HELOC Payment Calculator
Combined Loan-to-Value (CLTV):
0%
Available Equity (Based on LTV):
0
Monthly Interest-Only Payment:
$0.00
Monthly Repayment (Principal + Interest):
$0.00
Understanding Your HELOC Payments
A Home Equity Line of Credit (HELOC) functions differently than a standard home equity loan. It is a revolving line of credit, similar to a credit card, but secured by your home. Understanding the payment phases is critical for long-term financial planning.
Most HELOCs consist of two distinct phases:
- The Draw Period: Usually lasts 5 to 10 years. During this time, you can borrow funds and typically only have to pay the interest on what you use.
- The Repayment Period: Usually lasts 10 to 20 years. You can no longer borrow money, and you must pay back both the principal and interest, which significantly increases the monthly payment.
How This Calculator Works
This tool evaluates three critical metrics for homeowners considering a HELOC:
- Combined Loan-to-Value (CLTV): Lenders usually require your total debt (mortgage + HELOC) to stay below 80-90% of your home's value.
- Interest-Only Phase: We calculate the cost of carrying the balance if you choose to pay only interest during the draw period.
- Repayment Phase: We calculate the fully amortized payment over your chosen term to show what your "sticker shock" might look like once the draw period ends.
Real-World Example:
If your home is worth $500,000 and you owe $300,000, you have $200,000 in equity. However, at an 85% LTV limit, a lender will only allow a total debt of $425,000 ($500k * 0.85). This means your maximum HELOC would be $125,000 ($425k – $300k).
If your home is worth $500,000 and you owe $300,000, you have $200,000 in equity. However, at an 85% LTV limit, a lender will only allow a total debt of $425,000 ($500k * 0.85). This means your maximum HELOC would be $125,000 ($425k – $300k).
Key Factors Affecting HELOC Costs
Variable Interest Rates: Most HELOCs have variable rates tied to the Prime Rate. If the Federal Reserve raises rates, your monthly HELOC payment will increase accordingly.
Utilization Ratio: Just like a credit card, you only pay interest on the amount you actually draw, not the total credit limit. This makes HELOCs excellent for ongoing projects like home renovations where expenses occur in stages.
Appraisal Value: Your borrowing power is tied directly to your home's current market value. If home prices in your area drop, a lender might "freeze" or reduce your credit limit.