HELOC Calculator

Home Value

Current estimated market value

Mortgage Balance

Remaining balance on your mortgage

Max LTV Ratio

Lender's max combined LTV

HELOC Credit Limit

Max available equity

Amount You Plan to Draw

How much you intend to borrow

Interest Rate (APR)

Current avg: 8–10% (variable)

Draw Period

years

Typically 5–10 years

Draw Period Payments

Most HELOCs are interest-only during draw

Fixed Monthly Payment

Must exceed monthly interest

Repayment Period

years

Typically 10–20 years

Draw Period

Duration—

Monthly payment—

Total interest paid—

Balance at end of draw—

Repayment Period

Duration—

Monthly payment—

Total interest paid—

Payment typePrincipal + Interest

Total Interest Paid

—

Total Cost of HELOC

—

Available Equity

—

Current LTV

—

Combined LTV (with HELOC)

—

Total Loan Life

—

How a HELOC Works

A Home Equity Line of Credit (HELOC) is a revolving credit line secured by your home's equity. Unlike a home equity loan which gives you a lump sum, a HELOC works more like a credit card — you can borrow, repay, and borrow again up to your credit limit during the draw period.

Two Distinct Phases

Draw Period (typically 5–10 years): You can borrow up to your credit limit as needed. Most HELOCs require interest-only payments during this phase, which keeps monthly costs low. However, since you're not paying down principal, your balance doesn't shrink unless you make extra payments.

Repayment Period (typically 10–20 years): The credit line closes and you repay the outstanding balance in full amortizing payments. This is where many borrowers face payment shock — monthly payments often jump significantly because you're now paying both principal and interest on the full outstanding balance.

How Your Credit Limit Is Calculated

Lenders typically allow a combined loan-to-value (CLTV) ratio of 80%–85% of your home's appraised value. The formula is:

Max HELOC = (Home Value × Max LTV%) − Mortgage Balance

Example: $400,000 home × 85% = $340,000 max combined debt. If you owe $250,000 on your mortgage, your maximum HELOC line is $90,000.

HELOC vs Home Equity Loan vs Cash-Out Refi

HELOC — Variable rate, flexible draws, lower initial payments. Best for ongoing expenses like renovations over time.
Home Equity Loan — Fixed rate, lump sum, predictable payments. Best for a single large expense with a known cost.
Cash-Out Refinance — Replaces your entire mortgage at a new rate. Best when current mortgage rates are lower than your existing rate.

Watch Out For Payment Shock

The biggest HELOC trap is interest-only draw period payments followed by full amortizing repayment payments. A $50,000 HELOC at 8.5% has an interest-only draw payment of about $354/month. When repayment begins on a 20-year term, that payment jumps to approximately $434/month — a 23% increase. On larger balances the shock can be much more severe. Use this calculator to plan ahead.

Frequently Asked Questions

Can I pay off a HELOC early?

Yes — and it's a smart strategy. Making extra principal payments during the draw period reduces your balance, which means lower interest charges and a smaller repayment-period payment. Some HELOCs have early termination fees (typically $300–$500) if you close the line within the first 2–3 years, but there's usually no penalty for paying down the balance. Check your HELOC agreement for the specific terms.

Are HELOC interest payments tax deductible?

HELOC interest is tax deductible only if the funds are used to buy, build, or substantially improve the home that secures the loan — per the Tax Cuts and Jobs Act of 2017. Interest on HELOC funds used for other purposes (debt consolidation, vacations, etc.) is not deductible. Consult a tax professional for guidance specific to your situation, as tax laws can change.

What happens if home values drop?

If your home value drops significantly, lenders can freeze or reduce your HELOC credit line — even mid-draw-period — if your combined LTV exceeds their limits. This happened widely during the 2008 housing crisis. Borrowers who relied on undrawn HELOC funds suddenly found their credit line reduced or eliminated. This is why it's risky to count on a HELOC as your primary emergency fund.

What credit score do I need for a HELOC?

Most lenders require a minimum score of 620, but scores of 700+ qualify for better rates. You'll also typically need at least 15%–20% equity in your home, a debt-to-income ratio below 43%, and stable employment history. Check our Debt-to-Income Calculator to see where you stand before applying.