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.
By Suhaib Hassan · Updated · How we verify formulas
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 at a combined loan-to-value (CLTV) ratio, commonly 80-85% of your home's appraised value. Total borrowing means your existing mortgage plus the new HELOC. This calculator uses that limit to estimate your maximum credit line. Your actual approved amount also depends on your credit score, income and debt-to-income ratio.
A HELOC is secured by your home, much like a second mortgage. That is why lenders can typically offer lower rates than unsecured credit. It also means your home is collateral, so responsible borrowing matters.
By Suhaib Hassan · Formula verified 27 Sep 2026 · How CalculatePilot verifies formulas →
How to use this HELOC calculator
- Enter your home value and mortgage balance. Enter the current estimated value of your home and the remaining balance on your first mortgage.
- Set the lender CLTV ceiling. Choose the maximum combined loan-to-value your lender allows: 80%, 85% or 90%.
- Enter the credit line you want. Enter the credit line or draw amount you want to borrow.
- Set the draw and repayment periods. Enter the length of the interest-only draw period and the principal-and-interest repayment period, in years.
- Enter the rates and read the payments. Enter the variable HELOC APR and the fixed home equity loan APR, then read your CLTV and the payment in each phase.
How HELOC payments typically work
Most HELOCs have two phases. The first is a draw period, often 5-10 years, when you can borrow as needed and typically pay only interest on what you've drawn. The second is a repayment period, when you pay down both principal and interest on the outstanding balance. This calculator estimates both phases. It assumes the full draw is outstanding and the rate stays the same.
HELOCs commonly carry variable interest rates, so your actual payment can change as rates move. A fixed-rate home equity loan is different: the rate and payment stay constant for the life of the loan.
Worked example with the calculator defaults
Your home is worth $500,000 and you owe $280,000 on the first mortgage. The lender cap is 80% CLTV, and you want an $80,000 line at 8.25% with a 10-year draw period and a 20-year repayment period.
- Maximum lending: $500,000 × 80% = $400,000, minus the $280,000 mortgage = $120,000 available.
- CLTV after borrowing $80,000: ($280,000 + $80,000) ÷ $500,000 = 72.0%.
- Draw period (years 1 to 10): interest only, $550 a month.
- Repayment period (years 11 to 30): principal and interest, $682 a month.
The payment rises by $132 a month (+23.9%) when repayment starts. Total interest is $66,000 in the draw period and $83,597 in the repayment period, or $149,597 over the life of the line.
Key takeaways
- A HELOC is a revolving credit line secured by your home. A home equity loan is a lump sum with a fixed rate and fixed payments.
- Lenders cap total borrowing at a combined loan-to-value, commonly 80-85%. Your home equity line payments depend on how much you draw and the rate.
- On the defaults, you could borrow up to $120,000, and an $80,000 draw pays $550 a month interest-only, then $682 a month in repayment.
- HELOC rates are commonly variable, so payments can change. Your home is the collateral.
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 (often 5-10 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.
How much can I borrow with a HELOC?
Lenders typically cap combined borrowing at 80-85% of your home’s value. On the calculator defaults, a $500,000 home with a $280,000 first mortgage and an 80% cap supports a line of up to $120,000, which is $400,000 minus $280,000.
What is CLTV?
Combined loan-to-value is your first mortgage plus the new borrowing, divided by your home’s value. On the defaults, $280,000 plus an $80,000 line on a $500,000 home gives a CLTV of 72.0%.
How much is a HELOC payment on $80,000?
At the default 8.25% rate, the interest-only payment in the draw period is about $550 a month. In the 20-year repayment period it rises to about $682 a month, which is $132 more.
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