HELOC Payment & Credit Limit Calculator
Estimate your available equity and projected monthly interest-only payments.
Your HELOC Summary
*Estimation based on your current draw amount. Interest-only payments usually apply during the draw period (typically first 10 years).
Understanding How a HELOC Works
A Home Equity Line of Credit (HELOC) is a revolving line of credit secured by your home. Unlike a standard home equity loan, which provides a lump sum, a HELOC allows you to borrow as needed, repay, and borrow again during a set period known as the "draw period."
How is your HELOC limit calculated?
Lenders determine your credit limit based on your Combined Loan-to-Value (CLTV) ratio. Most lenders allow a CLTV of 80% to 85%, though some may go higher for borrowers with excellent credit scores. The formula is:
(Home Value × CLTV %) – Mortgage Balance = Maximum HELOC Limit
Interest-Only vs. Fully Amortized Payments
During the initial draw period (often 10 years), many HELOCs allow for interest-only payments. This makes the monthly cost very low but does not reduce the principal balance. Once the draw period ends, the "repayment period" begins (often 20 years), requiring you to pay both principal and interest, which can significantly increase your monthly obligation.
Example Calculation
If your home is worth $400,000 and your lender allows an 80% CLTV, your total borrowing capacity is $320,000. If you still owe $200,000 on your primary mortgage, your maximum HELOC limit would be $120,000.
If you then draw $30,000 at an 8% interest rate, your monthly interest-only payment would be approximately $200.00.
Factors That Affect Your HELOC Rate
- Credit Score: Higher scores typically unlock lower margins over the Prime Rate.
- Debt-to-Income (DTI) Ratio: Lenders prefer a DTI below 43%.
- Current Prime Rate: HELOCs are variable-rate products tied to the U.S. Prime Rate.
- Equity Amount: Borrowing a smaller percentage of your home's value may result in better terms.