HELOC Calculator
See how large a home equity line of credit your equity supports, what the interest-only payment runs during the draw period, and how much the payment jumps when the repayment period starts.
Your Home & Mortgage
Lenders use an appraisal or AVM, not your Zestimate.
60% of the home's value. Enter 0 if the home is paid off.
The ceiling on your mortgage and HELOC combined.
You only pay interest on what you draw, not the full line.
HELOC Terms
Variable, tied to Prime.
Estimated HELOC Credit Limit
$125,000
85% of $500,000 minus your $300,000 mortgage balance.
Home Equity
$200,000
Value minus what you owe
Current LTV
60.0%
First mortgage only
CLTV After Draw
75.0%
Against a 85% ceiling
Draw Period vs. Repayment Period
On a $75,000 balance at 8.5%.
Draw period — first 10 years
$531/mo
Interest-only. Nothing comes off the principal, so you still owe $75,000 when the draw period ends.
Repayment period — next 20 years
$651/mo
Principal and interest. No more drawing — the line is closed and the balance amortizes to zero.
Payment shock: +$120/mo (23% higher) the month the draw period ends.
This is the single most-missed number on a HELOC. The jump arrives on schedule, 10 years out — plan for it, or refinance the balance before it lands.
Interest During Draw
$63,750
10 years, interest-only
Interest During Repayment
$81,208
20 years, P&I
Total Interest
$144,958
If you never pay extra
If Prime rises 2 points, your draw-period payment becomes
$75,000 at 10.5% instead of 8.5%.
$656/mo
HELOC rates float with the Prime rate, so the payment above is a snapshot, not a promise. If a fixed payment matters more than flexibility, compare against a cash-out refinance.
How Lenders Set Your HELOC Limit
One ratio decides almost everything: combined loan-to-value, or CLTV. It measures every loan secured by the property against what the property is worth. A lender sets a ceiling — 85% is the most common — and your line is whatever room is left beneath it after the first mortgage.
Credit limit = (Home value × Max CLTV) − Mortgage balance
Work through the default scenario above. A $500,000 home at an 85% ceiling supports $425,000 of total debt. Subtract the $300,000 first mortgage and $125,000 of line remains. Push the ceiling to 90% and the line grows to $150,000; drop it to 80% and it shrinks to $100,000. The same house, the same equity — a 20-point swing in the limit driven entirely by the lender's risk appetite.
That appetite is a function of you. Credit scores above 720 and a debt-to-income ratio under 43% get the higher ceilings and better pricing. Weaker files get held to 80%, or approved for less than the formula allows. Check where you stand with the debt-to-income ratio calculator before you apply.
The Draw Period: Cheap, Flexible, and Deceptive
For the first 10 years or so, a HELOC behaves like a credit card secured by your house. Borrow what you need, repay it, borrow again. The minimum payment is interest-only on the balance you've drawn, which makes it feel remarkably cheap: $75,000 drawn at 8.5% asks only $531 a month.
That number is seductive because it is not amortization — it is rent on the money. Pay exactly the minimum for ten years and you will have paid roughly $63,750 in interest and still owe the original $75,000, to the dollar. The balance does not move unless you push principal at it voluntarily.
The flexibility is real, though, and it is the reason to choose a HELOC over a lump-sum loan. A kitchen remodel billed in four draws over eight months accrues interest only as each invoice lands. A cash-out refinance would have started charging interest on the entire sum the day it closed.
The Repayment Period and the Payment Shock
When the draw period ends, the line closes and the balance converts to an amortizing loan over the repayment period — typically 10 to 20 years. Both principal and interest are now due, and the payment jumps on a date you knew about a decade in advance.
| Balance at 8.5% | Draw (interest-only) | Repay over 20 yrs | Repay over 10 yrs |
|---|---|---|---|
| $50,000 | $354/mo | $434/mo | $620/mo |
| $75,000 | $531/mo | $651/mo | $930/mo |
| $125,000 | $885/mo | $1,085/mo | $1,550/mo |
Notice how much the repayment term matters. The same $75,000 costs $651 a month stretched over 20 years and $930 over 10 — a 75% jump from the interest-only payment rather than a 23% one. Ask any lender for the repayment term in writing before you sign; it is rarely on the rate sheet.
Three ways to defuse the shock: pay principal during the draw period so less converts, refinance the balance into a fixed second mortgage before the deadline, or size the draw so the eventual amortizing payment already fits your budget. The amortization schedule shows exactly how the balance falls once repayment begins.
HELOC vs. Home Equity Loan
Both are second liens against the same equity, and people use the names interchangeably. They are not the same product.
| HELOC | Home Equity Loan | |
|---|---|---|
| How you get the money | Revolving line — draw as needed | Lump sum at closing |
| Rate | Variable, tied to Prime | Fixed for the full term |
| Payment | Interest-only, then P&I | Level P&I from month one |
| Interest accrues on | Only what you've drawn | The entire amount, day one |
| Best for | Staged or uncertain costs | One known expense |
The decision usually comes down to a single question: do you know exactly what you need, right now? A $60,000 bathroom addition with a signed contract is a home equity loan — lock the rate, take the money, make one payment. A multi-phase renovation, a business runway, or tuition spread across four years is a HELOC, because you only pay for the money once you actually take it.
The hidden cost of the HELOC is the variable rate. Prime moves with the Federal Reserve, and a line taken at 8.5% can be an 11% line two years later with no action on your part. The calculator above shows what a two-point move does to your payment. Price a fixed-rate second lien alongside it with the second mortgage calculator.
HELOC vs. Cash-Out Refinance
A cash-out refinance replaces your first mortgage with a larger one and hands you the difference. That is a fine trade when today's rates are at or below your current rate. It is an expensive one when they are not — refinancing a $300,000 balance at 3.5% into a new loan at 6.5% to extract $75,000 means paying three extra points of interest on the entire $300,000, not just on the cash you wanted.
A HELOC leaves the first mortgage untouched. You pay a higher rate, but only on the second lien, and closing costs typically run $0–$1,000 against 2–5% of the loan amount for a refinance. Run both against your actual numbers on the HELOC vs. cash-out refinance calculator — it computes the cost of the cash under each structure. If your current rate is already above market, start with the refinance calculator instead.
Costs and Fine Print Worth Checking
- Annual fee — often $50–$75 simply to keep the line open, drawn or not. Frequently waived in year one.
- Early closure fee — many lenders reclaim waived closing costs if you close the line within the first two or three years.
- Minimum initial draw — some lines require you to take a set amount at closing, which starts the interest clock immediately.
- Rate cap — the lifetime ceiling on the variable rate. Federal law requires HELOCs to disclose one; find out what it is.
- Fixed-rate conversion option — many lenders let you lock a portion of the balance at a fixed rate. Worth asking about before you need it.
- Repayment term — a 10-year repayment period costs more than 40% more per month than a 20-year one. Get it in writing.
Frequently Asked Questions
How is a HELOC limit calculated?
A lender picks a maximum combined loan-to-value (CLTV) ratio — most commonly 85% — multiplies your home's appraised value by it, and subtracts every dollar you still owe on the property. On a $500,000 home with a $300,000 mortgage at 85% CLTV, that's ($500,000 × 0.85) − $300,000 = $125,000. Credit score, income, and debt-to-income ratio then determine whether the lender extends the full amount or trims it.
What is the draw period on a HELOC?
The draw period is the opening phase — usually 10 years — when you can borrow against the line, repay, and borrow again, like a credit card secured by your house. The minimum payment during the draw period is typically interest-only on the balance you've actually drawn. Draw nothing and you owe nothing. The catch: interest-only payments retire no principal, so the full balance is still there when the draw period ends.
How much does my payment go up after the draw period?
It usually doubles or more. A $75,000 balance at 8.5% costs $531/month interest-only during the draw period. When the 20-year repayment period begins, that same balance amortizes at $651/month — a 23% jump. Shorten the repayment period to 10 years and the payment climbs to $930/month, a 75% jump. The shorter the repayment period and the larger the balance, the harder the shock.
Do I pay interest on the whole credit line?
No. Interest accrues only on what you've drawn. An unused $125,000 line costs nothing in interest. Some lenders do charge an annual fee (often $50–$75) or an inactivity fee to keep an untouched line open, and a few require a minimum initial draw at closing. Read the fee schedule before you sign.
What credit score do I need for a HELOC?
Most lenders want 680 or higher, and the best rates and highest CLTV limits generally go to borrowers above 720. Below 680 the line gets smaller, the rate gets higher, or the CLTV ceiling drops from 85% to 80%. Lenders also check debt-to-income ratio — 43% or lower is the common cutoff — and require enough equity that the deal still works if home values fall.
Is HELOC interest tax-deductible?
Only when the money is used to buy, build, or substantially improve the home securing the loan, and only if you itemize. That rule came from the Tax Cuts and Jobs Act of 2017. Using a HELOC to consolidate credit card debt or pay tuition makes the interest non-deductible, even though the loan itself is secured by your home. Confirm your situation with a tax professional — this is not tax advice.
Can my lender freeze or reduce my HELOC?
Yes. A HELOC is a revolving commitment, not a lump sum in your bank account. Lenders can freeze or cut a line if your home's value drops materially, if your credit deteriorates, or if you miss payments. This happened at scale during the 2008 housing downturn. If you're counting on a HELOC as an emergency fund, understand that it can be withdrawn at exactly the moment a broad downturn makes you want it.