Home Equity Loan: Lump Sum, Fixed Payments
One lump sum upfront with a fixed rate and fixed monthly payments. When you know the amount you need and want predictability, a home equity loan fits. Best when you prefer one known payment.
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Home Equity Loan Highlights
A lump-sum second mortgage with fixed rate and fixed payments. Your first mortgage stays in place—add a separate loan for a known amount.
Lump sum upfront
One amount, one set of fixed monthly payments. Easier to budget than a revolving line of credit.
Fixed rate
Your rate and payment stay the same for the life of the loan. No surprises when rates move.
Second lien
Your first mortgage stays in place. A home equity loan adds a separate loan secured by your equity.
5–30 year terms
Typical terms range from 5 to 30 years. Choose the term that fits your budget and timeline.
How a home equity loan works, step by step
Unlike a line of credit, this is a single installment loan secured by your home. Below is the usual flow from approval to payoff.
- 1
Apply and lock terms
The lender sizes the loan to your equity, income, and credit.
They estimate home value (or order an appraisal), check combined loan-to-value against your first mortgage, and offer a fixed rate and term. You agree to a single loan amount—not a line you draw from later.
- 2
Close and fund
You sign; the lender records a second lien and wires your lump sum.
At closing you get the full proceeds in one shot (minus closing costs). Your first mortgage stays in place. This is different from a HELOC, where you might borrow in pieces over time.
- 3
Pay the same amount each month
Fixed principal-and-interest (or lender-structured) payments until the loan ends.
On a typical fixed-rate home equity loan, your rate does not change, so your payment is predictable. You are paying down a closed-end balance—there is no “available credit” that refills when you pay principal.
- 4
Pay off and release
When the balance hits zero, the second lien is released.
Need more equity later? That would be a new application and a new loan. The mechanics are one lump sum, one amortization schedule, one payoff date (unless you refinance the home equity loan itself).
Why a Home Equity Loan Works
When you know the amount you need and want one predictable payment—renovation, debt consolidation, or a one-time expense—a home equity loan delivers.
Predictable payments
One fixed payment monthly—no variable-rate surprises.
Known amount
Lump sum fits when you know exactly what you need.
Often lower rate than HELOC
Fixed rates can beat HELOCs, especially for longer terms.
Home Equity Loan At a Glance
Rates & terms
Fixed rates, typically 5–30 year terms. Your payment stays the same for the life of the loan. Compare 5-, 10-, 15-, 20-, and 30-year options above.
Home equity loan guide →How much can you borrow?
Lenders typically allow 80–90% of home value minus your first mortgage. Combined loan-to-value (CLTV) limits vary.
Income, credit, and debt-to-income also affect your limit.
Loan vs alternatives
Need flexibility? A HELOC lets you draw as needed. Want a new first loan larger than your current loan balance and cash at closing? See cash-out refinance.
Compare all options →Compare Home Equity Options
| Feature | HELOC | Home Equity Loan | Cash-Out Refi |
|---|---|---|---|
| Payout | Revolving Line | Lump Sum | New Mortgage |
| Interest Rate | Variable | Fixed | Fixed |
| First Mortgage Rate | Untouched | Untouched | Replaced |
| Best For | Ongoing renovations | One-time projects | Debt overhaul |
| Time to Close | 2–4 weeks (Fastest, often no full appraisal) | 3–5 weeks (Requires more verification) | 30–45 days (Full mortgage underwriting process) |
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