Home Equity Loan Calculator (HELOC)
Use the calculator above to estimate payments for a home equity line of credit (HELOC) by entering your home’s value, mortgage balance, and desired loan amount. The results show your available equity, potential borrowing limit, and estimated monthly payments during both the draw period (interest-only) and repayment period (principal + interest).
How Home Equity Loans (HELOC) are calculated
Lenders typically allow borrowing up to 85% of your home’s value minus any existing mortgage debt. The formula works like this:
- Maximum Loan Amount = (Home Value × 0.85) – Remaining Mortgage
- Example: $500,000 home × 0.85 = $425,000 – $300,000 mortgage = $125,000 available credit
Payments have two phases:
| Phase | Duration | Payment Type |
|---|---|---|
| Draw Period | 5-10 years | Interest-only (variable rate) |
| Repayment Period | 10-20 years | Principal + interest (fixed rate) |
What affects your payment
- Variable rates: Most HELOCs use Prime Rate + margin (typically 1.5-3.5%)
- Credit score: Scores below 680 may face higher rates or lower LTV ratios
- Loan-to-value (LTV): Borrowing >80% of home equity often triggers PMI requirements
- Draw period length: Shorter draw periods mean faster transition to higher payments
- Fees: Annual fees ($50-$100), appraisal costs ($300-$600), or early closure penalties
Tips to lower your payment
- Improve your credit score: Rates for 740+ scores average 1.5% lower than sub-680
- Borrow conservatively: Every $10,000 borrowed adds ~$50-$75 to repayment phase payments
- Make principal payments early: Reduces balance before repayment phase begins
- Compare margin rates: A 2% margin vs. 3% saves $83/month on $100,000 borrowed
- Lock fixed-rate portions: Some lenders let you convert portions to fixed rates
Common questions
Can I deduct HELOC interest on taxes?
Only if funds are used for home improvements (per IRS Topic 505). Other uses like debt consolidation or education don’t qualify after 2026 tax reforms.
What happens if my home value drops?
Lenders may reduce your credit limit or require partial repayment if LTV exceeds agreed thresholds. This is called a “HELOC freeze” and occurred frequently during the 2008 housing crisis.
How often do variable rates adjust?
Most adjust monthly or quarterly based on Prime Rate changes. Lenders must disclose adjustment frequency in your agreement – typical caps are 2% per year and 5% lifetime.