HELOC Payment Calculator
Estimate your maximum credit line and monthly interest-only payments.
70%
75%
80%
85%
90%
Available Equity:
$0.00
Max HELOC Credit Line:
$0.00
Monthly Interest-Only Payment:
$0.00
Remaining Credit After Draw:
$0.00
What is a HELOC and How Does it Work?
A Home Equity Line of Credit (HELOC) is a revolving line of credit secured by your home. Think of it like a credit card where your house is the collateral. Unlike a traditional home equity loan that provides a lump sum, a HELOC allows you to borrow as needed, pay it back, and borrow again during the "draw period."
How This Calculator Works
To determine your HELOC eligibility and payments, this calculator uses three primary factors:
- Combined Loan-to-Value (CLTV): Lenders usually limit your total debt (mortgage + HELOC) to 80-90% of your home's value.
- Current Equity: The difference between your home's market value and what you owe on your mortgage.
- Interest-Only Period: Most HELOCs allow you to pay only the interest during the first 10 years (the draw period).
Calculating Your HELOC Limit
The formula for your maximum HELOC limit is:
Max HELOC = (Home Value × Max CLTV%) – Current Mortgage Balance
For example, if your home is worth $400,000, your lender allows 80% CLTV, and you owe $250,000 on your mortgage:
($400,000 × 0.80) – $250,000 = $70,000 Maximum Credit Line.
Understanding HELOC Monthly Payments
During the draw period, many borrowers choose interest-only payments to keep costs low. To calculate this monthly payment:
Monthly Payment = (Draw Amount × Annual Interest Rate) / 12
Example HELOC Scenarios
| Draw Amount | Interest Rate | Interest-Only Payment |
|---|---|---|
| $25,000 | 7.5% | $156.25 |
| $50,000 | 8.0% | $333.33 |
| $100,000 | 9.0% | $750.00 |
Pros and Cons of a HELOC
Pros:
- Flexibility: Borrow only what you need, when you need it.
- Lower Rates: Usually lower interest rates than personal loans or credit cards.
- Tax Deductibility: In some cases, interest may be tax-deductible if used for home improvements (consult a tax pro).
Cons:
- Variable Rates: Your monthly payment can fluctuate as market rates change.
- Risk to Home: Your home is the collateral; failure to pay could lead to foreclosure.
- Ballooning Payments: Once the draw period ends, you must pay back principal, which can significantly increase your monthly payment.