How the HELOC calculator works
A home equity line of credit (HELOC) lets you borrow against the part of your home you own outright. It works like a credit card secured by the house: during the draw period, usually 10 years, you borrow what you need and often pay interest only. Then the repayment period, usually 10 to 20 years, begins and you repay principal and interest.
- Enter your home value and mortgage balance. Use a recent appraisal or a realistic estimate of what the home would sell for.
- Set the maximum combined loan-to-value (CLTV). Most lenders cap your first mortgage plus the HELOC at 80% to 90% of the home's value. 85% is a common limit.
- Enter how much you plan to draw and the rate. The calculator shows both payment phases so the jump at the end of the draw period is not a surprise.
HELOC formulas
Interest-only payment = amount drawn × (APR ÷ 12)
Repayment payment = P × r ÷ (1 − (1 + r)^−n), where r = APR ÷ 12 and n = repayment months
Worked example
A home worth $400,000 with $250,000 left on the mortgage. At an 85% CLTV limit, the lender allows 340,000 total, so the HELOC could be up to $90,000. Drawing $50,000 at 8.5% costs about $354 a month in interest only during the 10-year draw. When the 20-year repayment period starts, the payment rises to about $434 a month.
HELOC vs home equity loan vs cash-out refinance
| HELOC | Home equity loan | Cash-out refinance | |
|---|---|---|---|
| How you get money | Draw as needed | Lump sum | Lump sum, replaces mortgage |
| Rate | Usually variable | Fixed | Fixed or adjustable |
| Best for | Ongoing projects, flexible costs | One known expense | When new mortgage rate is not higher |
| Closing costs | Low, sometimes none | Moderate | Full mortgage closing costs |
Things to check before you apply
- Variable rate risk. Most HELOC rates follow the prime rate. Try a rate 2 points higher in the calculator to see a worst case.
- Payment shock. Moving from interest-only to principal and interest can raise the payment sharply.
- Fees. Ask about annual fees, early closure fees and minimum draw requirements.
- Your home is the collateral. Missing payments can put the house at risk.
Planning a renovation with the money? Estimate materials with our roofing, tile and drywall calculators. Buying a home instead? See the closing cost calculator.
This calculator gives estimates for planning only and is not financial advice. Lender terms vary.
Frequently asked questions
How much can I borrow with a HELOC?
Most lenders let your mortgage plus the HELOC reach 80% to 90% of your home's value. For a $400,000 home with a $250,000 mortgage and an 85% limit, that is up to $90,000.
What is the monthly payment on a $50,000 HELOC?
At 8.5% interest, about $354 a month while you pay interest only during the draw period. Once a 20-year repayment period begins, it rises to about $434 a month.
Is a HELOC payment interest only?
Many HELOCs allow interest-only payments during the draw period, often 10 years. After that you must repay principal and interest over the repayment period.
What credit score do I need for a HELOC?
Many lenders look for a score of 680 or higher, a debt-to-income ratio under about 43%, and at least 15% to 20% equity in the home. Requirements vary by lender.
Is HELOC interest tax deductible?
In the US, interest may be deductible if the money is used to buy, build or substantially improve the home that secures the loan, and you itemize deductions. Check with a tax professional.
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Last updated October 2026.