If you've been trying to borrow money recently, you're likely aware of how expensive it is to take out a personal loan or use a credit card right now. That's because, as the Federal Reserve hiked rates in 2022 and 2023 to try and temper inflation, these types of borrowing costs skyrocketed in tandem. And, while the central bank implemented three rate cuts at the end of 2024, leading borrowing rates to fall slightly, inflation has been ticking back up over the last few months and the Fed appears to be keeping interest rates paused for now. In turn, the rates on these and many other borrowing options remain relatively high overall. 

But while affordable borrowing options may be limited, homeowners who are looking for an affordable funding source have a good option to consider: their home equity. Home equity levels have reached new highs over the last few years, leaving the average homeowner with a lot of equity to tap into. And, there are a few different home equity borrowing options to consider, including home equity loans and home equity lines of credit (HELOCs), which currently have average rates sitting at a two-year low. How much equity does the average homeowner have to borrow against, though? 

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Here's how much home equity the average homeowner has now

The average homeowner currently has about $313,000 worth of equity in their home, according to the . About $203,000 of that equity, on average, is considered tappable, meaning that it can be borrowed against while still maintaining a 20% equity cushion.

That means the average homeowner now has slightly less home equity to tap into compared to the previous average, which was $319,000 in November 2024. It's worth noting, though, that home equity is still up by 6% overall compared to this time last year.  In total, homeowners are now sitting on a collective $17 trillion in home equity, including $11 trillion in tappable home equity. 

One driver behind the decline in home equity levels was an expected pullback in annual home price growth, according to the report. Nationwide, home price growth experienced a noticeable decline in January, falling to 3.0% from 3.4% in December 2024. And, nearly one-fourth of the 100 largest housing markets saw monthly home prices ease on a seasonally adjusted basis in January. 

But while home equity levels have dropped slightly over the last few months, homeowners still have plenty of equity to borrow against if they need to fund a large project, consolidate debt or tackle another expense — and at today's rates, both home equity loans and HELOCs are some of the most affordable options to consider.

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How to borrow home equity effectively

If you want to borrow from your home's equity right now, HELOCs and home equity loans are both options worth considering. Here's a quick overview of how HELOCs and home equity loans work:

• HELOC: A HELOC offers access to your equity through a revolving line of credit you can draw from, as needed, up to the credit limit. You're typically able to draw from this line of credit for between 10 and 15 years and, generally speaking, you're able to make interest-only payments on what you've borrowed during that time. The repayment period typically lasts between 10 and 20 years, during which you'll make payments toward your principal and interest. The big benefit of HELOCs is that they typically have variable interest rates, meaning that if rates drop in the future, your payments would, too. However, rates could also rise, increasing your monthly costs. 
• Home equity loan: A home equity loan allows you to tap into your home equity through a lump-sum loan with the full loan amount disbursed upfront. The repayment period begins after you receive your funds — there is no "draw period" like HELOCs. Home equity loans have a fixed rate, though, meaning your interest rate stays the same for the life of your loan, which can protect you if rates rise in the future. If rates fall, though, you'll have to refinance your home equity loan to take advantage of the lower-rate environment. 

The bottom line

Homeowners currently have an average of $313,000 in equity in their homes, down slightly from the average amount of home equity they had in November 2024. Homeowners who want to borrow against this equity have a few options to choose from, including HELOCs and home equity loans, both of which have lower average rates than many of the other borrowing options. It's important to remember, though, that your home is used as collateral for this type of funding. If you default on your payments, your lender could foreclose on your home.