HELOC Calculator

How a HELOC payment works

A home equity line of credit has two phases. During the draw period, often 10 years, you can borrow as needed, and many HELOCs require only interest payments. During the repayment period, often 20 years, you can't draw more, and payments include principal, so they jump. This calculator assumes you draw the full amount at the start and make interest-only payments during the draw period.

Most HELOCs have a variable rate tied to the prime rate, so your real payments will move when rates change. Try a rate 1 or 2 points higher to see how much room your budget has. To compare a HELOC with a fixed home equity loan or a cash-out refinance, see HELOC vs. home equity loan vs. cash-out refinance.

Common questions

Most lenders let your total home debt, meaning your mortgage plus the HELOC, reach about 80% to 85% of your home's appraised value. The maximum line is roughly home value times that percentage, minus your current mortgage balance. Your credit score and income also affect the limit.

Many HELOCs allow interest-only payments during the draw period, which is usually 10 years. After that, the repayment period begins and payments include principal, which can raise the payment significantly.

HELOC interest may be deductible if the money is used to buy, build, or substantially improve the home that secures the loan, subject to IRS limits. It generally isn't deductible when used for other purposes. Check with a tax professional.

Most HELOCs have variable rates, so your payment rises when the prime rate rises. Some lenders let you lock part of the balance at a fixed rate. Always check that your budget works at a higher rate.

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