HELOC Calculator United States

A home equity line of credit, or HELOC, turns the equity in your house into a revolving credit line. A home equity loan pays you one lump sum; a HELOC works more like a credit card secured by your house, with an approved limit, borrowing as needed and interest only on the outstanding balance. This HELOC calculator estimates how large a line your lender is likely to approve and the interest-only payment on what you draw during the draw period.

How much a HELOC lets you borrow

Lenders size a HELOC using combined loan-to-value (CLTV): all loans secured by the home divided by its value. They cap it, commonly between 80% and 90%, to keep an equity cushion in case prices fall. Your available line is that cap times the home value, minus your first mortgage balance. For a $400,000 home, an 85% cap and a $200,000 mortgage: $400,000 times 0.85 is $340,000, minus $200,000, leaving $140,000 of borrowing power.

Why the LTV limit matters

The lender’s cap varies: one bank might stop at 80% and another allow 90% for a strong borrower, a $40,000 difference on a $400,000 home. Because each lender sets its own cap, it is an input; get quotes from a few lenders and compare. The result is a maximum based on equity alone, and lenders also weigh your credit score, income and existing debts, so the line offered may be smaller.

The interest-only payment during the draw period

During the draw period, often about 10 years, you can borrow up to your limit and usually pay only interest on what you have drawn: the balance times the annual rate divided by twelve. Drawing $30,000 at 8.5% costs $30,000 times 0.085 divided by 12, or $212.50 a month, and the payment rises in proportion as you draw more.

A worked example

Your home is worth $400,000, you owe $200,000, and your lender allows an 85% combined LTV, so your maximum line is $140,000. You need $30,000 now for a renovation; at an 8.5% variable rate the interest-only payment is $212.50 a month. Drawing the full $140,000 at the same rate would raise it to about $991.67 a month. You are only charged for what you draw, so drawing what you need when you need it keeps a HELOC affordable.

The repayment period

When the draw period ends, the HELOC enters a repayment period, typically 10 to 20 years, during which you can no longer borrow and the balance is paid off with principal and interest. The payment can jump: a $140,000 balance costing about $992 a month in interest would rise to about $1,380 a month over a 15-year repayment at 8.5%. This calculator models only the draw phase, so treat its payment as a minimum. Some borrowers plan to refinance or sell before repayment, and others pay down principal during the draw years to reduce the later increase. Know the repayment terms before you sign.

Common mistakes to avoid

The most common error is treating the full approved line as spending money; every dollar drawn is debt secured by your home, and default can lead to foreclosure. Another is ignoring the variable rate: most HELOCs track the prime rate plus a margin, so an affordable payment today can rise, and it is worth checking for a lifetime rate cap. Fees are easy to miss too: annual maintenance charges, inactivity fees and closing costs that can reach hundreds or thousands of dollars. And using a HELOC to consolidate unsecured debt lowers the rate but turns debt you could walk away from into debt secured by your house.

Assumptions and limitations

This is a planning estimate. It assumes an interest-only draw period and does not model the repayment period, when payments are substantially higher. It does not include closing costs, annual fees or rate changes over time, and it does not check whether your income and credit qualify you for the full line. Confirm the exact terms, LTV cap and rate with your lender before you apply.

About This HELOC Calculator

Use this HELOC calculator to get an instant estimate based on the figures you enter. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.