U.S. Mortgage Index

What is the difference between a home equity loan and a HELOC?

Short answer

A is a lump-sum loan secured by your home equity. A is a revolving line of credit secured by that same equity, more like a credit card than a one-time loan. If you already have a first mortgage, the CFPB treats either product as a second mortgage you would pay in addition to the first.

Full explanation

With a home equity loan, you receive the borrowed amount once, up front. The rate may be fixed or adjustable. With a HELOC, you can draw more than once, up to a stated maximum. As you repay, available credit is typically restored, similar to a credit card. HELOCs usually have adjustable rates, and the payment changes with the outstanding balance.

Both products use the home as collateral. Missing payments can put the home at risk in addition to the first mortgage. The CFPB publishes a booklet on how HELOCs work and on shopping and common pitfalls.

If you are already having trouble paying the first mortgage, the CFPB says to talk with a housing counselor before adding a home equity loan or HELOC. You can call the CFPB at (855) 411-CFPB (2372) to reach a HUD-approved counseling agency. This page does not say which product to choose.

Sources reviewed

Last reviewed

September 10, 2026