How to use the HELOC calculator
- 1 Enter your home value, mortgage balance and the lender's CLTV limit.
- 2 Enter the amount you draw and the HELOC rate.
- 3 Choose the draw period and repayment period.
- 4 Choose interest only or interest and principal during the draw period, and read your payments.
Worked example
A $500,000 home with a $250,000 mortgage, an 85% CLTV limit and a $60,000 draw at 8.5%, interest only for 10 years then 20 years of repayment. The credit limit is $175,000. The draw-period payment is $425 a month, rising to $520.69 when repayment starts. Over 30 years you would pay about $115,967 in interest, so paying principal early saves a lot.
Using a HELOC safely
- Plan for the payment jump when the draw period ends.
- Test a higher rate: most HELOCs are variable.
- Pay principal early to cut interest.
- Borrow for lasting value, such as home improvements.
Compare a lump-sum loan with the Home Equity Calculator, a cash-out refinance with the Refinance Calculator, and card payoff with the Credit Card Payoff Calculator.
Features
Credit limit
Home value × CLTV limit − mortgage balance.
Both periods
The draw-period payment and the repayment payment, and the jump between them.
Total interest
What the line costs over its whole life at the rate you enter.
When to use it
Home improvements
Draw as the work progresses and pay interest only on what you use. Compare a lump-sum loan with the Home Equity Calculator.
Paying off high-rate debt
Compare with paying cards directly in the Credit Card Payoff Calculator.
Comparing with a cash-out refinance
Check the new mortgage payment in the Refinance Calculator.
Checking affordability
Add the payment to your debts in the Debt-to-Income Calculator.
Related Home and Auto tasks
Frequently asked questions
What is a HELOC?
A home equity line of credit: a revolving loan secured by your home. You can borrow up to a limit during the draw period, usually 10 years, then repay over a repayment period, usually 20 years.
How is my HELOC limit worked out?
Lenders usually allow 80% to 90% of your home's value, minus your mortgage balance. A $500,000 home with a $250,000 mortgage and an 85% limit gives a $175,000 line.
What is an interest-only HELOC payment?
During the draw period, many HELOCs require only the interest on what you have borrowed. $60,000 at 8.5% costs $425 a month in interest.
What happens when the draw period ends?
You can no longer borrow, and the balance is repaid with principal and interest, so the payment rises. In the example it rises from $425 to $520.69 a month.
Are HELOC rates variable?
Usually. They are tied to the prime rate plus a margin, so payments change when rates change. Some lenders let you fix the rate on part of the balance.
Is HELOC interest tax-deductible?
Only if you itemize and use the money to buy, build or substantially improve the home that secures it, within the mortgage debt limits.
HELOC or home equity loan?
A HELOC is flexible and you pay interest only on what you use, at a variable rate. A home equity loan gives a lump sum at a fixed rate with fixed payments.
What are the risks of a HELOC?
Your home is the collateral, so missing payments can lead to foreclosure. Payments can rise with rates or at the end of the draw period, and lenders can freeze the line if your home value falls.
Are there fees?
Some HELOCs have appraisal fees, annual fees or early closure fees. Many lenders waive closing costs if you keep the line open for a few years.
Can I pay off a HELOC early?
Usually yes. Paying principal during the draw period lowers the interest and the later payment.
Results are estimates based on the official rates linked above. Confirm important figures with the issuing authority or a qualified adviser before you act on them.
Built and reviewed by Hamza Farooq, founder and lead developer
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