$100,000 HELOCs: 3 things borrowers should keep in mind now

A HELOC could be your cheapest way to borrow $100,000 worth of home equity right now. Getty Images

According to a report released in early March, the average home equity amount is now $313,000. While that's down from the average $327,000 amount homeowners had in 2024, it's still a six-figure amount that homeowners can borrow from in today's high-rate climate. With most home equity lenders mandating that homeowners keep a healthy 20% portion of equity in their home as a buffer, a $100,000 home equity loan or home equity line of credit (HELOC) is generally accessible for most homeowners.

Borrowing that much equity, however, should always be approached strategically, particularly if done with a HELOC, which comes with a variable interest rate subject to change monthly for homeowners. Still, the benefits and cost-effectiveness of a HELOC have become more pronounced in the early months of 2025, making it one of the better ways to borrow a large sum of money right now. Before getting started with a $100,000 HELOC now, however, homeowners should refresh their understanding of this unique home equity product. Below, we'll break down three things borrowers should keep in mind now.

See how much equity you could withdraw with a HELOC here.

$100,000 HELOCs: 3 things borrowers should keep in mind now

Here are three items homeowners should be aware of before pursuing a $100,000 HELOC in today's economy:

It's the cheapest way to borrow $100,000 worth of home equity now

Considering a HELOC amid other home equity borrowing options? If the goal is to spend as little as possible to secure the $100,000, then you can stop looking around, as a HELOC is currently the cheapest way to borrow home equity. With an interest rate of just 7.95%, HELOCs are less expensive than home equity loans (with a rate of 8.36%). But they're also cheaper than personal loans (with average rates around 12%) and credit cards (with average rates just under a record 23%). This affordability is always attractive, but it's particularly important when borrowing home equity, as the home could be foreclosed upon if repayments aren't made. That will be much easier to do now, however, with a HELOC than it would be with most other alternatives.

See how low a HELOC rate you could qualify for now.

It's likely to become less expensive in the months ahead

Homeowners considering a $100,000 HELOC right now shouldn't just look at today's average interest rates – they should also inspect the path these rates have taken over the past year. When taking this broader look, borrowers would learn that HELOC rates have been steadily declining for more than a year now. Not only did HELOC rates fall for much of 2024, but they've continued that drop in a significant way this year. HELOC rates are down more than two full percentage points from September 2024. And if inflation continues to fall (it declined in February and March) and the Federal Reserve resumes the interest rate-cut campaign it started in 2024, HELOC rates will fall further, making it even easier to repay your HELOC in the future.

Volatility will need to be priced in

Because a HELOC rate is variable and because $100,000 represents a significant part of the average homeowner's equity, it's critical that repayments are calculated against a series of realistic interest rate scenarios – not just what's available right now. Volatility, in other words, will need to be priced in for the long term, as any number of economic items could cause rates to rise or fall. With a 10-year draw period in which interest-only payments are required, followed by an extended repayment period, it makes sense to calculate these costs over an extended period. And, if unaffordable, it may be worth locking in a home equity loan rate instead, which will be easier to budget for, even if that simplicity comes with a slightly higher repayment.

The bottom line

Borrowing a large, six-figure sum of money should always be done cautiously, but even more so when using your home equity as the funding source. By understanding these three items now, homeowners can better determine if a $100,000 HELOC is the answer to their financial needs or if they'll be better served by exploring alternatives. 

Matt Richardson

Matt Richardson is the senior managing editor for the Managing Your Money section for CBSNews.com. He writes and edits content about personal finance ranging from savings to investing to insurance.