HELOC Calculator

What is a HELOC?

A home equity line of credit, or HELOC, is a revolving credit line secured by the equity in your home. Where a home equity loan disburses one lump sum at closing and starts amortizing immediately, a HELOC behaves like a credit card backed by your house: the lender approves a maximum draw amount, you take only what you need, you repay it, and you can draw again. Interest accrues solely on the outstanding balance, so a $170,000 line with $50,000 drawn costs interest on $50,000 and nothing on the remaining $120,000.

Nearly every HELOC runs in two phases. The draw period comes first and typically lasts 10 years; during it, many lenders permit interest-only payments, and principal you repay can usually be borrowed again. The repayment period follows and typically lasts 20 years. At that point the line stops revolving, redraws end, and the balance amortizes over 240 fixed payments of principal and interest. The standard structure — 10 years of interest-only access plus 20 years of repayment — is a 30-year obligation, and the payment that arrives in month 121 is the one that catches people off guard.

The rate is variable: a published index (the prime rate or a SOFR-based index are the two you will see most often) plus a margin that is fixed at closing, with the total bounded by periodic and lifetime rate caps. Lenders underwrite to a combined loan-to-value ceiling of 80% to 85%, which counts your first mortgage and your HELOC together. On a $400,000 home at an 80% cap that is a $320,000 ceiling; with $150,000 owed on the first mortgage you have $170,000 of usable credit, even if the lender advertises a $200,000 maximum line. Closing costs commonly run $200 to $500, and plenty of lenders waive them.

How to use this calculator

1. Enter your home's current market value under Home Price.
2. Enter the remaining balance on your first mortgage under Current Mortgage Balance.
3. Select your credit score band — the calculator adjusts the base rate by as much as a full percentage point depending on where you land.
4. Enter the amount you actually plan to draw, not the full credit limit. Interest is charged only on what you take.
5. Enter the base interest rate (your index plus your margin) and choose the draw period: 5, 10, or 15 years.
6. Read the interest-only draw payment, the 20-year repayment payment, available equity, the 85% borrowing limit, and the total interest across both periods.

A realistic set of inputs: home price $500,000, current mortgage balance $350,000, credit score in the 740–799 band, desired draw $50,000, base rate 8.50%, draw period 10 years. That returns available equity of $150,000, a maximum line of $127,500 (85% of equity), an adjusted rate of 8.25% after the 0.25-point credit adjustment, an interest-only payment of $343.75 a month, a repayment payment of $426.03 a month over 20 years, and about $93,498 of interest across the full 30-year life of the line. Drop to the 640 band and the adjustment flips to plus half a point — 9.00% instead of the 8.50% base — which is $375.00 a month of interest on that $50,000 draw instead of the $343.75 the 740–799 band pays.

How a HELOC payment is calculated

During the draw period the math is single-step, because you are paying interest only. The lender multiplies your outstanding balance by the annual rate and divides by 12.

Interest-only payment = Balance × Annual rate ÷ 12

On a $50,000 draw at 8.50%, that is $50,000 × 0.0850 = $4,250 of interest a year, and $4,250 ÷ 12 = $354.17 a month. None of that $354.17 reduces the balance. Draw $170,000 instead and the same formula gives $170,000 × 0.0850 ÷ 12 = $1,204.17 a month.

When the draw period closes, the balance converts to a standard fully amortizing loan over 240 months, and the payment is the same amortization formula used on any mortgage:

M = P × [ i (1 + i)ⁿ ] ÷ [ (1 + i)ⁿ − 1 ]

Here M is the monthly principal-and-interest payment, P is the balance at conversion, i is the monthly rate (annual rate ÷ 12), and n is 240. For $50,000 at 8.50%: i = 0.0850 ÷ 12 = 0.00708333, (1 + i)²⁴⁰ = 5.4411, so M = 50,000 × 0.00708333 × 5.4411 ÷ (5.4411 − 1) = $433.91 a month — 22.5% more than the $354.17 interest-only payment on the identical balance.

Worked example: a $170,000 line through both periods

Step 1 — size the line. An 80% combined LTV cap on a $400,000 home is $400,000 × 0.80 = $320,000; subtract the $150,000 first mortgage and $320,000 − $150,000 = $170,000 of available credit. Step 2 — draw-period payment: $170,000 × 0.0850 ÷ 12 = $1,204.17 a month, all interest. Step 3 — ten years of that is $1,204.17 × 120 = $144,500 paid, with the balance still $170,000. Step 4 — conversion payment: $170,000 amortized over 240 months at 8.50% = $1,475.30 a month. Step 5 — repayment total is $1,475.30 × 240 = $354,072, so interest in phase two is $354,072 − $170,000 = $184,072. Step 6 — lifetime interest is $144,500 + $184,072 = $328,572, and the payment shock at month 121 is $1,475.30 − $1,204.17 = $271.13 a month, or 22.5%.

Worked scenarios

The three tables below each hold two inputs constant so you can see the effect of one change at a time: how much credit the CLTV rule allows, what the draw-to-repayment transition costs, and what a moving index does to a fixed balance.

Available credit at an 80% combined LTV cap ($150,000 first mortgage)

The mortgage balance is the binding constraint, not the equity you have already built. That $500,000 house in the third row carries $350,000 of raw equity, yet the 80% cap allows only $250,000 of it to be borrowed against; raising the cap to 85% unlocks $275,000. The 5-point difference in CLTV policy is worth $25,000 of borrowing power on this house alone, and it costs you nothing but a lender who writes to 85% instead of 80%.

Draw-period to repayment payment jump at 8.50%

The increase is always 22.5% of the interest-only payment, because both figures scale linearly with the balance at the same rate. Every $100,000 you draw costs $708.33 a month during the draw period and $867.82 a month in repayment — a $159.49 difference you should already be setting aside in a sinking fund rather than discovering in month 121.

Rate sensitivity on a $170,000 balance

Each percentage point of index movement adds $141.67 to the interest-only payment and roughly $43,000 of interest across the 30-year life of the line. On the $170,000 example, moving from 8.50% to 10.50% adds $283.33 a month during the draw period and $87,267 of lifetime interest — the arithmetic case for reading the cap schedule before you sign.

Key HELOC terms explained

• Draw period — 10 years, interest-only: You may borrow, repay, and reborrow. Payments cover interest only, so a $50,000 balance at 8.50% costs $354.17 a month and the balance never falls on its own.
• Repayment period — 20 years, fully amortizing: Redraws end and 240 payments of principal and interest begin. On $50,000 at 8.50% the payment becomes $433.91; on $170,000 it becomes $1,475.30.
• Index: The published rate your loan floats with — most commonly the wall street journal prime rate or a SOFR-based index. It resets on a stated cycle, typically monthly or quarterly.
• Margin: The lender's fixed markup, added to the index at every reset. If the index sits at 7.50% and your margin is 1.00%, your rate is 8.50% — the rate used in every example on this page. Margins are negotiable and vary by credit tier.
• Combined LTV cap — 80% to 85%: Your first mortgage plus your HELOC may not exceed that share of appraised value. At 80% on a $400,000 home with $150,000 owed, you get $170,000, not the $250,000 of raw equity you hold.
• Rate caps: Most HELOCs limit how far the rate can move at each reset — commonly about 2 percentage points — and set an overall ceiling. Ask for both numbers in writing; the cap, not the intro rate, determines your worst-case payment.
• Closing costs — $200 to $500: Typical for a second-lien line, and many lenders advertise a waiver. Also ask about annual fees, per-draw fees, and early-closure charges if you repay the line within the first few years.
• Credit and income: Most lenders want a score of 680 or better (some accept 620), a debt-to-income ratio under 43% including the new payment, and documented income. A 640 score typically adds about half a point to the margin-adjusted rate.
• Second-lien position: Your HELOC sits behind the first mortgage in the claim queue, which is exactly why the CLTV cap exists. In a foreclosure the first lender is paid in full before the HELOC lender sees a dollar.

HELOC tips for 2026

1. Shop the margin, not the headline rate. Every lender prices off the same prime or SOFR index, so the only real variable is the margin. A 1.00-point spread on a $170,000 line is $141.67 a month during the draw period and $109.32 a month in repayment — get at least three margin quotes on the same day.
2. Budget against month 121, not month 1. Set aside the difference between the interest-only payment and the repayment payment from day one: $79.74 a month on a $50,000 draw, $271.13 on $170,000. Ten years of that discipline fully funds the jump before it happens.
3. Model a higher index. Prime and SOFR both move. Take your payment at the quoted rate and add two percentage points; that is the number your budget has to survive. On $170,000 the payment goes from $1,204.17 to $1,487.50 a month during the draw period.
4. Return principal while you still can. The draw period is the only time repayment is optional. Every dollar you push back during those 10 years shrinks the balance that converts at month 121 and restores your available credit for the next draw.
5. Keep the line at or under 80% CLTV. The 85% tier prices higher and leaves almost no cushion. Staying at 80% on a $400,000 home gives you $170,000 instead of $190,000 and preserves room to borrow later if values dip.
6. Document how you will spend the funds. Interest on a HELOC is deductible only when the money is used to buy, build, or substantially improve the home that secures the loan, subject to the $750,000 acquisition-debt limit. A $170,000 draw used for a vacation is not deductible, and the deduction is worth roughly $180 a month at a 15% marginal rate.
7. Confirm the draw period and any freeze terms. Lines expire and lenders can suspend redraws when values fall — that happened on a large scale in 2008 and again in 2020. Ask how long the draw period lasts, what triggers a freeze, and whether the repayment term can be shortened.

Common HELOC mistakes

• Treating the interest-only payment as the payment. $354.17 a month looks like the cost of $50,000 at 8.50%, but it is only the interest. The real payment after 10 years is $433.91, and on a full $170,000 line the jump is $1,204.17 to $1,475.30.
• Assuming you can borrow your full equity. Equity and borrowing power are different numbers. $250,000 of equity in a $400,000 home with $150,000 owed yields $170,000 at an 80% CLTV cap — 68% of what you actually own.
• Drawing for consumption and calling it a plan. A HELOC is secured by your house. Using it for ongoing living expenses converts a short-term cash-flow gap into a 30-year lien, and it removes the tax deduction that only improvement spending qualifies for.
• Ignoring the cap schedule. A quoted 8.50% with a 2-point-per-reset cap and no lifetime ceiling is a different product from an 8.65% with hard caps. On $170,000 each uncapped percentage point costs $141.67 a month during the draw period.
• Comparing APRs without comparing terms. APR folds fees into a single number but says nothing about margin, reset frequency, or caps. Two lines quoted at 8.75% APR can differ by thousands of dollars over 10 years if one resets quarterly and the other annually.
• Skipping the payoff math on early repayment. Repaying $50,000 of a $170,000 line during the draw period eliminates $4,250 of annual interest at 8.50%. Run the trade against other debt: a card at 22% is always the higher priority than principal on an 8.50% line.

Frequently asked questions

How much can I borrow with a HELOC? Most lenders cap combined loan-to-value at 80% to 85%. On a $400,000 home that is a $320,000 to $340,000 ceiling; subtract your $150,000 first mortgage and you get $170,000 to $190,000 of usable credit. The calculator's 85%-of-equity figure — $127,500 on $150,000 of equity — is a quicker version of the same limit.

What does a HELOC cost per month? Interest-only during the draw period: a $50,000 balance at 8.50% costs $50,000 × 0.0850 ÷ 12 = $354.17 a month. After conversion, the same balance amortized over 20 years costs $433.91. At the calculator's 8.25% adjusted rate, those figures are $343.75 and $426.03.

What happens when the draw period ends? The line stops revolving and the balance fully amortizes over 240 months. On a $170,000 balance at 8.50%, the payment moves from $1,204.17 interest-only to $1,475.30 principal-and-interest — a $271.13 increase, and the first payment that actually reduces what you owe.

Is a HELOC rate fixed? No. The rate is an index — prime or SOFR — plus your margin, and it resets on a monthly or quarterly cycle. With the index at 7.50% and a 1.00% margin you get 8.50%; if the index rises to 9.50% the same line costs $1,345.83 a month on $170,000 instead of $1,204.17.

What are typical closing costs? Budget $200 to $500 for a second-lien HELOC, though many lenders waive the charge to win the business. Ask about annual fees, per-draw fees, and early-closure penalties — some lenders recoup a waived closing cost if you repay and close within the first two or three years.

How is a HELOC different from a home equity loan? A home equity loan disburses one lump sum at a fixed rate with a fixed payment from day one. A HELOC revolves: you draw, repay, and redraw during 10 years of interest-only access, then amortize over 20. Use the HELOC vs home equity loan comparison for the full breakdown.

Can I repay a HELOC early? Yes, and there is a real incentive: every principal dollar returned during the draw period cuts interest and rebuilds your availability. Repaying $50,000 at 8.50% removes $4,250 of annual interest and lowers the balance that converts at month 121 by the same $50,000.

Do I need an appraisal to get a HELOC? Lenders price to your home's value, so most require a valuation — sometimes a full appraisal, sometimes a desktop or automated one. On a $400,000 home the difference between a $380,000 and a $420,000 value at an 80% cap is $32,000 of borrowing power, which is far larger than the cost of the valuation itself.

Related calculators

• Home Equity Calculator — how much equity you have today before you apply.
• HELOC vs Home Equity Loan — revolving line or lump sum, compared line by line.
• Refinance Calculator — the cash-out alternative to tapping equity with a line.
• Closing Cost Calculator — estimate the $200 to $500 of upfront costs and lender fees.
• Mortgage Calculator — your first-lien payment and remaining balance.
• Debt-to-Income Calculator — check the 43% ratio lenders qualify you against.