HELOC Calculator — Home Equity Line of Credit
Model your credit limit, draw period payments, payment shock, variable rate risk, and full amortization — before tapping your home equity.
How to Use This Calculator
1
Enter Your Property Details
Input your home's current value, existing mortgage balance, and your lender's CLTV limit (usually 80–85%).
2
Set Rate & Terms
Choose fixed or variable rate mode. Variable HELOCs use Prime + your margin. Set draw and repayment periods.
3
Model Your Borrow Amount
Use the slider or quick presets to set your planned draw. See the payment shock when interest-only ends.
4
Explore Scenarios & Schedule
Check the Scenario tab for rate risk analysis and product comparisons. See the Full Schedule tab for month-by-month amortization.
Key Terms
- HELOC
- Home Equity Line of Credit — a revolving credit line secured by your home. You draw as needed and pay interest-only during the draw period.
- Draw Period
- The initial phase (5–10 years) when you can borrow from the line and make interest-only payments. Balance stays flat.
- Repayment Period
- The phase (10–20 years) when the line closes and you repay principal + interest. This causes the payment shock.
- CLTV (Combined LTV)
- Total liens ÷ Home Value. Lenders cap HELOCs at 80–90% CLTV. Higher CLTV = higher risk + higher rates.
- Payment Shock
- The jump in monthly payment when draw period ends. Since you've been paying interest-only, the P&I repayment payment is significantly higher.
- HELOAN
- Home Equity Loan — a fixed-rate lump-sum loan. Predictable payments but no revolving access. Compare to HELOC in the Scenario tab.
- Prime Rate
- The benchmark rate set by major banks, based on the Fed Funds Rate. Most variable HELOCs are priced at Prime + a margin (e.g., Prime + 1%).
Real-World Examples
Example 1
Home Renovation
Home: $500k, Mortgage: $300k, CLTV: 85%, Rate: 8.5%, Borrow: $50k, 10yr draw / 20yr repay
Credit limit: $125k. Draw payment: $354/mo (interest-only). Repayment: $435/mo (+23% shock). Interest deductible if for improvements.
Example 2
Debt Consolidation
Home: $400k, Mortgage: $200k, CLTV: 85%, Rate: 9%, Borrow: $30k, 10yr draw / 15yr repay
Credit limit: $140k. Draw payment: $225/mo. Repay: $305/mo. Saves vs. 20% credit card APR, but home is collateral.
Example 3
Variable Rate Risk
Prime + 1% margin HELOC on $75k balance. Current rate: 9.5%. If Prime rises 2% → Rate becomes 11.5%.
Draw payment rises from $594/mo to $719/mo (+$125/mo). Use the Scenario tab to model rate increase risk before borrowing.
HELOCs: Everything You Need to Know Before Borrowing
How a HELOC Works
A HELOC acts like a credit card backed by your home equity. During the draw period you borrow what you need, when you need it, and pay only interest on the outstanding balance. Once the draw period ends, the line closes and you begin repaying principal plus interest — often causing a significant payment jump known as "payment shock."
Variable vs. Fixed Rate
Most HELOCs have variable rates tied to the Prime Rate. If Prime rises 2%, your payment on a $75,000 balance increases by roughly $125/month. Some lenders offer fixed-rate conversion options, and a Home Equity Loan (HELOAN) provides a fixed lump-sum alternative if predictability matters more than flexibility.
Tax Deductibility
HELOC interest may be tax-deductible if the funds are used to "buy, build, or substantially improve" the home securing the loan (per IRS Publication 936). Debt consolidation or personal use does not qualify. Always consult a tax advisor for your specific situation.
HELOC vs. Cash-Out Refinance
Cash-out refi replaces your existing mortgage at a (hopefully) lower fixed rate. It offers lower rates but high closing costs (2–5%) and resets your loan term. A HELOC leaves your first mortgage intact and has low/no closing costs, making it better for ongoing or uncertain expenses like renovation projects.