HELOC Calculator
Tap into your home's equity with a Home Equity Line of Credit. Enter your home value and mortgage balance to see how much you can borrow and what it costs.
How HELOCs Work and Why People Use Them
A HELOC functions like a giant credit card backed by your home equity. You get approved for a maximum credit line, borrow what you need when you need it, and only pay interest on the outstanding balance.
During the draw period (usually 10 years), you make interest-only payments and can borrow, repay, and re-borrow as often as you like. Once the draw period ends, you enter the repayment period where you pay both principal and interest, often causing payments to jump significantly.
People use HELOCs for home renovations, debt consolidation, emergency funds, or business investments. The interest is sometimes tax-deductible if used for home improvements, making it cheaper than personal loans or credit cards.
Calculating Your HELOC Borrowing Power
Lenders typically cap HELOCs at 85% of your home's value minus your mortgage balance. If your home is worth $350,000, 85% is $297,500. Subtract your $200,000 mortgage and you can borrow up to $97,500.
Your actual approval depends on credit score, income, and debt-to-income ratio. Lenders want to see that you can handle the payments even if rates rise. Strong credit (740+) and low debt (<36% DTI) unlock the best rates and highest credit lines.
Home appraisals determine your home's value. If the market has softened since you bought, your equity might be less than you think, reducing your borrowing power.
Risks and Downsides of HELOCs
Variable rates mean your payment can skyrocket when the Fed raises rates. A $50,000 HELOC balance at 5% costs $208 monthly in interest. If rates jump to 9%, that payment rises to $375—an 80% increase.
Your home is collateral. If you can't make payments, the lender can foreclose. Unlike credit card debt, HELOC default means losing your house.
Interest-only payments during the draw period feel affordable, but they don't reduce your balance. When the repayment period starts, your payment can double or triple as you begin paying down principal. Budget for that shock well in advance.
Frequently Asked Questions
What is a HELOC?
A Home Equity Line of Credit is a revolving credit line secured by your home equity. You can draw funds as needed up to your credit limit, similar to a credit card, and only pay interest on what you borrow.
How much can I borrow with a HELOC?
Most lenders allow you to borrow up to 85% of your home's value minus your existing mortgage balance. If your home is worth $350,000 and you owe $200,000, you can typically borrow up to $97,500.
What is the difference between a HELOC and a home equity loan?
A HELOC is a revolving line of credit with variable rates and interest-only payments during the draw period. A home equity loan is a lump sum with fixed rates and fixed monthly payments from day one.
Do I have to pay back a HELOC right away?
No. Most HELOCs have a 10-year draw period where you only pay interest. After that, you enter a 10-20 year repayment period where you pay both principal and interest.
Can my HELOC rate change?
Yes. Most HELOCs have variable interest rates tied to the prime rate. When the Federal Reserve raises rates, your HELOC rate and payment can increase, sometimes significantly.