HELOC Borrowing Power Calculator
Estimate your available equity and potential monthly interest-only payments.
70%
75%
80% (Standard)
85%
90%
Warning: Draw exceeds available credit!
Total Collateral Value (Max Loan):
Available HELOC Credit Line:
Estimated Monthly Payment (Interest-Only):
How to Calculate Your HELOC Borrowing Power
A Home Equity Line of Credit (HELOC) is a revolving credit line secured by your home. Unlike a standard home equity loan, a HELOC allows you to borrow as needed, repay, and borrow again during the "draw period."
To determine how much you can borrow, lenders use the Combined Loan-to-Value (CLTV) ratio. The formula is:
(Home Value × Max CLTV%) – Current Mortgage Balance = Available HELOC Limit
Example Calculation
Suppose your home is worth $450,000 and your current mortgage balance is $250,000. If a lender allows an 80% CLTV:
- 80% of $450,000 = $360,000 (Maximum total debt allowed)
- $360,000 – $250,000 = $110,000 (Your HELOC limit)
Understanding Interest-Only Payments
Most HELOCs offer an interest-only payment option during the draw period (typically the first 10 years). This means your monthly payment only covers the interest on the amount you have actually withdrawn, not the total credit limit. This keeps initial costs low, but remember that the principal remains unchanged until you make additional payments or enter the repayment period.
Important Factors to Consider
- Variable Rates: HELOC interest rates are usually variable and tied to the Prime Rate. Your payments can fluctuate monthly.
- Credit Score: A higher credit score often unlocks higher CLTV limits (up to 90%) and lower interest rates.
- Appraisal: Lenders will require a professional appraisal to verify the home's value before final approval.