Quick answer
A personal loan is usually unsecured with fixed payments. A home equity loan is a lump sum secured by your home, usually at a fixed rate. A HELOC is a line of credit secured by your home, usually at a variable rate. The CFPB warns that with home equity borrowing, falling behind could cost you your home.
All three can fund a big expense or consolidate debt. The difference is what backs the loan and how predictable the payments are.
Side by side
| Personal loan | Home equity loan | HELOC | |
|---|---|---|---|
| Collateral | Usually none | Your home | Your home |
| How you get money | Lump sum | Lump sum | Draw as needed up to a limit |
| Rate | Usually fixed | Usually fixed | Usually variable |
| Payments | Fixed monthly | Fixed monthly | Can change; often rise when repayment begins |
| Risk if you fall behind | Credit damage, collections | You could lose your home | You could lose your home |
Home equity details are from the CFPB.
HELOC details to know
- Draw period. You can borrow up to your limit, often for a set number of years. The CFPB gives 10 years as an example.
- Repayment period. You stop borrowing and repay, often over 10 or 20 years, with payments that are often significantly higher.
- Frozen lines. The lender may block further draws if your home's value drops significantly or your finances change.
- Fees and minimums. Some plans have fees or require minimum draws.
When a personal loan may fit better
- You want a fixed payment and a set end date.
- You do not want to put your home on the line.
When home equity may fit better
- You have substantial equity and are confident you can make payments.
- You need a large amount and have compared the fees and total cost.
Read more on home equity loans for debt consolidation and fixed vs variable rates.
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Frequently asked questions about heloc vs personal loan vs home equity loan
Is a HELOC cheaper than a personal loan?
It depends on the APR, fees and term you are offered. The CFPB notes home equity loans may have upfront fees, and both home equity products put your home at risk. Compare APR and total cost.
What is the difference between a home equity loan and a HELOC?
A home equity loan pays a lump sum, usually at a fixed rate. A HELOC lets you borrow repeatedly up to a limit during a draw period, usually at a variable rate.
Should I use home equity to pay off credit cards?
The CFPB suggests exploring alternatives with a credit counselor that do not put your home at risk before using a home equity loan to consolidate debt.
What happens when a HELOC draw period ends?
You can no longer borrow and enter repayment. The CFPB says monthly payments are often significantly higher then, and some HELOCs require repaying the whole balance at once.
Sources
- CFPB: What is a home equity loan? (accessed 2026-10-09)
- CFPB: What is a home equity line of credit (HELOC)? (accessed 2026-10-09)
- CFPB: Do personal installment loans have fees? (accessed 2026-10-09)
Last updated 2026-10-09. How we research and update pages.