HELOC Maximum Credit & Payment Calculator
Your HELOC Summary
*Payment estimated based on full utilization of the available credit line.
Understanding HELOC (Home Equity Line of Credit) Calculations
A Home Equity Line of Credit (HELOC) functions much like a credit card secured by your home. Unlike a standard home equity loan which provides a lump sum, a HELOC allows you to borrow as needed, pay it back, and borrow again during the "draw period."
How the Maximum Credit Limit is Calculated
Lenders use a metric called CLTV (Combined Loan-to-Value) ratio to determine how much equity you can access. Most lenders allow a CLTV of up to 80% or 85%.
The Formula:
(Home Value × Max LTV %) - Existing Mortgage Balance = HELOC Limit
For example, if your home is worth $500,000 and the lender allows 80% LTV, your total allowable debt is $400,000. If you still owe $300,000 on your primary mortgage, your maximum HELOC limit would be $100,000.
HELOC Monthly Payments
During the initial draw period (usually 10 years), many HELOCs offer "interest-only" payments. This means your monthly bill only covers the interest on the amount you have actually borrowed. Once the draw period ends, you enter the repayment period (usually 15-20 years), where you must pay both principal and interest.
Factors That Impact Your HELOC Approval
- Credit Score: Higher scores usually unlock lower interest rates and higher LTV limits.
- Debt-to-Income (DTI) Ratio: Lenders typically want your total debt payments to be below 43% of your gross monthly income.
- Appraised Value: Professional appraisals may differ from online estimates, affecting your actual borrowing power.