HELOC Calculator
Estimate your monthly payments during the draw period (interest-only) and the repayment period (principal + interest) for a Home Equity Line of Credit.
How a HELOC Works
A Home Equity Line of Credit (HELOC) lets you borrow against your home's equity — up to an approved credit limit — whenever you need it, similar to a credit card. It has two distinct phases:
1. Draw Period (Typically 5–10 Years)
During the draw period you can borrow up to your limit and make minimum interest-only payments. Your balance can go up and down as you borrow and repay. Interest on the outstanding drawn balance is calculated monthly.
2. Repayment Period (Typically 10–20 Years)
After the draw period ends, the line closes and you begin fully amortizing payments (principal + interest) on the outstanding balance. Because you are now paying down principal, the monthly payment is significantly higher than during the draw period.
HELOC vs Home Equity Loan
- HELOC: Flexible revolving credit, usually variable rate, interest-only draw period.
- Home Equity Loan: Fixed lump sum, fixed interest rate, fixed monthly payments from day one.
Typical HELOC Qualification Requirements
- At least 15–20% equity in your home (combined LTV ≤ 80–85%)
- Credit score of 620 or higher (700+ for best rates)
- Debt-to-income ratio under 43%
- Stable income and employment history
Frequently Asked Questions
What is a HELOC?
A Home Equity Line of Credit (HELOC) is a revolving credit line secured by your home's equity. It works like a credit card — you borrow what you need up to your limit, repay it, and borrow again during the draw period.
How is a HELOC different from a home equity loan?
A home equity loan gives you a single lump sum at a fixed interest rate with equal monthly payments. A HELOC gives you flexible access to credit with variable monthly balances and usually a variable rate. HELOCs are better for ongoing expenses; home equity loans are better for one-time large purchases.
How much can I borrow with a HELOC?
Lenders typically allow a combined loan-to-value ratio (CLTV) of 80–85%. For example, if your home is worth $400,000 and you owe $250,000, you may qualify for a HELOC of up to $70,000–$90,000.
Are HELOC interest rates fixed or variable?
Most HELOCs have variable rates tied to the prime rate (e.g., Prime + 0.5%). This means your payments can rise or fall as the prime rate changes. Some lenders offer rate-lock features that convert a portion to a fixed rate.
What happens after the draw period ends?
The HELOC closes to new borrowing and enters the repayment period. You must now make fully amortizing payments (principal + interest) on the remaining balance, which are typically much higher than draw period payments.
Is HELOC interest tax-deductible?
As of current IRS rules, HELOC interest may be deductible only if the funds are used to "buy, build, or substantially improve" the home securing the line. It is not deductible for personal expenses like vacations or paying off credit cards. Consult a tax advisor for your specific situation.
What are the risks of a HELOC?
Your home is the collateral. If you miss payments, the lender can foreclose. Additionally, rising interest rates increase your payment burden. Lenders can also freeze or reduce your credit line if your home value drops or your financial situation changes.
Can I pay off my HELOC early?
Yes. Most HELOCs allow early repayment without a prepayment penalty, though some lenders charge an early closure fee (typically $300–$500) if you close the line within the first 2–3 years.
What credit score do I need for a HELOC?
Most lenders require a minimum credit score of 620. To qualify for the best interest rates you generally need a score of 700 or higher.
Is this calculator free?
Yes, this HELOC calculator is completely free. No registration, no data saved — all calculations run locally in your browser.