Bank Loan Calculator

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HELOC (Home Equity Line of Credit) Calculator

Most lenders allow between 80% and 90%.

Estimated HELOC Limit:

Understanding Your Home Equity Line of Credit (HELOC)

A Home Equity Line of Credit (HELOC) is a revolving credit line secured by your home. Unlike a standard home equity loan, which provides a lump sum, a HELOC functions more like a credit card with a limit based on the equity in your property. You only pay interest on the amount you actually draw, making it a flexible financial tool for home renovations, debt consolidation, or emergency funds.

How Does the HELOC Calculation Work?

Lenders determine your credit limit using the Combined Loan-to-Value (CLTV) ratio. The formula used in this calculator is:

Max HELOC Limit = (Home Value × Max CLTV %) – Current Mortgage Balance

For example, if your home is worth $400,000 and the lender allows an 80% CLTV, they will allow total debt up to $320,000. If you still owe $250,000 on your first mortgage, your maximum HELOC line would be $70,000.

Key Factors That Influence Your HELOC Approval

  • Current Home Value: A professional appraisal is usually required to confirm the value.
  • Debt-to-Income (DTI) Ratio: Lenders evaluate your monthly income against your existing debt obligations.
  • Credit Score: Higher scores typically unlock higher CLTV limits (up to 90%) and lower interest rates.
  • Equity Margin: Most lenders require you to maintain at least 15-20% equity in the home.

Realistic Example Scenario

Imagine a homeowner with the following profile:

  • Home Appraisal: $600,000
  • Mortgage Owed: $350,000
  • Lender CLTV Limit: 85%

First, calculate the total allowable debt: $600,000 x 0.85 = $510,000. Next, subtract the existing mortgage: $510,000 – $350,000. The resulting maximum HELOC is $160,000.

Draw Period vs. Repayment Period

Most HELOCs consist of two phases. The Draw Period (usually 10 years) allows you to borrow funds and typically requires only interest payments. The Repayment Period (usually 15-20 years) follows, where you can no longer borrow and must pay back both principal and interest.

function calculateHELOC() { var homeValue = parseFloat(document.getElementById('homeValue').value); var mortgageBalance = parseFloat(document.getElementById('mortgageBalance').value); var cltvRatio = parseFloat(document.getElementById('cltvRatio').value); var resultDiv = document.getElementById('helocResult'); var amountDisplay = document.getElementById('helocAmountDisplay'); var explanation = document.getElementById('helocExplanation'); // Basic Validation if (isNaN(homeValue) || isNaN(mortgageBalance) || isNaN(cltvRatio)) { alert("Please enter valid numbers for all fields."); return; } if (homeValue <= 0 || cltvRatio 0) { amountDisplay.innerHTML = formatter.format(maxHELOC); amountDisplay.style.color = "#28a745"; explanation.innerHTML = "Based on a " + cltvRatio + "% CLTV limit, your total allowable debt is " + formatter.format(maxAllowableDebt) + ". After subtracting your existing mortgage, you may qualify for this line of credit."; } else { amountDisplay.innerHTML = "$0"; amountDisplay.style.color = "#dc3545"; resultDiv.style.backgroundColor = "#ffebee"; explanation.innerHTML = "Currently, your mortgage balance exceeds the allowable Combined Loan-to-Value limit. You may need more equity or a higher CLTV lender to qualify for a HELOC."; } // Smooth scroll to result resultDiv.scrollIntoView({ behavior: 'smooth', block: 'nearest' }); }

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