HELOC & Home Equity Loan Calculator
Estimate how much you could borrow against your home, your combined loan-to-value (CLTV), and your payment in the interest-only draw period versus the principal-and-interest repayment period.
No principal paid down
Full 240-month balance payoff
Monthly payment rises by — when repayment starts in Year 11. Plan cash reserves for the reset — and remember the rate can change too.
- Total Interest Paid in Draw (Yrs 1-10):—
- Total Interest in Repayment (Yrs 11-30):—
- Cumulative Lifetime Finance Cost:—
HELOC vs. Home Equity Loan vs. Cash-Out Refinance
Compare how each option pays out, what it costs to set up, and its rate risk before borrowing against your home.
| Financing Vector | HELOC (Revolving Line) | Home Equity Loan (Fixed 2nd) | Cash-Out Refinance (1st Lien) |
|---|---|---|---|
| Interest Rate Mechanism | Usually variable (prime rate + margin) | Fixed APR for the full term | New rate on your whole mortgage |
| Capital Disbursement | Revolving draws as needed | Lump sum at closing | Lump sum cash-out at closing |
| Upfront Closing Costs | Often low or waived; some lenders charge 2%–5% | Often 2%–5% of the loan | Typically 2%–6% of the new mortgage |
| Monthly Repayment Flow | Interest-only in the draw period, then P&I | Fixed level P&I payment | One larger consolidated mortgage payment |
| Rate Risk Exposure | Payment rises if the prime rate rises | None — payment is locked | Gives up your existing mortgage rate |
IRS Tax Deductibility Guidelines
Interest on a home equity loan or line of credit is deductible only if the money is used to buy, build, or substantially improve the home that secures the loan. These TCJA rules were made permanent in 2025, and you must itemize to benefit.
- Deductible: kitchen renovation, adding a bedroom, structural repairs, replacing the roof.
- Not deductible: credit card consolidation, student loan payoff, buying a car, travel.
Combined mortgage debt cap: $750,000 ($375,000 married filing separately). Consult a tax professional for your situation.
CLTV Computational Specification
Lenders size home equity credit with the combined loan-to-value ratio, which keeps an equity cushion in case home prices fall.
- ≤ 80% CLTVWidest lender choice, best pricing
- 80.1% – 85% CLTVWidely available, often priced higher
- > 85% CLTVFewer lenders, stricter requirements
How lenders determine your HELOC limit
Lenders typically cap total borrowing (your existing mortgage plus the new HELOC) at a combined loan-to-value ratio, commonly 80-85% of your home's appraised value. This calculator uses that combined limit to estimate your maximum available credit line, though your actual approved amount also depends on credit score, income, and debt-to-income ratio.
A HELOC is secured by your home, similar to a second mortgage — this is why lenders can typically offer lower rates than unsecured credit, but it also means your home is collateral, making responsible borrowing especially important.
By Suhaib Hassan · Formula verified 27 Sep 2026 · How CalculatePilot verifies formulas →
How HELOC payments typically work
Most HELOCs have two phases: a draw period (often 5-10 years) where you can borrow as needed and typically only pay interest on what you've drawn, followed by a repayment period where you pay down both principal and interest on the outstanding balance. This calculator estimates both phases, assuming the full draw is outstanding and the rate stays the same.
Because HELOCs commonly carry variable interest rates, your actual payment can change over time as rates move — unlike a fixed-rate home equity loan, where the rate and payment stay constant for the life of the loan.
Frequently asked questions
What's the difference between a HELOC and a home equity loan?
A HELOC is a revolving credit line you can draw from as needed, typically with a variable rate, while a home equity loan provides a lump sum upfront with a fixed rate and fixed payments.
Why is my payment only interest during the draw period?
Many HELOCs are structured to require interest-only payments during an initial draw period, with principal repayment beginning once the draw period ends and the repayment period begins.
What is a HELOC?
A Home Equity Line of Credit (HELOC) lets you borrow against the equity in your home, similar to a credit card with a credit limit. You can draw from it as needed during the draw period (typically 10 years), then repay it during the repayment period.
How is a HELOC payment calculated?
During the draw period, most HELOCs require interest-only payments on the amount drawn. During the repayment period, payments cover both principal and interest. This calculator shows both phases based on your credit limit, rate, and terms.
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