What Is a HELOC?

A home equity line of credit (HELOC) is a revolving line of credit secured by your home, similar to a credit card but backed by your equity instead of unsecured. You can draw, repay, and draw again during the "draw period," then repay the remaining balance during the "repayment period." Per the Consumer Financial Protection Bureau, only consider a HELOC if you're confident you can keep up with payments — your home is the collateral.

How HELOC Availability Is Calculated

Lenders typically cap your combined loan-to-value (existing mortgage + HELOC) at 80–85% of your home's value. The exact figure varies by lender and your credit profile — pair this with our mortgage calculator to see your current loan balance trajectory first.

How to Use This Calculator

Enter your home's current value, what you still owe on your mortgage, and your lender's max combined LTV (80% is a safe default). Add the HELOC's interest rate and your draw/repayment period lengths. Leave the draw amount blank to model borrowing your full available equity, or enter a specific amount if you only plan to draw part of it.

The Payment Shock Most Borrowers Miss

During the draw period, most HELOCs only require interest payments — your principal balance doesn't shrink. When the repayment period begins, you suddenly owe principal and interest on the full drawn balance, often causing a significant payment jump. This calculator's warning card shows exactly how much that jump will be, so it doesn't catch you off guard.

HELOC vs. Home Equity Loan

A home equity loan gives you a lump sum upfront with a fixed rate and fixed payments. A HELOC is a flexible line of credit you draw from as needed, almost always with a variable rate. The FTC's consumer guide breaks down both in detail if you're deciding between the two.

Worked Example

A $450,000 home with a $250,000 mortgage and an 80% max LTV gives $110,000 in available equity. Drawing the full amount at 9.5% interest-only costs about $871/month during a 10-year draw period. Once repayment begins over 20 years, the payment jumps to roughly $1,025/month — and that's before accounting for any rate increases on the variable HELOC rate.

Where a HELOC Fits Your Plans

HELOCs are commonly used for home renovations, consolidating higher-interest debt (compare against our credit card payoff calculator or debt avalanche calculator first), covering large expenses, or as a financial safety net. Because your home secures the line, it's worth comparing the total cost here against unsecured alternatives before committing.

Quick Reference

• Draw period: typically 5–10 years, interest-only payments common
• Repayment period: typically 10–20 years, full principal + interest
• Typical max CLTV: 80–85% of home value
• Rate type: usually variable, tied to an index like the Prime Rate

Risks and Limitations

This calculator assumes your HELOC rate stays constant for the life of the loan — in reality, almost all HELOC rates are variable and will move with the market, changing your actual payments over time. Falling behind on payments puts your home at risk of foreclosure since it's the collateral. Always confirm your specific lender's terms, fees, and rate caps before borrowing, and check your net worth impact of taking on additional secured debt.

Frequently Asked Questions