HELOC Calculator guide
Find out how much equity you can borrow against, what the interest-only draw payment is, and how much the payment jumps when the repayment period begins, before you sign anything.
How a HELOC works in two phases
A home equity line of credit is a revolving credit line secured by your house. You can borrow, repay, and borrow again up to the limit during the draw period, typically 10 years. Most HELOCs only require interest payments during that time. Then the repayment period starts, usually 20 years, and the balance gets amortized: principal plus interest, every month, no more borrowing.
That switch is the part people underestimate. The payment can jump 20% to 60% overnight, and if rates have climbed in the meantime, more. This calculator shows both payments and the size of that jump so you can plan for it before you sign.
How much you can borrow
Lenders cap your combined loan-to-value ratio (CLTV): your first mortgage plus the HELOC, divided by the home's appraised value. The formula is: max line = home value × max CLTV − mortgage balance. Many lenders cap CLTV at 80% to 85%; some go to 90% for strong borrowers.
Example: a $450,000 home with $250,000 left on the mortgage at an 85% CLTV cap gives a maximum line of $450,000 × 0.85 − $250,000 = $132,500. At 80% it's $110,000. Your credit score and debt-to-income ratio then decide whether you get the full amount and at what rate.
The payment formulas
Draw period (interest only): payment = balance × annual rate ÷ 12.
Repayment period (amortizing): payment = B × r(1 + r)^n ÷ ((1 + r)^n − 1), where B is the balance at the end of the draw, r is the monthly rate, and n is the number of repayment months.
Worked example: $50,000 at 8.25%
Draw $50,000 at 8.25% with a 10-year draw and 20-year repayment. During the draw period you pay $50,000 × 0.0825 ÷ 12 = $343.75 a month, and the balance doesn't move. In year 11 the payment becomes $426.03 to pay off $50,000 over 240 months, an $82 (24%) jump. Total interest over 30 years: about $93,498, almost double what you borrowed, because a decade of interest-only payments never touched the principal.
Now the variable-rate reality. HELOCs are usually priced at the prime rate plus a margin. If prime rises one point and your rate becomes 9.25%, the draw payment rises to $385.42 and the repayment payment to $457.93. Run a stress test at your rate plus 2 points before you borrow.
HELOC vs home equity loan vs cash-out refinance
A HELOC fits spending that happens over time, like a renovation paid in stages, and you pay interest only on what you've drawn. A home equity loan gives you a lump sum at a fixed rate with fixed payments from day one; better when you know the exact cost and want payment certainty. A cash-out refinance replaces your whole first mortgage, which only makes sense if the new rate is close to or below your current one. If you locked a 3% mortgage in 2021, don't give it up to access equity.
Mistakes that turn a HELOC into a problem
Paying only interest for 10 years. Nothing requires it. Paying even $150 extra a month during the draw period shrinks the balance before the payment shock arrives.
Using it for spending that doesn't last. Your house is the collateral. Funding vacations or a car with home equity means you can lose the house over a depreciating purchase.
Ignoring fees. Look for annual fees, inactivity fees, early closure fees (often if you close within three years), and appraisal costs. Many lenders waive closing costs but claw them back if you close early.
Assuming the line will always be there. Lenders can freeze or reduce a HELOC if home values fall or your finances change; many did in 2008. Don't treat an undrawn line as your emergency fund.
Taxes
HELOC interest is deductible only if you itemize and the money was used to buy, build, or substantially improve the home that secures it, within the overall mortgage debt limit. Interest on a HELOC used to pay off credit cards or buy a car is not deductible.
How we calculate: sources
Frequently asked questions
How much can I borrow with a HELOC?
Most lenders cap your combined loan-to-value at 80% to 90%. Max line = home value × CLTV − mortgage balance. A $450,000 home with $250,000 owed at an 85% cap allows $132,500.
What is the payment on a $50,000 HELOC?
At 8.25%, the interest-only draw payment is $343.75 a month. When a 20-year repayment period starts, it becomes about $426.03 a month to pay off the $50,000.
What happens when the HELOC draw period ends?
You can't borrow any more, and the balance starts amortizing over the repayment period, usually 10 to 20 years. Because you now pay principal too, the monthly payment often rises 20% to 60%.
Are HELOC rates fixed or variable?
Usually variable, tied to the prime rate plus a margin, so your payment changes when the Fed moves rates. Some lenders let you lock part of the balance at a fixed rate.
Is HELOC interest tax deductible?
Only if you itemize and used the money to buy, build, or substantially improve the home securing the loan, within the mortgage debt limits in IRS Publication 936. Interest on money used for cars or credit cards isn't deductible.
HELOC or home equity loan: which is better?
A HELOC suits costs spread over time, since you pay interest only on what you draw. A home equity loan suits a known one-time cost and gives a fixed rate and fixed payment from day one.
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Can I pay off a HELOC early?
Yes. You can pay principal any time during the draw period and borrow it again later. Check for an early closure fee if you plan to close the line in the first few years.