HELOC fees and closing costs: what you actually pay
A digital HELOC has no annual fee and no prepayment penalty. The main cost is a one-time draw fee selected at closing (2%, 3%, 4%, or 5%), plus government and state recording fees that vary by state.
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What you pay at closing
Two cost lines show up on a digital HELOC closing statement: the draw fee and the state fees. Everything else is either zero or absorbed by the lender.
The fee structure
State recording fees. Government and state fees that vary by state.
Appraisal cost. $0 in most cases (automated valuation). See Section 5.
Application fee. $0.
Title fee. $0.
Origination fee. $0 (draw fee replaces it).
Worked example
$100,000 HELOC drawn at closing. 3% draw fee selected. State and recording fees average around $300 to $1,200 depending on state.
- Draw fee: $3,000
- State fees (example range): $300 to $1,200
- Total at closing: roughly $3,300 to $4,200
That total is what you pay one time. After closing, no monthly fee, no annual fee, no ongoing charges except interest on what you owe.
Want to model your own numbers? Use the HELOC calculator to see your line size first.
The fees that are not on your closing statement
Traditional HELOCs often pile on a long list of fees. The digital HELOC strips most of them out.
- No application fee
- No origination fee (the draw fee replaces it)
- No title fee
- No lender fee or underwriting fee
- No annual fee
- No prepayment penalty
- No monthly maintenance fee
- No inactivity fee
Compared to a cash-out refinance, the savings get larger. A refi triggers full title fees, lender fees, and an impound account reset, often several thousand dollars in additional costs that the HELOC does not have. See HELOC vs cash-out refinance for the side-by-side cost view.
The draw fee, explained
The draw fee is a one-time fee on the amount drawn at closing. You pick the percentage at application: 2%, 3%, 4%, or 5%.
Why you get to choose
The draw fee is the lender’s structure for splitting upfront cost and ongoing rate. A lower draw fee may correspond to a slightly higher rate. A higher draw fee may correspond to a slightly lower rate. The structure lets you match the trade-off to your situation.
How to pick
Two questions to ask:
- How long will you carry a balance? The longer you hold the balance, the more the rate matters relative to the upfront fee. Long carry leans toward higher draw fee for the lower rate.
- How much cash do you have at closing? If closing cash is tight, the lower draw fee preserves cash and trades for a slightly higher rate.
Your loan officer can walk through the math for your specific situation. For the full rate picture, see how HELOC rates work.
See your actual fees, not estimates.
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Government and state fees
Every real-estate-secured loan triggers state and county fees. The exact dollars vary by state and by county within a state.
What the fees cover
- Recording fees. County recorder charges to record the new lien.
- Transfer or mortgage taxes. State-specific taxes on real estate transactions or new mortgage debt. Some states charge these, some do not.
- Other state-required line items. Vary by state.
What this looks like in practice
Across our licensed states, state and recording fees on a HELOC typically run a few hundred dollars to around $1,200. The exact dollar figure is disclosed in your loan documents before closing. No surprises.
For state-by-state availability, see HELOC by state.
The appraisal question
Appraisal cost is one of the biggest line items on a traditional HELOC. On the digital program, most borrowers pay nothing for the appraisal.
Lines at or below $400,000
The lender uses an automated valuation model (AVM) to value the property. AVMs run in seconds against current market data. No appraiser visit, no appraisal cost.
If you disagree with the AVM value, you can request a drive-by or full appraisal. That appraisal is at your expense.
Lines above $400,000
The lender covers the appraisal cost regardless of the line size. A full appraisal is typically required to support the larger loan amount.
For the full mechanics, see how a HELOC works.
What happens if you pay off early
There is no prepayment penalty on the digital HELOC. You can pay down or pay off your balance early without a generic penalty fee.
One specific fee can apply: an early payoff (EPO) fee. The EPO fee triggers if you pay off more than 90 percent of your original draw before a certain point in the loan. Your loan documents disclose the exact terms and trigger point.
If you are using the HELOC as a short-term bridge with intent to pay it off fast, ask your loan officer about EPO mechanics before closing. The fee can be material on large draws paid off quickly.
For the broader picture on costs and risks beyond fees, see HELOC risks and disclosures.
Ongoing costs after closing
Once the HELOC closes, the ongoing cost structure is simple:
- Interest on outstanding balance. Charged monthly on what you owe. See how HELOC rates work for how the rate is built.
- $0 annual fee. No fee for keeping the line open.
- $0 monthly maintenance. No charge for the account itself.
- Late fees. Standard lender practice applies if a payment is missed. Disclosed in your loan documents.
If you draw nothing, you owe nothing. The line stays open and available, but you do not pay interest on a zero balance and you do not pay any account fee. For the full step-by-step on the digital HELOC application, see how to apply for a HELOC.
How HELOC costs compare to other equity products
Each product carries a different cost structure. Quick comparison on the biggest line items. The HELOC sits in second position behind your first mortgage, so it preserves your low first mortgage rate. See keep your low mortgage rate for the full framework.
Streamlined fees
Draw fee 2 to 5 percent selectable, state fees vary, no title fee, no application fee, no annual fee, no prepayment penalty. AVM in most cases.
Traditional closing
Origination fee, title fee at some lenders, full appraisal often required, state fees apply. No annual fee. Closing costs typically 2 to 5 percent of loan amount.
Full closing costs
Origination, lender, title, escrow, full appraisal, impound account reset. State fees apply. Closing costs typically 2 to 5 percent of new loan amount on the entire balance.
For the full side-by-side, see HELOC vs cash-out refinance or HELOC vs home equity loan.
How to estimate your total cost
Three steps to a real estimate:
- Run the HELOC calculator to estimate your available line.
- Pick a draw fee level (2%, 3%, 4%, or 5%) based on how long you expect to carry a balance.
- Start a soft credit check on the form below. You get your real rate and a fee summary in minutes.
If the numbers fit your plan, the next step is the full application. Most files fund within a week. For definitions of draw fee, CLTV, AVM, and other technical terms on this page, see the HELOC glossary. Start with the form below.
HELOC fees and costs, answered
Is there an annual fee on this HELOC?
No. Zero annual fee. You do not pay anything just for keeping the line open.
Is there a prepayment penalty?
No prepayment penalty. You can pay down or pay off the balance early without a penalty fee. An EPO (early payoff) fee may apply if you pay off more than 90 percent of your original draw, depending on your specific loan terms.
What is the draw fee?
A one-time fee charged at closing on the amount you draw at closing. You select the percentage: 2%, 3%, 4%, or 5%. The lower draw fee options may correspond to higher rates; the higher draw fee options may correspond to lower rates. Your loan officer can walk you through the trade-off for your specific situation.
Do I need to pay for an appraisal?
In most cases, no. Lines at or below $400,000 use an automated valuation (AVM) at no cost to you. If you disagree with the AVM and request a drive-by or full appraisal, that is paid by you. Lines above $400,000 include a full appraisal paid by the lender.
What are the government and state fees?
Recording fees and any state-specific taxes apply to all real-estate-secured loans. The exact amount varies by state and county. We disclose the exact dollar figure in your loan documents before closing.
How does this HELOC compare to traditional HELOC closing costs?
Traditional HELOCs often charge application fees, title fees, lender fees, and annual fees. The digital HELOC eliminates most of these. The remaining costs are the draw fee and state-required fees.
If I do not draw anything from the line, do I still pay fees?
The draw fee at closing is based on the amount drawn at closing. The digital HELOC currently requires a full draw at closing, so the draw fee is calculated on the full amount. After closing, you do not pay an annual fee or any monthly fee for keeping the line open. You only pay interest on what you owe.
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