What are the closing costs and fees for a home equity loan?

By Jackie Lam

Reviewed by Kimberly Rotter

Mar 17, 2023

Read time: 5 min

A man with a white beard and a plaid shirt doing gardening in his backyard

Key Takeaways:

  • Closing costs and fees for a home equity loan are 2% to 5% of the loan amount. 

  • Common fees include an origination fee, appraisal fee, and a title search.

  • You can lower your closing costs on a home equity loan by improving your credit score or borrowing less.

It’s smart to want to understand total borrowing costs before you apply for credit. Borrowing isn’t free, and the cost is an important factor to consider when you compare your options. There are ways to lower your costs. Choosing a home equity loan is an excellent first step because its costs are lower compared to many other options.

Home equity loan fees

The fees for home equity loans are similar to the fees for other kinds of mortgages. They are often deducted from your loan before you get the money. This is called “rolling the fees into the loan.” But if you want to, you can pay the fees out of pocket. If you roll your fees into the loan, you’re borrowing the money to pay them. If you can afford to pay the fees up front, you can get access to your entire loan amount without any reductions. 

Some lenders advertise no-closing-cost loans. They can do this because they charge a higher interest rate. You’ll either pay the lender up front in fees or over time in interest. There are pros and cons to both.

Lender fees

The lender typically charges the following fees. 

Origination fee

Most lenders charge an origination fee. This is their fee for making the loan. The origination fee is usually a percentage of the total loan amount, ranging from 1% to 5%, but it could be higher or lower. For example, on a $100,000 loan, a 2.5% origination fee is $2,500. 

Underwriting fee

Underwriting fees are for processing your loan application and verifying the information you submit.

Credit report

While credit isn't the only determining factor in getting approved for a home equity loan, it does play a significant role. Your lender will pull your credit report as part of your application. The cost is usually $30 to $50.

Title insurance

Your lender may require title insurance. This protects your lender from anyone making a claim of ownership of the property. The cost of title insurance depends on your loan amount. It might be equivalent to 0.5% to 1% of the loan. 

Prepayment penalty

Some lenders charge a fee for paying off your home equity loan early. This penalty might be a flat rate of no more than a few hundred dollars. Or it might be charged as a percentage, such as 2% or 3% of the total loan amount. 

Third-party fees

For a home equity loan, you’ll also pay third-party fees. Even though you might pay your lender, another vendor is charging the fee. Here are common third-party fees you might pay for a home equity loan.

Appraisal fee

The lender will require an appraisal to determine the value of your home. This usually costs at least a few hundred dollars, but the actual price varies depending on the location and property size. 

Document prep and attorney fees

The lender may charge document preparation fees. These fees are for preparing and filing the necessary paperwork for your loan. Document fees can range from $20 to $100, sometimes more. Some borrowers hire an attorney to review their loan paperwork. The fee for this might range from $300 to $1,000. 

Notary fee

A notary will need to be present to witness your documents being signed. This fee can range from $50 to $200 per signature.

Title search fee

How much are the total fees on a home equity loan?

You can expect to pay fees equal to 2% to 5% of the amount you’re borrowing. For certain fees, you have the right to use the vendor of your choice and may be able to lower your cost that way. For instance, you may prefer a title company or notary public that charges less than the one the lender suggests. For other fees, such as the appraisal, you can’t choose the vendor. But if you think the lender’s vendor is charging too much you can ask whether there is a less expensive alternative.

Remember, every lender doesn’t charge every fee. You should ask about fees before you apply.

Examples of closing costs on a home equity loan


Typical amount

Origination fee

1% to 5% of the loan amount

Underwriting fee

$400 to $1,000

Appraisal fee


Document prep fees 


Attorney fee


Notary fee 


Title search 


Credit report


Title insurance 

0.5% to 1% of the loan amount

Prepayment penalty 

2% to 3% of the loan amount

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How to lower your costs on a home equity loan 

You can take steps to make sure you’re getting the lowest possible cost on your home equity loan. 

1. Improve your credit score

The biggest loan cost that’s within your control is the interest rate. Your rate is primarily based on your credit standing. It’s in your best interest to make sure your credit score is as high as you can get it before you apply. Here’s how.  

Check your credit report for errors

Millions of people have errors on their credit reports, and some of those errors can affect your score. Visit AnnualCreditReport.com to access your free credit report, and if you notice anything inaccurate, start an online dispute (the website will show you how). 

Lower your credit card debt if you can

Maxed out credit cards can torpedo a credit score. If you can, pay your revolving debts (credit cards) down. The balances on your installment loans (car loans, student loans, personal loans) don’t affect your credit score in the same way.

Pay on time every time

Your payment history has more influence on your credit score than anything else. Pay on time every time. Set up automatic payments if you think you might forget.

Keep accounts open

Part of your credit score is based on how long you’ve had accounts. If you have a credit card that you don’t use, keep the account open, especially if there is no annual fee. People with top credit scores tend to have an average account age of more than 20 years.

2. Borrow only what you need

It might be tempting to borrow more than you need. But you’ll pay more in interest and fees if you do. This is a good reason to look for a fixed-rate HELOC instead of a home equity loan. You’ll get a fixed interest rate, as you would with a traditional home equity loan, but you don’t have to take the full loan amount up front if you don’t want to. You can borrow only the amount you need.

3. Talk to your lender

Ask the lender if there is another way to lower your costs. The lender might waive a fee, find a cheaper third-party vendor, or offer a discount that you weren’t aware of. Sometimes you can get an interest rate discount if you agree to have the monthly payments automatically paid from your checking account.

Jackie Lam - Author

Jackie is an Achieve contributor. She is an accredited financial coach (AFC®) who has written for Business Insider, BuzzFeed, CNET, USA Today's Blueprint, and others. She coaches artists and freelancers.

kim rotter 2022 2

Kimberly is Achieve’s senior editor. She is a financial counselor accredited by the Association for Financial Counseling & Planning Education®, and a mortgage expert for The Motley Fool. She owns and manages a 350-writer content agency.

Frequently asked questions

HELOCs have fees, but they won’t necessarily come out of your pocket at the time you get the loan. You can roll the fees into the loan. The fees will be deducted from your loan before it is disbursed to you. There are HELOCs with no closing costs, but that just means they are charging other fees, such as a higher interest rate. Fees for a HELOC can be 2% to 5% of your loan amount. 

Yes, a HELOC can be a great idea, depending on your financial goals and circumstances. HELOCs offer the flexibility of accessing funds as needed, making them an excellent option for home improvements, debt consolidation, or other expenses without affecting your first mortgage rate or terms.

HELOCs typically have variable interest rates, but some lenders offer fixed-rate options. By choosing a fixed-rate HELOC, you can avoid the uncertainty of fluctuating interest rates, giving you greater control over your monthly payment budget and helping you plan your finances with greater confidence.

It usually takes between 10 days and six weeks to close a home equity loan. The actual time to get a home equity loan depends on you providing the required documentation, an appraiser providing an appraisal, and the lender processing all of the pieces.  

A fixed-rate HELOC combines the best features of traditional home equity loans and traditional HELOCs. You get a fixed interest rate and a draw period. During the draw period, you can borrow, repay, and borrow more as often as you like, up to your loan limit. The interest rate is locked when you get your loan, protecting you from fluctuations.

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