Home equity levels in the country hit a record high in 2025 and, according to a March report, the average amount of borrowable equity is over $11 trillion right now. Against this backdrop, withdrawing a relatively small amount such as $25,000 should be relatively simple. Knowing which way to borrow that equity, however, can be less obvious. With options ranging from reverse mortgages to cash-out refinances to home equity loans and home equity lines of credit (HELOCs), homeowners have a variety of options. 

Two of the most affordable, however, are home equity loans and HELOCs. Interest rates on both products have markedly improved in recent years, and with a HELOC, borrowers will be positioned to exploit additional rate drops ahead, thanks to the product's variable interest rate that will change each month. Home equity loans, meanwhile, have fixed interest rates that will provide borrowers with peace of mind, financial security and accurate payment projections. 

Heading into May, however, and with no Federal Reserve rate cut to contend with, borrowers should know which product will be cheaper when withdrawing $25,000: A home equity loan or a HELOC? Below, we'll break down the numbers borrowers should know.

Start by seeing how much home equity you could borrow here.

$25,000 home equity loan vs. $25,000 HELOC: Which will be cheaper this May?

The average home equity loan interest rate is 6.95% currently, while it is 7.11% for a HELOC, according to Money.com. While the home equity loan will be provided as a lump sum upfront, in which full repayments will be expected immediately, a HELOC will function as a revolving line of credit in which borrowers will be required to pay interest-only expenses during the product's initial draw period (up to 10 years). 

Here's how much each will cost now, assuming that the full $25,000 is borrowed and used upfront and the assumption that the HELOC rate remains constant (and that borrowers skip the interest-only payment structure to repay the full line of credit):

$25,000 home equity loans

• 10-year home equity loan at 6.95%: $289.63 per month
• 15-year home equity loan at 6.95%: $224.01 per month

$25,000 HELOCs

• 10-year HELOC at 7.11%: $291.69 per month
• 15-year HELOC at 7.11%: $226.25 per month

To better appreciate the affordability this moment in the home equity borrowing space now represents, it helps to know what both of these products cost monthly in the recent past. For reference, here's how much more expensive a $25,000 home equity loan was in December 2025:

• 10-year home equity loan at 8.18%: $305.70 per month 
• 15-year home equity loan at 8.13%: $240.79 per month

And here's what a HELOC of this same size would have cost in October 2025:

• 10-year HELOC at 7.89%: $301.87 per month
• 15-year HELOC at 7.89%: $237.33 per month

So payments on both products have dropped considerably over the past year and a half, approximately. And, with a HELOC, they may continue to fall further. At the same time, a HELOC rate can rise as easily as it can decline, so some volatility will need to be priced in before getting started. 

And that's especially critical when borrowing home equity, as your home serves as collateral in the exchange, and it can be foreclosed on if you're ultimately unable to make your monthly payments as initially agreed to. That's why it's also important to shop around to find the most affordable rates and best terms, which you can do easily now via online marketplaces that list rates, lenders, costs and terms all in one place.

Shop for low-rate HELOCs and home equity loans here now.

The bottom line

Monthly payments on a $25,000 home equity loan and a $25,000 HELOC will look similar this May, but that relationship could change over time thanks to the latter's variable interest rate. Examine both carefully, then, and shop around diligently (you can use a lender besides the one that currently services your mortgage) to boost your chances of finding an affordable deal. Make sure, too, to go into the process with a good credit score and clean credit history, as both will be examined during the application process for either product.