HELOC calculator

How a HELOC works

A home equity line of credit lets you borrow against the part of your home you own outright. The lender sets a limit, and for the draw period, often 10 years, you can borrow, repay and borrow again up to it.

During the draw the minimum payment is usually just the interest, so it stays low and the balance stays put. When the draw ends, the balance is spread over the repayment period with principal and interest, and the payment jumps. That jump is the figure this calculator is built to show.

HELOC rates are variable and usually follow the prime rate, so every payment here moves when rates do. Your home secures the line: miss payments and the lender can foreclose.

Questions

How much of a HELOC can I get?

Lenders cap everything owed on the home at a share of its value, usually 80% to 90%. A $400,000 home at an 85% limit allows $340,000 of debt; with $250,000 still owed on the mortgage, that leaves a line of up to $90,000. Your credit and income can make it smaller.

How is the payment worked out while I draw?

Many HELOCs let you pay only the interest during the draw period: about the balance times the rate, divided by 12. $50,000 at 8% is $333.33 a month, and the balance doesn't go down.

What happens when the draw period ends?

The balance is paid off with principal and interest over the repayment period. The same $50,000 at 8% over 20 years is $418.22 a month, $84.89 more than before. Across a 10-year draw and 20 years of repayment, that's $90,373 of interest.

HELOC or home equity loan?

A home equity loan is a lump sum, usually at a fixed rate, paid like a mortgage from the first month; the amortization calculator handles that. A HELOC is a line you draw on as needed, at a variable rate, often interest only at first.

What does the calculator leave out?

Rate changes, closing costs and annual fees, and draws spread over time. It also assumes you pay only the interest during the draw; paying principal early makes the later payment smaller.