HELOC Payment Calculator
Estimate your available equity and monthly payments for both draw and repayment periods.
How a HELOC Works
A Home Equity Line of Credit (HELOC) is a revolving line of credit secured by your home. Unlike a traditional home equity loan, which provides a lump sum, a HELOC allows you to borrow as needed, much like a credit card, up to a specific limit determined by your home's equity.
The Two Phases of a HELOC
1. The Draw Period: This is typically the first 5 to 10 years. During this time, you can withdraw funds as needed. Most HELOCs allow for "interest-only" payments during this phase, which keeps monthly costs low but does not reduce your principal balance.
2. The Repayment Period: Once the draw period ends, you can no longer borrow money. You enter the repayment phase (often 10 to 20 years), where you must pay back both the principal you borrowed and the interest. This usually results in a significant jump in your monthly payment.
How We Calculate Your HELOC
To determine your maximum credit line, lenders usually look at your Combined Loan-to-Value (CLTV) ratio. The formula used in this calculator is:
Max Line = (Home Value × Max LTV %) – Current Mortgage Balance
Example Calculation:
If your home is worth $500,000 and your lender allows an 80% LTV, your total borrowing capacity is $400,000. If you already owe $300,000 on your primary mortgage, your maximum HELOC limit would be $100,000 ($400,000 – $300,000).
Variable Interest Rates
It is important to remember that most HELOCs have variable interest rates tied to an index like the Prime Rate. This means your payments can fluctuate over time. While the calculator provides a static estimate, your actual monthly costs will change if market interest rates rise or fall.