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What a HELOC calculator should show
A HELOC looks cheap at the start. The interest-only payment is small, the limit is large, and the line is there whenever you need it. The cost shows up later: a payment that steps up when repayment begins, a variable rate you do not control, and a lien on your house. This calculator shows all three so you borrow with the full picture.
How it works
Enter your home value, mortgage balance and the maximum combined loan-to-value your lender allows. The tool works out how much equity is available. Then enter the amount you plan to use, the rate, and the lengths of the draw and repayment periods. It shows the interest-only payment, the payment once repayment starts, total interest and your combined LTV. If you ask for more than your equity supports, it caps the amount and says so.
How the numbers are calculated
Available equity is home value × combined LTV limit − mortgage balance. The interest-only payment is amount borrowed × rate ÷ 12. The repayment payment uses the standard amortization formula over the repayment period on the same balance. The rate table repeats both payments at rates 1, 2 and 3 points higher.
Worked example: $500,000 home, $300,000 mortgage, $60,000 draw
At an 80% limit the available equity is $100,000. Borrowing $60,000 at an example rate of 8.5% costs $425 a month interest-only for 10 years, then $520.69 for 20 years of repayment. Total interest is about $115,967, and combined LTV after the draw is 72%. If the rate rises 2 points, the interest-only payment becomes $525 and the repayment payment $599.
Before you open a line
HELOC or fixed-rate home equity loan
A home equity loan gives you a lump sum at a fixed rate with a set schedule. A HELOC gives flexibility. If you know exactly how much you need, the fixed version removes rate risk. Compare how the loan payment behaves on the main mortgage calculator.
Compare it with other ways to reach cash
A cash-out refinance replaces your first mortgage, which may be a bad trade if your current rate is low. A HELOC leaves your first mortgage alone.
Paying it down
Because the draw-period payment does not touch principal, make extra payments during that time. Use the payoff calculator to test how quickly extra money shortens the balance.
Estimate only. Real HELOCs let you draw over time and may have fees, rate caps and minimum draws; ask your lender for the terms.
Frequently asked questions
What is a HELOC?
A home equity line of credit is a revolving credit line secured by your home. You borrow against the equity you have, which is the home's value minus what you owe on the mortgage. During the draw period you can borrow as needed, and afterward you repay what you owe.
How much can I borrow with a HELOC?
Lenders commonly cap your combined mortgage and HELOC balance at a percentage of the home's value, often in the range of 80% to 85%, though it varies. At 80% on a $500,000 home with a $300,000 mortgage, the room is $100,000. Enter your lender's limit in the combined LTV field.
Why does my payment jump after the draw period?
During the draw period many HELOCs only require interest. When repayment starts, you pay principal as well, so the payment rises. In the default example it goes from $425 to about $521 a month on a $60,000 balance at 8.5% repaid over 20 years.
Is a HELOC rate fixed or variable?
Usually variable, tied to an index such as the prime rate, so your payment can rise or fall. Some lenders let you lock part of your balance at a fixed rate. The rate table on this page shows how your payment changes if rates go up 1, 2 or 3 points.
Is HELOC interest tax deductible?
In general, only if you use the money to buy, build or substantially improve the home that secures the loan, and only if you itemize. Ask a tax professional about your case.
What are the risks?
Your home is the collateral, so missing payments can lead to foreclosure. Lenders can also freeze or reduce a line in a downturn, and variable rates can raise payments. Borrow against home equity for purposes that build value or solve a real need.