What is a fixed-rate HELOC and how does it work?

Homeowners are sitting on record levels of home equity, with the average mortgaged homeowner holding more than $300,000 in equity. At the same time, home equity line of credit (HELOC) balances have grown for 13 consecutive quarters as more people tap this wealth to consolidate debt, fund renovations, or cover major expenses.

But here's where it gets tricky: traditional HELOCs come with variable interest rates that shift with Federal Reserve policy changes. One month your payment might be manageable, the next it could jump significantly. That uncertainty has many homeowners asking: can you get a HELOC with a fixed interest rate?

The answer is yes. A fixed-rate HELOC locks in predictable payments so you can plan long-term without worrying about rate swings. But not all fixed-rate HELOCs work the same way.

A fixed-rate HELOC is a home equity line of credit where the interest rate stays the same throughout the loan term, rather than fluctuating with market conditions. This means your monthly payment remains predictable, making it easier to budget and plan for the long term.

Traditionally HELOCs carry a variable rate, much like a credit card, with an interest rate that can change month to month based on the Federal Reserve's monetary policy decisions. 

A HELOC with a fixed interest rate lets you borrow against your home’s equity while locking in a consistent rate on what you draw — giving you predictable payments instead of the variable rates most HELOCs have. Here's how fixed-rate HELOCs work in practice, and why the structure matters for your specific situation:

With traditional variable-rate HELOCs, your interest rate is typically tied to the prime rate, which moves in step with the Federal Reserve's federal funds rate. According to Federal Reserve data, HELOC balances reached $422 billion in Q3 2025, with interest rates directly influenced by Fed policy changes.

When you lock in a fixed rate (whether at origination or through a conversion), that rate is set based on current market conditions and your creditworthiness. From that point forward, even if the Federal Reserve raises or lowers rates, your fixed-rate HELOC payment typically stays the same.

Most HELOCs have two phases:

• Draw period: Typically lasting five to 10 years, this is when you can access your credit line. With traditional HELOCs, you might make interest-only payments during this time. With Figure's fully disbursed structure^{1: Navigates to numbered disclaimer 2: Navigates to numbered disclaimer}, you receive your full loan amount upfront and begin making payments on both principal and interest right away. As you repay, you can still take additional draws — and the interest rate for each new draw is set on the day you take it, giving you clarity and control as you borrow.

• Repayment period: After the draw period ends, you enter the repayment phase, which might last 10 to 20 years. During this time, you pay back both principal and interest on any outstanding balance.

The key advantage of a fixed rate is payment predictability. Whether rates rise or fall during your loan term, you'll know exactly what you owe each month.

Figure’s HELOC offers a unique fully disbursed structure with both fixed^{1: Navigates to numbered disclaimer} and variable^{2: Navigates to numbered disclaimer} rate options. You receive your full loan amount at closing (minus fees)^{3: Navigates to numbered disclaimer}, with the ability to redraw as you pay down your balance. This works well if you know exactly how much you need and want one predictable payment from the start.

It’s important to note that a HELOC creates an additional monthly payment beyond your existing mortgage — it's not a replacement.

Like any financial product, fixed-rate HELOCs come with both advantages and trade-offs. Understanding these can help you determine if this type of financing makes sense for your situation.

• Payment stability: Your monthly payment stays the same throughout the loan term, making it easier to budget and plan. This predictability is especially valuable if you're on a fixed income or managing multiple financial obligations.

• Protection from rate increases: If interest rates rise, you're protected. Variable-rate HELOC borrowers might see payments increase when the Federal Reserve raises rates, but fixed-rate borrowers maintain their locked-in rate.

• Easier financial planning: Knowing exactly what you'll pay each month removes uncertainty from your budget. This makes it simpler to plan for other goals, from retirement savings to college funding.

• Competitive rates for qualified borrowers: Home equity financing may offer lower interest rates than credit cards or personal loans because your home secures the loan, reducing the lender's risk.

• Potentially higher initial rates: Fixed rates might start slightly higher than variable rates since you're paying for rate stability. The trade-off is protection against future increases.

• Less flexibility if rates drop: If rates decline after you lock in, you won't benefit unless you refinance. Some lenders might allow conversion to a variable rate, but this typically involves fees.

• Product availability: Fixed-rate HELOCs may not be as widely available as traditional variable-rate options. Not all lenders offer fixed-rate structures, and those that do might have specific requirements.

The right choice between fixed and variable rates depends on your individual circumstances, risk tolerance, and expectations about the interest rate environment.

A fixed-rate HELOC might make sense in several situations, but it's not automatically the right choice for everyone. Here are some scenarios where locking in a fixed rate could be particularly beneficial:

If you prefer knowing exactly what you'll owe each month, a fixed rate removes uncertainty. This is especially important if you're managing a tight budget, have limited cash flow flexibility, or are retired with predictable income.

When the Federal Reserve is in a rate-hiking cycle or holding rates at higher levels, locking in a fixed rate might protect you from future increases. Understanding the current monetary policy environment can inform your decision.

According to CoreLogic data, homeowners with mortgages held an average of about $315,000 in equity in Q2 2024. If you're planning to tap significant equity for a long-term need, rate stability might be worth prioritizing.

If you know exactly how much you need for a particular purpose — home renovation, debt consolidation, or education expenses — a fully disbursed fixed-rate HELOC provides clarity. You get all your funds upfront, establish a fixed payment, and can plan accordingly.

Ready to shop for a fixed-rate HELOC? Here's how to find the right fit.

Consider your budget and how you'll use the funds. Do you need all the money at once, or would you prefer to draw as needed? Traditional conversion-style HELOCs give you flexibility, while fully disbursed products provide simplicity with one fixed payment from the start, while retaining the ability to take additional draws as the balance is paid down.

The interest rate isn’t the only cost to borrow. Consider origination fees, closing costs, and any conversion fees. Some lenders advertise low rates but offset them with higher fees.

Look beyond the advertised rate. Check the full picture: loan amounts, fees, repayment terms, prepayment flexibility, and whether they're available in your state. And don't skip the customer reviews, either. They'll tell you what working with that lender is really like.

Remember that tapping your home equity means taking on additional debt secured by your property. It’s smart to borrow only what you need and ensure you can comfortably afford the payment.

Fixed-rate HELOCs offer borrowing flexibility and payment predictability. Whether you choose a traditional conversion-style product or a fully disbursed structure, the key benefit is knowing exactly what you'll owe each month.

Understanding interest rates and how they affect your borrowing costs is an important step in making an informed decision. For many homeowners, the stability of a fixed rate provides peace of mind worth the potential trade-off of slightly higher initial rates.

As you consider your options, think about your financial goals, your comfort with payment variability, and your expectations for interest rates. The right choice depends on your individual circumstances.

If you're ready to explore your home equity options, learn more about Figure HELOC to see how a fully disbursed structure with options for a fixed or variable rate might fit your needs^{1: Navigates to numbered disclaimer 2: Navigates to numbered disclaimer}. For qualified borrowers, the combination of fast approval and payment predictability can make accessing your home equity simpler than ever.

Fixed-rate HELOCs maintain the same interest rate throughout the loan term, while variable rates adjust based on market conditions. Fixed rates offer payment stability, while variable rates might start lower. Your best choice depends on risk tolerance and rate expectations.

Most fixed-rate HELOCs allow early repayment without prepayment penalties, but review your specific loan terms. Paying off your HELOC early can save interest and free up your home equity for other uses.

Yes, HELOC rates can be fixed. Some lenders offer fixed rates from the start, while others allow you to convert a variable-rate HELOC to a fixed rate during the draw period. Figure offers both fixed^{1: Navigates to numbered disclaimer} and variable^{2: Navigates to numbered disclaimer} rate options at origination, giving borrowers the choice based on their preferences and financial goals.

Yes, you may be able to refinance a HELOC to a fixed rate, though your options depend on your lender. Some lenders allow you to convert an existing variable-rate HELOC to a fixed rate during the draw period, typically for a fee. Alternatively, you could refinance into an entirely new fixed-rate HELOC with a different lender. Figure offers both fixed^{1: Navigates to numbered disclaimer} and variable^{2: Navigates to numbered disclaimer} rate options at origination, allowing qualified borrowers to choose the rate structure that fits their needs from the start. Before refinancing, compare the costs — including any conversion fees, closing costs, or prepayment penalties — against the benefit of locking in a fixed rate.

Fixed-rate HELOCs are available from various lenders, including traditional banks, credit unions, and online lenders. Figure offers a unique fixed-rate, fully disbursed HELOC^{1: Navigates to numbered disclaimer} with loan amounts from $15,000 to $750,000 for qualified borrowers^{4: Navigates to numbered disclaimer}. When shopping for a fixed-rate HELOC, compare not just rates but also the product structure, fees, and the lender's reputation for customer service.

Figure offers fixed^{1: Navigates to numbered disclaimer}- and variable-rate^{2: Navigates to numbered disclaimer} HELOCs with a fully disbursed structure — receive your funds at closing and start with one predictable payment with the ability to draw more as you repay. For qualified borrowers, approval may take as few as 5 minutes with funding in as few as five business days^{3: Navigates to numbered disclaimer}.

Check your rate to see what you could qualify for.