Both a HELOC and a home equity loan allow California homeowners to access their home’s equity — but they are fundamentally different products. Choosing the right one depends on how you plan to use the funds.

HELOC — Revolving Line of Credit

• Functions like a credit card secured by your home
• Variable rate tied to Prime Rate
• Draw as needed during the draw period (typically 10 years)
• Interest-only payments on drawn balance during draw period
• Flexible — borrow, repay, and borrow again
• Best for ongoing or unpredictable expenses

Home Equity Loan — Fixed Lump Sum

• A one-time, lump-sum loan funded at closing
• Fixed interest rate for the life of the loan
• Fixed monthly principal and interest payments from day one
• Cannot redraw — once repaid, the money is gone
• Best for a single, defined expense with a known cost

When to Choose Each

Choose a HELOC when you need flexibility — home improvement projects with unknown final costs, emergency reserves, or business working capital where you draw over time. Choose a home equity loan when you need a specific amount, want a fixed rate and predictable payment, and do not need revolving access.