HELOC vs HELOAN: Which is Right for You?

Access your home’s equity for upgrades, repairs, debt consolidation, or emergencies with a HELOC or HELOAN. Learn the differences and choose what fits your needs.

1 min read

Hancock Whitney

Your home is more than just a place to live - it’s also one of your biggest financial assets. By tapping into your home’s equity, you can access funds for upgrades, repairs, debt consolidation, or even unexpected expenses. Two common ways to do this are through a Home Equity Line of Credit (HELOC) or a Home Equity Loan (HELOAN).

But what’s the difference? Let’s break it down in simple terms.

What is a HELOAN? (Home Equity Loan)

Think of a HELOAN as a traditional loan. You borrow a lump sum of money upfront and repay it with fixed monthly payments.

Key Features:

Fixed interest rate (your payments stay the same every month)
One-time lump sum disbursement
Best for large, one-time expenses (like a roof replacement, major renovation, or debt consolidation)

Good For:
Homeowners who like predictability and know exactly how much money they need.

Family chooses between a HELO and HELOAN to make home improvements

What is a HELOC? (Home Equity Line of Credit)

A HELOC works more like a credit card that’s tied to your home’s equity. You get a revolving line of credit that you can borrow from, repay, and borrow again during your “draw period.”

Key Features:

Variable interest rate (your payments can change over time)
Flexibility to borrow only what you need, when you need it
Pay interest only on the amount you actually use
Great for ongoing or unpredictable expenses (like home repairs spread out over time, education costs, or medical bills)

Good For:
Homeowners who want flexibility and may not know exactly how much they’ll need upfront.

HELOC vs. HELOAN at a Glance

Feature	HELOAN	HELOC
Funds	Lump sum upfront	Borrow as needed
Interest Rate	Fixed	Variable
Payments	Predictable, same each month	Vary depending on balance/interest
Best For	One-time large expenses	Ongoing or flexible expenses

Which One Should You Choose?

Choose a HELOAN if you want stability, fixed payments, and know your exact project cost.
Choose a HELOC if you prefer flexibility, want to borrow as you go, or expect expenses to come up over time.

Ready to Explore Your Options?

Your home’s equity can help you reach your goals. Whether you need the predictability of a HELOAN or the flexibility of a HELOC, our team at Hancock Whitney can walk you through the options and help you get started.

Call us at 800-506-4441 or visit hancockwhitney.com/mortgage-loans to learn more.

Hancock Whitney Bank, Member FDIC and Equal Housing Lender. Bank NMLS# 454781. All loans and accounts subject to credit approval. Terms and conditions apply.