HELOC Calculator
Estimate HELOC payments, available credit, and total interest based on home value and balance.
Disclaimer: This calculator is for informational and educational purposes only and does not constitute financial advice. Results are estimates based on the inputs provided. Consult a qualified financial advisor before making any financial decisions.
What Is a HELOC?
A Home Equity Line of Credit (HELOC) is a revolving line of credit secured by the equity in your home. Unlike a traditional loan where you receive a lump sum, a HELOC works like a credit card — you can borrow up to your credit limit, repay, and borrow again during the draw period (typically 5-10 years). Most lenders allow you to borrow up to 85% of your home's value minus your outstanding mortgage balance.
How HELOC Interest Payments Work
During the draw period, most HELOCs require interest-only payments on the amount you've borrowed. HELOCs typically carry variable interest rates tied to the prime rate, meaning your payment can change over time. After the draw period ends, you enter the repayment period (usually 10-20 years) where you must pay back both principal and interest. Understanding this two-phase structure is essential for planning your finances.
HELOC vs. Home Equity Loan
While both are secured by your home equity, they differ significantly. A home equity loan provides a lump sum with a fixed interest rate and predictable monthly payments. A HELOC offers flexible access to funds with a variable rate. HELOCs are ideal for ongoing expenses like home renovations or education costs, while home equity loans suit one-time large expenses. Consider your spending pattern and risk tolerance when choosing between the two.
Frequently Asked Questions
How much can I borrow with a HELOC?
Most lenders allow you to borrow up to 85% of your home's appraised value minus your current mortgage balance. For example, if your home is worth $400,000 and you owe $200,000, your maximum HELOC would be approximately $140,000.
Are HELOC interest payments tax deductible?
HELOC interest may be tax deductible if the funds are used to buy, build, or substantially improve the home that secures the loan. Interest on HELOC funds used for other purposes (debt consolidation, vacations, etc.) is generally not deductible. Consult a tax professional for your specific situation.
What happens if my home value drops?
If your home value decreases, your lender may reduce your credit limit or freeze your HELOC entirely. In extreme cases, you could owe more than your home is worth. It's important to borrow conservatively and maintain a buffer in your available equity.
Can I convert my HELOC to a fixed rate?
Some lenders offer a fixed-rate conversion option that allows you to lock in a fixed rate on all or part of your outstanding HELOC balance. This can protect you from rising interest rates, though the fixed rate is typically higher than the initial variable rate.
What credit score do I need for a HELOC?
Most lenders require a credit score of at least 680 for a HELOC, though some may accept scores as low as 620. Higher credit scores typically qualify for lower interest rates and higher credit limits. Lenders also consider your debt-to-income ratio and available home equity.