HELOC Calculator
Estimate your available Home Equity Line of Credit
*Estimates only. Specific terms depend on credit score and lender criteria.
Understanding Your Home Equity Line of Credit (HELOC)
A Home Equity Line of Credit, or HELOC, is a revolving credit line secured by your home. Unlike a standard home equity loan that provides a lump sum, a HELOC works more like a credit card, allowing you to borrow, repay, and borrow again during a set "draw period."
How is a HELOC Calculated?
Lenders calculate your HELOC limit based on your Loan-to-Value (LTV) ratio. Most lenders will allow you to borrow up to 80% or 85% of your home's appraised value, minus what you still owe on your primary mortgage.
The Formula: (Home Value × Lender's Max LTV %) – Current Mortgage Balance = Available HELOC
HELOC Example Calculation
Let's say your home is worth $500,000 and you owe $300,000 on your mortgage. If your lender allows an 80% LTV:
- 80% of $500,000 = $400,000 (Maximum total debt allowed)
- $400,000 – $300,000 (Current Balance) = $100,000 Available HELOC
Draw Period vs. Repayment Period
Most HELOCs consist of two phases:
- Draw Period: Usually 5 to 10 years. You can withdraw funds as needed and typically only make interest-only payments.
- Repayment Period: Usually 10 to 20 years. You can no longer withdraw money, and you must pay back both principal and interest.
Key Factors Lenders Consider
While equity is the most important factor, lenders also evaluate:
- Credit Score: A score of 700+ usually secures the best interest rates.
- Debt-to-Income (DTI) Ratio: Your total monthly debt payments should generally be below 43% of your gross monthly income.
- Home Appraisal: A professional appraisal will be required to confirm the current market value.