HELOC (Home Equity Line of Credit) Calculator
Determine your borrowing power based on your home's current market value and existing mortgage balance.
Calculation Results
*Interest-only payment based on full utilization of the credit line.
How Does a HELOC Calculator Work?
A Home Equity Line of Credit (HELOC) functions as a revolving credit source, much like a credit card, but it is secured by the equity in your home. This calculator helps you determine how much cash you can access by evaluating your current home value against your outstanding mortgage debt.
The HELOC Formula
Lenders typically allow you to borrow up to a specific percentage of your home's value, known as the Loan-to-Value (LTV) ratio. For most HELOCs, this limit is 80% to 85% of the appraised value, including your primary mortgage.
Formula: (Home Value × LTV Limit) – Current Mortgage Balance = Max HELOC Line
Example Calculation
Suppose your home is worth $500,000 and you owe $300,000 on your mortgage. If a lender offers an 80% LTV:
- 80% of $500,000 = $400,000 (Maximum total debt allowed)
- $400,000 – $300,000 (Current Balance) = $100,000 HELOC Limit
Draw Period vs. Repayment Period
During the draw period (typically the first 10 years), you can borrow money as needed and usually only have to pay interest on the amount you use. Once the repayment period begins (typically the next 15-20 years), you can no longer borrow money, and you must pay back both the principal and interest, which often results in a significantly higher monthly payment.
Key Considerations
- Variable Interest Rates: HELOC rates are typically tied to the Prime Rate, meaning your monthly payments can fluctuate over time.
- Closing Costs: While some lenders offer "no-fee" HELOCs, others may charge for appraisals, title searches, and application fees.
- Risk of Foreclosure: Because your home is collateral, failing to make payments could result in the loss of your property.