HELOC Calculator

Calculate your home equity line of credit payments, available equity, and total interest costs. Plan your HELOC borrowing wisely.

Home Information
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$
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HELOC Details
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years
years

Quick Facts

Typical LTV Limit
80-85%
of home value
Average HELOC Rate
8-9%
Variable, tied to Prime
Draw Period
5-10 years
Interest-only payments
Repayment Period
10-20 years
Principal + Interest

Your HELOC Analysis

Calculated
Available Equity
$0
Maximum you can borrow
Draw Period Payment
$0
Interest-only monthly
Repayment Payment
$0
Principal + Interest monthly
Total Interest (Draw Period)
$0
If borrowing full amount
Total Interest (Repayment)
$0
During repayment phase
Borrowing Status
--
Total Cost of HELOC
$0
Principal + All Interest

Key Takeaways

  • A HELOC is a revolving credit line secured by your home equity
  • Most lenders allow borrowing up to 80-85% LTV minus your mortgage balance
  • Draw period payments are interest-only, making them lower initially
  • Be prepared for payment shock when the repayment period begins
  • HELOC rates are variable and tied to the prime rate

What is a HELOC?

A Home Equity Line of Credit (HELOC) is a revolving credit line secured by your home's equity. Unlike a traditional home equity loan, a HELOC works like a credit card - you can borrow as needed up to your credit limit, pay it down, and borrow again during the draw period.

How HELOCs Work

HELOCs typically have two phases:

  • Draw Period (5-10 years): You can borrow money as needed and usually only pay interest on what you've borrowed. This keeps monthly payments low but doesn't reduce your principal.
  • Repayment Period (10-20 years): You can no longer borrow and must repay the balance with principal and interest payments. This is when many borrowers experience payment shock.

Calculating Available Equity

Lenders typically allow you to borrow up to 80-85% of your home's value, minus your existing mortgage balance:

Available Equity = (Home Value x LTV%) - Mortgage Balance

Pro Tip: Shop Around for Better Rates

HELOC rates can vary significantly between lenders. Credit unions often offer lower rates than traditional banks. Also, consider whether an introductory rate applies and what the rate will be after the promotional period ends.

HELOC vs. Home Equity Loan

  • HELOC: Variable rate, flexible borrowing, interest-only payments during draw period, works like a credit card
  • Home Equity Loan: Fixed rate, lump sum disbursement, fixed monthly payments from the start, predictable costs

Common Uses for HELOCs

  • Home improvements and renovations - May be tax-deductible if used to improve your home
  • Debt consolidation - Lower rate than credit cards, but be careful not to rack up new debt
  • Education expenses - Alternative to student loans, but your home is at risk
  • Emergency fund backup - Available when needed, no cost if not used
  • Investment opportunities - Use cautiously; leverage can magnify losses

Important Considerations

Variable Rates: HELOC rates fluctuate with the prime rate, which can significantly increase your payments.

Your Home as Collateral: Failure to repay could result in foreclosure - your home is at stake.

Payment Shock: When the draw period ends, payments can increase dramatically as you begin paying principal.

Closing Costs: Some HELOCs have fees similar to a mortgage (appraisal, title search, etc.).

Tips for Using a HELOC Responsibly

  • Only borrow what you truly need and have a repayment plan
  • Consider making principal payments during the draw period to reduce future payment shock
  • Keep an eye on interest rate changes and budget for potential increases
  • Avoid using a HELOC for depreciating assets or everyday expenses
  • Maintain an emergency fund separate from your HELOC