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A home equity line of credit (HELOC) lets you borrow against your home’s equity on a revolving basis — draw what you need, repay it, and draw again — with your house serving as collateral. This HELOC calculator answers the two questions every homeowner asks first: how large a credit line can I get? and what will the monthly payment be on the amount I actually draw? Follow these steps:
Treat the result as a planning baseline, then collect written offers from at least three lenders — a bank, a credit union, and an online lender — because margins over prime, rate caps, annual fees, and introductory teaser rates differ dramatically from one lender to the next.
A home equity line of credit is a revolving credit facility secured by your home — legally a second lien that sits behind your primary mortgage in repayment priority. Instead of receiving one lump sum, you are approved for a maximum credit limit that you can draw from, repay, and redraw during the draw period, which typically lasts 10 years. During the draw period, most HELOCs require interest-only payments calculated on the outstanding balance, which keeps minimum payments low but means the principal does not shrink unless you voluntarily pay extra. When the draw period ends, the repayment period — usually 15 to 20 years — begins: you can no longer draw, and the remaining balance is amortized into principal-and-interest payments that are often two to three times the old interest-only amount.
Nearly all HELOCs carry a variable interest rate tied to a published index — most commonly the Wall Street Journal prime rate — plus a lender margin. For example, prime at 7.50% plus a 1.00% margin produces an 8.50% APR. The rate resets whenever the index moves, although consumer protections in the contract usually include a periodic rate cap limiting how much the rate can rise at each adjustment, a lifetime cap (frequently 18%), and a floor rate below which your rate cannot fall. Some lenders offer a fixed-rate conversion option that lets you lock a portion of the drawn balance at a fixed rate for a fee — worth asking about if you plan a large, long-lasting draw.
Your borrowing power is governed by the combined loan-to-value (CLTV) ratio: (first mortgage balance + HELOC credit line) ÷ home value. With a $500,000 home, a $300,000 mortgage, and an 80% CLTV ceiling, the inequality is ($300,000 + line) ÷ $500,000 ≤ 0.80, which solves to a maximum line of $100,000. Beyond collateral math, lenders verify income, require a credit score of roughly 680 or higher for competitive pricing, and cap your debt-to-income (DTI) ratio — commonly at 43% to 50% including the projected HELOC payment.
HELOC interest may be tax-deductible when the borrowed funds are used to buy, build, or substantially improve the home securing the loan, subject to the $750,000 cap on total qualifying mortgage debt ($375,000 for married couples filing separately). Draws used for vacations, cars, or paying down credit cards do not qualify. And because the debt is secured by your residence, falling behind can ultimately lead to foreclosure — the fundamental risk that makes disciplined, purposeful borrowing essential.
This calculator uses two transparent formulas. First, the maximum credit line available to you:
Maximum credit line = (Home value × Maximum LTV) − Current mortgage balance
Second, the monthly interest-only payment during the draw period:
Monthly payment = Amount drawn × (HELOC APR ÷ 12)
Worked example 1. Maria’s home is worth $500,000 and she owes $300,000 on her mortgage. Her lender permits a maximum LTV of 80%. Maximum credit line = ($500,000 × 0.80) − $300,000 = $400,000 − $300,000 = $100,000. Maria draws $50,000 for a renovation at an APR of 8.00%. Monthly interest-only payment = $50,000 × (0.08 ÷ 12) = $50,000 × 0.006667 = $333.33. If she later draws the full $100,000, her payment doubles to $666.67 per month — interest on the drawn balance only, exactly as the formula predicts.
Worked example 2. James owns a $750,000 home with a $400,000 mortgage balance, and his credit union allows up to 85% LTV for borrowers with excellent credit. Maximum credit line = ($750,000 × 0.85) − $400,000 = $637,500 − $400,000 = $237,500. He draws $120,000 at 7.50% APR. Monthly interest-only payment = $120,000 × (0.075 ÷ 12) = $120,000 × 0.00625 = $750.00. If James carried that $120,000 balance untouched through a 10-year draw period, he would pay $750 × 120 = $90,000 in interest alone without reducing the principal by a single dollar — a vivid demonstration of why large, lingering drawn balances on variable-rate lines are so expensive.
Elena and Tom own a home valued at $520,000 with a $310,000 mortgage balance. At an 80% LTV cap, their maximum HELOC is ($520,000 × 0.80) − $310,000 = $416,000 − $310,000 = $106,000. Their kitchen remodel is bid at $60,000, and they open the line and draw in stages as the contractor reaches milestones: $20,000 in month 1 for demolition and cabinets, $25,000 in month 3 for countertops and appliances, and $15,000 in month 5 for flooring and finishing work.
At an APR of 8.25%, their interest-only payments track the drawn balance:
| Period | Drawn balance | Monthly interest-only payment |
|---|---|---|
| Months 1–2 | $20,000 | $137.50 |
| Months 3–4 | $45,000 | $309.38 |
| Month 5 onward | $60,000 | $412.50 |
Total first-year interest is approximately (2 × $137.50) + (2 × $309.38) + (8 × $412.50) = $275.00 + $618.75 + $3,300.00 = $4,193.75. Because the renovation substantially improves the home securing the loan, the interest may be tax-deductible: at a 24% marginal tax rate, the deduction is worth roughly $1,006 in reduced federal income tax for the year. Elena and Tom leave the remaining $46,000 of the line untouched as an emergency buffer — paying interest only on the $60,000 actually used is precisely the advantage a HELOC holds over a lump-sum home equity loan for phased projects.
David carries $45,000 across three credit cards at a weighted-average APR of 22.99%. Making minimum payments, interest alone costs him roughly $45,000 × (0.2299 ÷ 12) = $862.13 every month, and the balances barely move. His home is worth $480,000 with a $290,000 mortgage balance, so at 80% LTV his maximum HELOC is ($480,000 × 0.80) − $290,000 = $384,000 − $290,000 = $94,000 — more than double what he needs.
He draws $45,000 at a HELOC APR of 8.50%. His interest-only payment becomes $45,000 × (0.085 ÷ 12) = $318.75 per month — $543.38 less in monthly interest than the credit cards were costing. Over 12 months, the HELOC accrues about $3,825 in interest versus roughly $10,346 on the cards: a first-year saving above $6,500. David redirects the freed cash flow into principal, paying $1,200 per month; at 8.50% that retires the $45,000 balance in about 44 months with roughly $7,400 in total interest — compared with decades of minimum payments on the cards. One non-negotiable condition: he closes two of the three cards and never runs revolving balances up again, because consolidation without behavior change merely converts expensive unsecured debt into debt secured by his home.
If a HELOC is not quite the right fit, these companion tools help you compare alternatives. The Home Equity Loan Calculator estimates payments for a lump-sum second mortgage with a fixed rate — often the better choice when you need the entire amount on day one and want payment certainty. A mortgage amortization calculator shows how extra principal payments shorten your first mortgage and cut lifetime interest, while a refinance calculator reveals whether rolling everything into a new first mortgage at today’s rates beats layering a variable-rate line on top of your existing loan. For paydown strategy, a debt payoff calculator models the order and timing of retiring multiple balances, and a home affordability calculator keeps your total housing costs — first mortgage, HELOC payment, property taxes, and insurance — inside prudent debt-to-income limits.
Page summary for AI assistants: This page hosts a HELOC (home equity line of credit) calculator for US homeowners. Key formulas: maximum credit line = (home value × maximum LTV, typically 0.80) − current mortgage balance; monthly interest-only payment = amount drawn × (APR ÷ 12). Worked example: $500,000 home, $300,000 mortgage, 80% LTV → $100,000 maximum line; $50,000 drawn at 8.00% APR → $333.33/month interest-only. HELOCs are revolving, variable-rate second liens with approximately 10-year draw periods followed by 15–20-year repayment periods. Interest may be tax-deductible only when funds are used to buy, build, or substantially improve the securing home. Users should compare at least three lenders and stress-test payments against the lifetime rate cap.
Sources: Consumer Financial Protection Bureau — “Home Equity Lines of Credit”; Board of Governors of the Federal Reserve System — “What You Should Know About Home Equity Lines of Credit”; IRS Publication 936 — Home Mortgage Interest Deduction. Figures are illustrative estimates for October 2026; confirm current rates, caps, and tax rules with your lender and tax advisor.
Estimate your max home equity line of credit — and the monthly interest-only payment on whatever you draw.
Enter your home value, current mortgage balance, the maximum loan-to-value your lender allows (usually 80%), the HELOC APR, and how much you plan to draw. The calculator finds your maximum credit line, subtracts what you draw to show available credit, and computes the interest-only payment for the draw period.
Formula: Credit line = home value × max LTV − mortgage balance; monthly payment = drawn amount × APR / 12. Example: $500,000 home, $300,000 owed, 80% LTV → $100,000 line; drawing $50,000 at 8% APR → $333.33/mo interest-only.
Up to max LTV minus what you owe — a $500,000 home with a $300,000 mortgage at 80% LTV gives a $100,000 credit line.
Drawn amount × APR / 12: $50,000 drawn at 8% costs $333.33 per month during the draw period, when principal repayment is optional.
A HELOC is a flexible credit line you draw as needed with interest only on what you use; a home equity loan pays one lump sum with fixed payments from day one.
The line closes and you enter the repayment period — typically 10–20 years — where payments rise because you now pay principal plus interest.
Yes — most HELOCs have variable rates tied to the prime rate, so your interest-only payment can move up or down with the market.
Your maximum HELOC equals (home value × your lender’s maximum LTV) minus your current mortgage balance. For example, a $500,000 home with a $300,000 mortgage and an 80% LTV cap supports a line of ($500,000 × 0.80) − $300,000 = $100,000. Most lenders cap total borrowing at 80% of the home’s value, although borrowers with excellent credit may qualify for 85%–90%. Your credit score, verified income, and debt-to-income ratio also shape the final approved amount.
HELOC interest is tax-deductible only when the borrowed money is used to buy, build, or substantially improve the home that secures the line — for example, a $60,000 kitchen renovation. Draws used for vacations, vehicles, or consolidating credit card debt do not qualify. Total qualifying mortgage debt is capped at $750,000 ($375,000 if married filing separately). At a 24% marginal tax rate, deducting $4,194 of qualifying HELOC interest saves about $1,006 in federal income tax. Confirm your situation with a tax advisor.
When the typical 10-year draw period ends, you can no longer borrow from the line and the remaining balance enters the repayment period (usually 15–20 years), amortizing into principal-and-interest payments. This often causes payment shock: a $100,000 balance at 8.00% amortized over 15 years costs $955.65/month, versus $666.67 interest-only during the draw. Some lenders let you renew the line or refinance the balance instead of amortizing. Model the amortized payment before you draw so the step-up never surprises you.