A Home Equity Line of Credit (HELOC) is a flexible borrowing option that allows homeowners to borrow against the equity they've built in their homes. Unlike a traditional home equity loan, which provides a lump sum, a HELOC functions more like a credit card, with a revolving credit limit that you can draw from as needed and repay over time. The "availability" of a HELOC refers to the maximum amount of funds you can borrow, which is determined by several factors.
This calculator helps you estimate your potential HELOC availability. The primary calculation is based on your home's equity and the lender's Loan-to-Value (LTV) ratio limits.
How it Works:
Property Value: This is the current market value of your home. Lenders typically require a professional appraisal to determine this accurately.
Outstanding Mortgage Balance: This is the total amount you still owe on your primary mortgage.
Home Equity: This is the difference between your property's value and your outstanding mortgage balance. It represents the portion of your home you truly own.
Home Equity = Property Value – Outstanding Mortgage Balance
Loan-to-Value (LTV) Ratio: Lenders set a maximum LTV percentage they are willing to lend against. This ratio compares the total debt secured by the property to its value. For example, an 80% LTV means the total outstanding loans (your primary mortgage plus the HELOC) cannot exceed 80% of the home's value.
Maximum Secured Debt Allowed = Property Value * (Maximum LTV Percentage / 100)
Maximum HELOC Amount: This is the difference between the maximum secured debt allowed and your current outstanding mortgage balance.
Maximum HELOC Amount = Maximum Secured Debt Allowed – Outstanding Mortgage Balance
Estimated Closing Fees: HELOCs often come with closing costs, which can include appraisal fees, title insurance, and recording fees. These are sometimes rolled into the loan, reducing the net amount you receive. This calculator allows you to estimate the impact of these fees as a percentage of the potential credit line.
Net Available Credit = Maximum HELOC Amount * (1 – (Estimated Closing Fees Percentage / 100))
Important Considerations:
Lender Policies: Different lenders have varying LTV limits and may consider other factors like your credit score and income.
Appraisal: The final HELOC amount will depend on the lender's appraisal of your property.
Interest Rates: HELOCs typically have variable interest rates, meaning your monthly payments can change over time.
Draw Period & Repayment Period: HELOCs usually have a "draw period" (when you can borrow funds) followed by a "repayment period" (when you must pay back principal and interest).
Fees: Be aware of annual fees, transaction fees, or inactivity fees associated with the line of credit.
Use this calculator as an initial estimate. Always consult with multiple lenders to get precise quotes and understand all terms and conditions before applying for a HELOC.
function calculateLineOfCredit() {
var propertyValue = parseFloat(document.getElementById("propertyValue").value);
var outstandingMortgage = parseFloat(document.getElementById("outstandingMortgage").value);
var loanToValueRatio = parseFloat(document.getElementById("loanToValueRatio").value);
var fees = parseFloat(document.getElementById("fees").value);
var resultDiv = document.getElementById("result");
var resultSpan = resultDiv.getElementsByTagName("span")[0];
if (isNaN(propertyValue) || isNaN(outstandingMortgage) || isNaN(loanToValueRatio) || isNaN(fees)) {
resultSpan.innerText = "Please enter valid numbers for all fields.";
resultDiv.style.backgroundColor = "#f8d7da";
resultDiv.style.borderColor = "#f5c6cb";
resultDiv.style.color = "#721c24";
return;
}
if (propertyValue <= 0 || outstandingMortgage < 0 || loanToValueRatio 100 || fees < 0) {
resultSpan.innerText = "Invalid input values. Ensure values are reasonable.";
resultDiv.style.backgroundColor = "#f8d7da";
resultDiv.style.borderColor = "#f5c6cb";
resultDiv.style.color = "#721c24";
return;
}
var homeEquity = propertyValue – outstandingMortgage;
if (homeEquity < 0) {
homeEquity = 0; // Cannot have negative equity for HELOC calculation
}
var maxSecuredDebt = propertyValue * (loanToValueRatio / 100);
var maxHelocAmount = maxSecuredDebt – outstandingMortgage;
if (maxHelocAmount < 0) {
maxHelocAmount = 0; // Cannot have a negative HELOC limit
}
var netAvailableCredit = maxHelocAmount * (1 – (fees / 100));
if (netAvailableCredit < 0) {
netAvailableCredit = 0; // Ensure net available credit is not negative
}
resultSpan.innerText = "$" + netAvailableCredit.toFixed(2);
resultDiv.style.backgroundColor = "#d4edda";
resultDiv.style.borderColor = "#c3e6cb";
resultDiv.style.color = "#155724";
}