HELOC Calculator
See your available credit line, interest-only draw payments, and what your payment becomes when repayment kicks in — the "payment shock" moment most borrowers don't see coming.
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Fill in your home value, mortgage balance, and draw amount to see your HELOC breakdown.
Understanding HELOCs
HELOC vs. Home Equity Loan
A HELOC (Home Equity Line of Credit) is a revolving line of credit secured by your home — similar to a credit card backed by your equity. A home equity loan, by contrast, gives you a fixed lump sum at a fixed interest rate.
HELOC
- • Variable rate (tied to Prime)
- • Revolving credit line
- • Draw what you need, when you need it
- • Interest-only payments during draw
- • Payment jumps when repayment starts
Home Equity Loan
- • Fixed rate
- • Lump sum upfront
- • Predictable monthly payment
- • Good for one-time large expenses
- • Higher initial rate than HELOC
Common Uses for HELOCs
The most financially sound uses tap the equity in a way that either adds value or avoids higher-cost debt:
- Home improvements — Adding value to the collateral itself. Kitchen remodels, additions, roof replacement.
- Debt consolidation — Replacing 20–28% credit card debt with 8–10% HELOC debt can save thousands. But you've converted unsecured debt to secured — miss payments and you risk foreclosure.
- Education — Often cheaper than private student loans, but you're putting your home at risk.
- Business investment — Some entrepreneurs fund business expenses through HELOC. High risk if the business fails.
Tax Deductibility (Post-2017 TCJA)
The 2017 Tax Cuts and Jobs Act changed the rules: HELOC interest is only deductible if the funds are used to "buy, build, or substantially improve" the home securing the loan. Using a HELOC for debt consolidation, vacations, or business expenses — the interest is no longer deductible. Always consult a tax professional for your specific situation.
Variable Rate Risk
Most HELOCs are tied to the Prime Rate, which moves with Federal Reserve policy. When the Fed raised rates from near 0% to over 5% between 2022 and 2023, HELOC rates jumped from ~4% to 9%+ — nearly doubling payments for existing borrowers. Budget conservatively and consider whether you could handle your payment if rates rose 2–3% more.
What Happens If Home Value Drops
If your home value falls significantly, your lender can freeze or reduce your HELOC — even mid-draw period. This happened widely in 2008–2009. If you become "underwater" (owe more than the home is worth combined), your HELOC may become uncollectable and impact your credit if the lender writes it off. This is why using HELOC funds for appreciating assets or debt reduction is safer than consumer spending.
How Lenders Calculate CLTV
Combined Loan-to-Value (CLTV) = (mortgage balance + HELOC limit) ÷ home value. Most lenders cap CLTV at 80–85%. With a $400,000 home and $200,000 mortgage, your maximum CLTV at 85% would allow a HELOC up to $140,000. Lenders also look at credit score (typically 680+ minimum), debt-to-income ratio (typically under 43%), and employment history.