How to Use the HELOC Calculator
Start with your home value and current mortgage balance. Set an LTV limit (many lenders use 80–85%). Enter an index (e.g., latest U.S. Prime) and your estimated margin, then choose a draw period and repayment term. Optionally add a ZIP code and credit score range for context. Finally, pick a draw amount (e.g., full line or a smaller amount) to preview interest-only payments and the later repayment schedule.
What Is a HELOC?
A HELOC is a revolving line of credit secured by your home’s equity. During the draw period, you can borrow, repay, and re-borrow up to your credit limit, usually making interest-only payments. In the repayment period, the outstanding balance is amortized into principal and interest payments.
Understanding the Draw and Repayment Periods
- Draw period: Typically 5–10 years; minimum payment often covers interest only.
- Repayment period: Principal and interest payments over a fixed term (e.g., 10–20 years).
HELOC vs. Home Equity Loan
A home equity loan is a fixed lump sum with a fixed rate. A HELOC is revolving, usually with a variable rate (Index + Margin). Some lenders also offer fixed-rate draw options on a HELOC.
How Lenders Determine Your HELOC Amount (LTV)
Many lenders cap combined loan-to-value (CLTV) at 80–85%. Your estimated line is: (Home Value × LTV Limit) − Existing Mortgage Balance. Qualification also considers credit, income, debt, and property factors.
Who a HELOC Is Right For & Common Uses
- Home improvements or renovations
- Debt consolidation (compare rates and fees)
- Major purchases or education expenses
- Emergency or opportunity fund flexibility
Frequently Asked Questions
Does my rate change over time?
Most HELOCs are variable: Rate = Index + Margin, and the index can move. Check your lender’s caps and adjustment schedule.
Can I lock a fixed rate on part of my HELOC?
Many lenders allow fixed-rate draws. This page models the variable-rate case; fixed draws typically amortize like a standard loan.