HELOC vs Personal Loan Comparison Calculator
HELOCs offer variable rates 7-10% secured by home equity with potential tax deduction (if used for home improvement). Personal loans charge 8-15% unsecured with fixed payments and faster funding. The right choice depends on rate spread, tax bracket, home equity available, and use case.
HELOC Tax Deduction Rules
Post-2017 TCJA: HELOC interest deductible only when proceeds used to buy, build, or substantially improve the residence securing the loan. Cap: $750K combined acquisition + HELOC debt for joint filers. Debt consolidation HELOCs no longer deductible. Save documentation of use for IRS — improvements only.
Variable Rate Risk on HELOC
HELOCs typically tie to Prime + margin (e.g. Prime + 1%). When Fed raises rates, HELOC rate jumps next billing cycle. Borrowers who took 4% HELOCs in 2020-2021 now pay 8-9%. Personal loans lock fixed rate at origination. If you expect rates to rise, lock with personal loan instead.
Funding Speed and Lien
Personal loans fund in 1-7 days, no collateral. HELOCs take 30-45 days, place 2nd lien on home. If you need money fast (medical emergency, time-sensitive purchase), personal loan wins despite higher rate. If you have time and home equity, HELOC's lower rate + deduction often wins by $3-15K over loan life on $50K+ borrowings.
Source: CFPB Mortgage Servicing Rules (12 CFR 1024), TCJA §11043 mortgage interest deduction, 2025 Bankrate HELOC Survey. Last updated: May 2026.