A HELOC permits repeated borrowing during its draw period, subject to the entered line and contract. A home equity loan advances a lump sum. Both secure borrowing against the property. This tool models a fixed home equity loan and either a fixed or manually indexed HELOC; the actual lender contract controls rates, payment requirements and access to credit.

Property and borrowing

Modeled capacity is max(0, home value × your CLTV ceiling − first mortgage − other liens). It is a planning ceiling, not an approval. With USD 400,000 value and USD 240,000 debt, 80% allows USD 80,000 additional borrowing and 85% allows USD 100,000. Total secured debt is USD 320,000 at 80%, USD 340,000 at 85%, and USD 360,000 at 90%. Financed fees also consume capacity. Property equity is value minus debt; unused credit is a different quantity. A HELOC permits repeated borrowing during its draw period, subject to the entered line and contract. A home equity loan advances a lump sum. Both secure borrowing against the property. This tool models a fixed home equity loan and either a fixed or manually indexed HELOC; the actual lender contract controls rates, payment requirements and access to credit. During draw, choose interest-only, principal-and-interest, extra payments, or explicit interest capitalization. Dated payments clear accrued interest first. Principal repaid can restore line availability before draw ends.

Variable index plus margin

Draw interest uses actual calendar days. Principal-and-interest payments recast using the closing cycle’s applied rate over the remaining life; future index assumptions do not change earlier bills. The index and paths are manual assumptions, not live market quotes. Observations apply at the next stated reset. The entered floor and cap constrain the note rate. For each dated interval, B is principal, a is the annual note rate as a decimal, d is actual calendar days and D is 365 or 360 as selected. Sum the interval interest. A USD 12,000 balance at 12% for 30 days on 365 produces USD 118.36, not a flat USD 120. Use the note rate, not a fee-inclusive APR. Fees, payments and capitalization are separate ledger entries. The monthly rate column shows the rate at the close of that billing cycle. Interest includes each dated rate segment; the transaction ledger lists the effective reset dates. For monthly-basis repayment, use the actual remaining debt as P in the payment formula, with the currently applied rate and remaining months.

Optional tax illustration

Published IRS Publication 936(2025) discusses itemized deductions for qualified secured home debt, including qualifying use and debt limits. Filing status, loan history, other mortgages and mixed use can affect the deductible share, so a purpose selection alone does not establish eligibility. Verify your filing year separately; the optional calculation uses only your verified share and assumed marginal rate, with no automatic tax benefit. Optional illustration: actual interest paid in the first twelve billing cycles × your verified deductible share × your assumed tax rate. IRS Publication 936 (2025) describes itemizing, qualified use and debt limits; this is not a tax-return calculation or confirmation of a later tax year. This illustration excludes any deduction for previously capitalized interest repaid as principal; verify that treatment separately. U.S. planning assumptions, verified against the linked source descriptions on 2026-10-18. Day count, reset cadence, payment recast and fee timing are model inputs, not universal requirements of Regulation Z. IRS Publication 936(2025) is guidance for 2025 returns; no later-year eligibility is inferred.

Matched-proceeds borrowing comparison

Compare cash paid plus debt left, less unused cash held for later planned needs. All rows use the same horizon and net funding. Upfront alternatives hold future-use cash at zero return. A cash-out refinance replaces the entire first mortgage. Enter the existing mortgage note rate and remaining term or actual principal-and-interest payment to model its cash and balance. Cash-out refinancing is unavailable until those details are supplied; additive-loan rows exclude the unchanged first mortgage. Ask the lender for the applicable rate, fees, remaining term, payment convention, draw restrictions, prepayment charges and required disclosures. Timing, documentation and cancellation rights depend on the transaction and applicable rules; this model does not decide them. Compare offers with equal net proceeds and a common horizon rather than selecting a product solely from its advertised payment. Closing fees occur at inception. Annual line fees occur at inception and every twelve months during draw. Financed fees and capitalized interest consume available credit.