Definition
A revolving credit line secured by your home equity. Rates are lower than unsecured debt because the house is collateral, which is exactly the risk: default and the lender can foreclose.
Why it matters
A HELOC converts home equity into cheap, flexible credit, and converts missed payments into a threat to the roof over your head. The rate is usually variable, so the cost can climb after you borrow.
Example
A homeowner with $150,000 of equity opens a $75,000 HELOC for a phased renovation, drawing only what each stage costs. The rate beats any personal loan, but the line is secured by the house itself.
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.