HELOC vs. Personal Loan Calculator

HELOC vs. Personal Loan: Secured vs. Unsecured

The fundamental difference is collateral: HELOCs are secured by your home, while personal loans are unsecured. This affects rates, amounts, and risk.

Interest Rate Comparison

• HELOC Rates: 7-10% (variable, secured by home)
• Personal Loan Rates: 10-36% (fixed, unsecured)

The rate difference can save you thousands. On a $30,000 loan over 5 years:
HELOC at 8%: $608/month, $6,480 total interest
Personal Loan at 15%: $713/month, $12,780 total interest
Savings with HELOC: $6,300

Borrowing Limits

• HELOC: Up to $250,000+ (based on home equity)
• Personal Loan: Typically $1,000-$50,000

Approval Requirements

HELOC Requirements:

• Home ownership with sufficient equity
• Credit score 620+ (700+ for best rates)
• DTI ratio below 43%
• Home appraisal required

Personal Loan Requirements:

• Credit score 580+ (700+ for best rates)
• Proof of income
• No collateral needed
• Faster approval (often same-day)

When to Choose a HELOC

• You need a large amount ($30,000+)
• You want the lowest possible rate
• You have significant home equity
• You're comfortable using your home as collateral
• You need ongoing access to funds

When to Choose a Personal Loan

• You need money quickly (same-day funding)
• You don't own a home or lack equity
• You want fixed payments and no risk to your home
• You need a smaller amount ($5,000-$25,000)
• You prefer not to use your home as collateral

Risk Considerations

HELOC Risk: If you default, you could lose your home through foreclosure.
Personal Loan Risk: If you default, your credit score drops significantly, but you won't lose your home.

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