$40,000 home equity loan vs. $40,000 HELOC: Which is cheaper this May?

MoneyWatch: Managing Your Money $40,000 home equity loan vs. $40,000 HELOC: Which is cheaper this May? We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms. .chip { background-image: url('/fly/bundles/cbsnewscore/images/chip-bgd/chip-bgd-moneywatch.jpg'); } By Matt Richardson Matt Richardson Sr. Managing Editor, Managing Your Money Matt Richardson is the senior managing editor for the Managing Your Money section for CBSNews.com. He writes and edits content about personal finance ranging from savings to investing to insurance. Read Full Bio Matt Richardson May 12, 2026 / 7:00 AM EDT / CBS News Add CBS News on Google Homeowners should closely compare their home equity loan and HELOC costs before getting started with either. Nora Carol Photography/Getty Images With household debt levels high, credit card interest rates still sitting around 20% (on average) and inflation rising once again, millions of Americans now find themselves in need of extra financing. And they'll need access to a large amount fairly quickly to make ends meet. Fortunately, for homeowners, there are two viable options to secure this funding: home equity loans and home equity lines of credit (HELOCs). With home equity levels in the United States reaching a record high in 2025 and with more than $10 trillion considered borrowable in today's economy, this May could be the smart time to leverage those funds with one of these products. And while $40,000 may feel like a lot to borrow, with hundreds of thousands in equity (on average) to use, a HELOC or home equity loan of this size will still allow you to maintain a healthy equity cushion for the future.To better determine the merits of each product now, it helps to know the associated monthly costs each comes with. Between a $40,000 home equity loan and a $40,000 HELOC, then, which will be cheaper this May (and in the months to follow)? That's what we'll examine below.Start b...