cash-out refinance$2,116$157,12124.5%$267,121Yes
Home equity investment$1,186$126,46412.7%$348,135Set by the company
401(k) loan$2,199$10,8298.0%$171,671Yes
Personal loan$2,294$16,52111.9%$171,671Yes

Monthly is your mortgage plus the new payment ($1,186 today); the refinance replaces the mortgage. Owed after 10 years includes what is left on your mortgage, $171,671 with every option but the refinance. The main risk of each option is in the list below.

Why the smallest dollar total is not always the cheapest

The dollar cost depends on how long you keep owing the money. For example, at 8%, $50,000 repaid over 5 years costs $10,829 of interest, while paying interest only for 10 years costs $40,000: same rate, different time. So the calculator ranks options by yearly cost: the rate at which the cash you get equals everything you pay plus what you still owe after 10 years. For a loan with no fees it is simply the loan's rate. For a refinance it includes the higher rate on your old balance, and for a home equity investment, the company's share of your home.

Each option in plain words

  • HELOC. $333 a month of interest at 8% for 10 years, then $418 a month over 20 years. Limit: 85% of $450,000 minus your mortgage, about $132,500. If the rate were 2 points higher, at 10%, for all 10 years, the HELOC would cost $50,000 instead of $40,000. Main risk: the rate can change, and the lender can freeze or cut the line if your home loses a lot of value.
  • Home equity loan. A fixed $607 a month at 8% for 10 years, no closing costs (several large lenders advertise none). Same limit as the HELOC, about $132,500. Main risk: your home is the collateral, and if you need more later you have to apply for a new loan.
  • Cash-out refinance. A new $309,278 loan at 7.28% for 30 years pays off your $250,000 mortgage, hands you $50,000 and adds $9,278 of closing costs (3% of the loan). Over 10 years its interest and closing costs come to $221,056, against $63,934 your current mortgage would cost anyway; the difference, $157,121, is the price of the cash. Limit: Fannie Mae's 80% of the home's value, which leaves about $99,200 of cash. Main risk: the new rate applies to your whole mortgage for 30 years.
  • Home equity investment. To leave you $50,000, the company pays $54,167, minus $4,167 of fees (4% plus $2,000, the CFPB's example). That is 12% of your home's value, so at a 2x multiple the company's stake is 24.1%. If your home gains 5% a year, it is worth $733,003 in year 10 and you settle for $176,464. No monthly payments until then. Main risk: one payment that grows with your home's value, due all at once; you may have to sell to pay it.
  • 401(k) loan. The IRS limit is the lesser of 50% of your $120,000 vested balance or $50,000: $50,000. Repaid over 5 years at 8%, it takes $1,014 a month, and the $10,829 of interest goes back into your account. The cost is the growth the borrowed money misses: at 8% a year, about $10,829, so its yearly cost is the growth rate you enter, whatever the loan rate. Main risk: if you leave your job, the plan may require full repayment; an unpaid balance is taxed and may get a 10% additional tax.
  • Personal loan. $1,109 a month for 5 years at 11.86%, $16,521 of interest. The example rate is the Federal Reserve's average for 24-month personal loans at banks in the second quarter of 2026; lenders price by amount, term and credit. Wells Fargo, for one, lends $3,000 to $100,000. Main risk: repaid in 5 years, so the payment is high; your home is not at stake.

The formulas

  • Monthly payment on a fixed-rate loan = amount × r ÷ (1 − (1 + r)−n), where r is the yearly rate ÷ 12 and n the number of months. HELOC interest-only payment = balance × rate ÷ 12.
  • Cost over 10 years = payments + what is still owed after 10 years − the cash. For the refinance, minus what your current mortgage would cost anyway. For the home equity investment: settlement − cash. For the 401(k) loan: balance × growth rate ÷ 12, month by month.
  • Yearly cost = 12 × the monthly rate i at which the cash = each month's payment ÷ (1 + i)month + what is owed at the end ÷ (1 + i)120.
  • Home equity investment settlement = the lesser of stake × home value × (1 + yearly change)years and payment × (1 + 20%)years, where stake = multiple × payment ÷ home value.

What this does not include

Property taxes and insurance; HELOC rate changes (the rate is held constant); annual fees, points and the higher price lenders may charge for cash-out loans; personal loan origination fees; 401(k) loan fees, the tax on the interest you pay into the plan with after-tax money, and plans that allow up to $10,000 on small balances; the terms of any real home equity investment (companies use different formulas, starting-value discounts and caps, and some have no cap); the cost of selling your home; tax deductions; Texas's 80% limit on home equity debt; and whether you are approved. Replace the example rates with real quotes.

How to use this calculator

  1. Home. Your home's value, what you owe, the rate and the years left.
  2. Cash. The cash you need and the years until you repay it or sell. Your vested 401(k) balance sets the 401(k) loan limit. Home prices (+5% a year, the long-term US average the CFPB cites from FHFA) and the multiple (2x, the CFPB's example) drive the home equity investment.
  3. Rates. Examples to replace with real quotes: HELOC 8%, the prime rate (7% on October 2, 2026) plus 1 point; home equity loan 8% (U.S. Bank's lowest listed 10-year rate: 7.65%); refinance 7.28%, Freddie Mac's 30-year average for the week of October 1, 2026; personal loan 11.86%, the Federal Reserve's bank average. Your plan sets the 401(k) loan rate; 401(k) growth is what the money would have earned in the plan.
  4. Results. The lowest yearly cost, or a close call within a quarter point, and each monthly payment. The breakdown explains every number.

How the options are compared

Cost in dollars = payments + what you still owe at the end − the cash
Yearly cost = the rate at which the cash equals those payments, like an APR over your years
Example ($50,000 for 10 years, 3% mortgage): HELOC $40,000 at 8.0%, 401(k) loan $10,829 at 8.0%, cash-out refinance $157,121 at 24.5%

Options are ranked by yearly cost because dollars favor whatever is repaid fastest: the 401(k) loan costs fewer dollars only because it must be paid off in 5 years. A refinance's cost includes the higher rate on your old balance; a 401(k) loan's is the growth the money misses.

The terms of each option are fixed (see the breakdown). To change them, use the HELOC calculator, the home equity loan calculator or the cash-out refinance vs. HELOC calculator.

The options at a glance

OptionHow you get the moneyPaymentsLimit used hereMain risk
HELOCA credit line you draw as neededCan be interest-only at first85% of value minus what you owe (Bank of America, PenFed)Variable rate; the line can be frozen
Home equity loanOne lump sumEqual paymentsSame as the HELOCNeed more later: apply for a new loan
Cash-out refinanceA bigger mortgage replaces yoursOne mortgage payment80% of value, one-unit main home (Fannie Mae)The new rate applies to everything you owe
Home equity investmentCash for a share of your home's future valueNone, then one lump sum at sale or term endSet by each company; here, the stake must fit within your equityHard-to-predict settlement; you may have to sell
401(k) loanA loan from your retirement planAt least quarterly, repaid within 5 yearsLesser of 50% of vested balance or $50,000 (IRS)Leaving your job can make the balance due
Personal loanA lump sum, not secured by your homeFixed monthly paymentsWells Fargo: up to $100,000A higher rate than home-secured loans

Your home secures the first three, and a home equity investment company takes a lien on it too. If you fall behind on a home-secured loan, you could lose your home.

When a cash-out refinance comes out ahead

A cash-out refinance moves your whole mortgage to the new rate. In the example, $250,000 goes from 3% to 7.28% to raise $50,000, so the cash costs about 24.5% a year. With everything else the same, the refinance costs less per year than the HELOC once your current rate is above about 7.67%; at 8%, the cash costs about 6.6% a year.

HELOC vs. 401(k) loan

At the example rates both cost about 8.0% a year, but the payments differ. The $50,000 HELOC costs $333 a month in interest for 10 years, then $418, at a rate that can change. The 401(k) loan takes $1,014 a month, because the IRS requires repayment within five years. Its real cost is the growth the money misses in your plan.

The HELOC is secured by your home. The 401(k) loan is not, but your plan may require full repayment if you leave your job. If you cannot repay, the balance is taxed as income, and you may owe an additional 10% tax if you are under 59½; rolling it over to an IRA by your tax filing deadline avoids the immediate tax.

Home equity investment vs. HELOC

A home equity investment pays cash now with no monthly payments; in return you owe one lump sum later, based on your home's value. In the CFPB's illustration, a homeowner gets $50,000 on a $500,000 home for a 20% stake, with a 20%-a-year cap. Settling after 3 years costs $86,400; after 10 years of 6% growth, $179,085; with no growth at all, $100,000. A $50,000 HELOC at 9%, interest only, costs $375 a month, $45,000 of interest over 10 years, and you still owe the $50,000. Counting total dollars, the CFPB found the contract would cost less only if the home lost at least 5% of its value over those 10 years. The yearly cost here also credits paying later, so with flat prices over many years a contract can rank lower than a loan.

Where it can help is approval: the CFPB notes HELOCs often have stricter underwriting, and these contracts are marketed as available to homeowners with no income and low credit scores.

Costs and risks to check

  • Up-front costs. Refinancing costs 3% to 6% of the loan, according to Freddie Mac. Home equity investment processing fees are often 3% to 5%, plus third-party fees. Several large lenders advertise no closing costs on home equity loans.
  • A cost that moves. HELOC rates are usually variable. A home equity investment's settlement moves with your home's value up to any cap, and some contracts have no cap.
  • Your plan's rules. Employers do not have to offer 401(k) loans, and some plans need your spouse's written consent for a loan over $5,000.

Questions about tapping home equity

What is the cheapest way to take equity out of your home?

It depends on your mortgage rate and how long you need the money. With our example rates and $50,000 for 10 years, a HELOC and a home equity loan each cost about 8.0% a year, a home equity investment about 12.7% if home prices rise 5% a year, and a cash-out refinance of a 3% mortgage about 24.5%, because the whole balance moves to 7.28%. The refinance only costs less per year than the HELOC once your current rate is above about 7.67%.

Is tapping into your home equity a good idea?

It can cost less than unsecured credit: the Federal Reserve's average rate on 24-month personal loans at banks was 11.86% in the second quarter of 2026, against 8% for our HELOC example. But your home secures the debt: if you fall behind, you could lose it. Interest is tax-deductible only if you use the money to buy, build or substantially improve the home, according to the IRS. Payments differ too: in our example, from $0 extra a month with a home equity investment to $931 with a cash-out refinance.

What is the monthly payment on a $50,000 home equity loan?

At a fixed 8%, about $1,014 a month over 5 years, $607 over 10 years, $478 over 15 years and $418 over 20 years. That is principal and interest only. As a HELOC at 8%, the same $50,000 would cost $333 a month while you pay interest only.

What is the monthly payment on a $50,000 401(k) loan?

$50,000 is the most the IRS allows, and only if your vested balance is at least $100,000. The loan must be repaid within 5 years in payments at least every quarter, so at 8% it takes about $1,014 a month. Your plan sets the rate, which federal rules require to be in line with what lenders charge, and the interest goes back into your own account.

What are the downsides of a 401(k) loan?

The money stops growing in the market while it is out. If your plan would earn 10% a year, the growth missed on a $50,000 loan comes to about $13,536 over 5 years, more than the $10,829 of interest you pay back in at 8%. Your plan may require full repayment if you leave your job; if you cannot, the balance is taxed as income and you may owe an additional 10% tax if you are under 59½.

What is the downside of a home equity investment?

The CFPB found that under many contracts the settlement grows 19.5% to 22% a year in the early years, more than most home-secured credit, and that the total paid is often higher than with a mortgage-secured loan. You repay it all at once, at the end of a 10- to 30-year term or when you sell, generally with no partial payments. If you cannot pay, you may have to sell or face foreclosure. In our example it costs about 12.7% a year against 8.0% for a HELOC.

What is the cheapest way to borrow $100,000?

On our example home ($450,000, $250,000 owed) with the example rates, for $100,000 over 10 years the HELOC and home equity loan tie at about 8.0% a year. A 401(k) loan cannot go above $50,000, a cash-out refinance tops out near $99,200 under Fannie Mae's 80% limit, and a 5-year personal loan at 11.86% would cost $2,217 a month.

Sources

  1. CFPB: Issue Spotlight: Home Equity Contracts: Market Overview (January 15, 2025) - how home equity investments work, the illustration, costs and risks
  2. IRS: Retirement topics - Loans - 50% / $50,000 limit, five years, leaving your job
  3. IRS: Retirement plans FAQs regarding loans - payments at least quarterly
  4. IRS: Retirement topics - Tax on early distributions
  5. 29 CFR 2550.408b-1: participant loans, reasonable rate of interest
  6. Federal Reserve: Consumer Credit G.19 (September 8, 2026) - 24-month personal loan rate at commercial banks
  7. Wells Fargo: Personal loans - loan amounts and terms
  8. Federal Reserve Bank of St. Louis (FRED): Bank Prime Loan Rate
  9. Freddie Mac: Primary Mortgage Market Survey - average 30-year fixed rate
  10. Freddie Mac: Costs of refinancing
  11. Fannie Mae: Eligibility Matrix (August 5, 2026) - maximum LTV for cash-out refinances
  12. CFPB: What you should know about home equity lines of credit - HELOC, home equity loan and cash-out refinance compared
  13. CFPB: Home equity loan vs. HELOC
  14. 12 CFR 1026.40: requirements for home equity plans (Regulation Z)
  15. Bank of America: Home equity - HELOC limit, fees
  16. PenFed: Home Equity Line of Credit - HELOC limits
  17. U.S. Bank: Home equity loan - fixed rate example, no closing costs
  18. Navy Federal Credit Union: Fixed-rate equity loan - closing costs
  19. Truist: Home equity loan - closing costs
  20. PNC: Home equity installment loan - closing costs
  21. IRS Publication 936: Home Mortgage Interest Deduction

Last reviewed October 7, 2026. See how we calculate. This page is general information, not financial or tax advice.

More calculators

  • HELOC calculatorYour HELOC limit, the interest-only payment and the payment after the draw period ends.
  • Home equity calculatorYour equity in dollars and percent, LTV and CLTV, and how much you may borrow at 80%, 85% and 90% caps.
  • Home equity loan calculatorYour fixed monthly payment, total interest and estimated maximum loan, next to a HELOC on the same amount.
  • Cash-out refi vs. HELOCKeep your mortgage and add a HELOC, or refinance for cash: which costs less over the years you choose.
  • Home equity investmentWhat a shared-equity deal really costs: your payback, the total cost and the cost a year, next to a loan.