HELOC calculator

How a HELOC limit and payment are worked out

A home equity line of credit (HELOC) is a revolving credit line secured by your home. You borrow what you need during the draw period, pay it down, and borrow again, a little like a credit card with a much lower rate and your house as collateral. Three numbers drive everything: how much the lender will let you borrow, the rate, and the two payment phases. Here is the calculator's opening example: a $400,000 home with $250,000 owed, an 85% limit, and $50,000 borrowed at prime plus 0.50%.

1. 1

   Find the most all your loans can total

   Multiply the value by the lender's combined loan-to-value (CLTV) limit: $400,000 × 85% = $340,000.

2. 2

   Subtract what you owe

   $340,000 − $250,000 = $90,000 of available credit. The other $60,000 of your $150,000 equity stays as the lender's cushion.

3. 3

   Set the rate

   Prime of 7.00% plus a 0.50% margin = 7.50%. The margin stays fixed; prime moves with the Federal Reserve's rate decisions.

4. 4

   Draw period: interest only

   $50,000 × 7.50% ÷ 12 = $312.50 a month. Over 10 years that is $37,500 of interest, and you still owe the full $50,000.

5. 5

   Repayment period: principal and interest

   The $50,000 is paid off over 20 years with the amortization formula, M = P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1), where r = 0.075 ÷ 12 and n = 240. That gives $402.80 a month, $90.30 more than before, and another $46,671 of interest. Total interest: $84,171.

The big total comes from ten years of paying nothing toward principal. You can pay principal during the draw period on most lines, and every dollar you repay early cuts the interest and the later payment.

Payment per $10,000 borrowed

Multiply by the number of $10,000s you plan to draw. At 7.50%, $50,000 is 5 × $62.50 = $312.50 interest-only, then 5 × $80.56 = $402.80 over 20 years.

How much equity lenders let you use

Lenders cap your combined loan-to-value, which is everything secured by the home divided by its appraised value. Many stop at 80% or 85%. Some go to 90% for borrowers with high credit scores and low debt, and a few go higher at a higher rate. They also check your credit, income and debt-to-income ratio, just as they did for your mortgage. On the default home, each step changes the line by $20,000:

The value is what the lender's appraisal or valuation model says, not your own estimate or a listing site's. If home prices in your area fall, a lender can freeze or lower the line during the draw period.

HELOC or home equity loan?

Both borrow against your equity and both put the home on the line. The difference is how the money arrives and how the rate behaves.

In the example, borrowing the full $50,000 at once on a 15-year home equity loan at 8.76% costs $500.02 a month and $40,004 of interest. The HELOC starts $188 a month cheaper but, paid interest-only for 10 years, ends up costing more than twice the interest. If you'd pay the HELOC down as fast as the loan, the gap shrinks, but the variable rate stays a risk. A third option is a cash-out refinance, which replaces your whole first mortgage and makes sense mainly when the new rate is no higher than the one you have.

What to check before you sign

• The index, the margin and the cap. Federal rules require a variable-rate line to state its maximum lifetime rate. Ask how often the rate can change.
• What happens at the end of the draw. Some lines amortize over 10 or 20 years; others call for a balloon payment of the whole balance.
• Introductory rates. A low teaser rate for six or twelve months then resets to prime plus the margin. Run the calculator at the full rate.
• Fees. Some lenders charge an appraisal, closing costs, an annual fee, inactivity fees or a fee if you close the line within a few years.
• The rate if prime rises. Add 2 points to the prime rate in the calculator. In the example, the repayment payment goes from $402.80 to $466.07.
• What you're spending it on. Using your home to pay for a vacation or a car turns unsecured spending into debt that can cost you the house. Remodels that add value are the classic use; our kitchen remodel cost calculator helps size one.

On taxes: since 2018, interest on a HELOC or home equity loan is deductible only if you itemize and use the money to buy, build or substantially improve the home that secures it, within the $750,000 limit on total home debt (IRS Publication 936). Ask a tax professional about your case.

Sources and assumptions

• Prime rate: Federal Reserve, H.15 Selected Interest Rates, bank prime loan rate of 7.00% on October 28, 2026 (released October 29, 2026). The 0.50% margin is our estimate; your lender sets yours based on your credit and CLTV. For reference, Bankrate's weekly survey of large lenders put the average HELOC rate at 7.36% on October 21, 2026 (Bankrate HELOC rates), which works out to prime plus about 0.36%.
• Home equity loan rate: Bankrate's weekly survey of large lenders, 15-year fixed average of 8.76% on October 21, 2026 (10-year 8.77%), for a $30,000 loan, a 700 credit score and 80% CLTV (Bankrate home equity loan rates). Other surveys run lower; CBS News cited 8.14% on September 16, 2026. Get real quotes.
• Draw and repayment periods, balloon payments and variable rates: CFPB, What is a home equity line of credit? and What you should know about HELOCs. Maximum-rate disclosure: Regulation Z, 12 CFR 1026.30.
• Tax rules: IRS Publication 936, Home Mortgage Interest Deduction, and the IRS notice Interest on home equity loans often still deductible.
• CLTV limits of 80% to 90% are typical lender ranges, not a rule; each lender sets its own.
• Math: the whole amount is drawn on day one, the rate stays the same for the life of the line, and payments are interest-only during the draw and fully amortizing after it. Fees, rate changes and teaser rates are not included.
• This is an educational estimate, not an offer of credit or financial or tax advice. Talk to a licensed lender, a tax professional, or a HUD-approved housing counselor. Rates checked October 29, 2026.

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