HELOC Calculator

During the draw period (typically 10 years), payments are usually interest-only: outstanding balance × (APR ÷ 12). On a $50,000 balance at 8.5% APR, that's about $354/month. Once you enter the repayment period (typically 20 years), the lender re-amortizes the balance as a fully amortizing P&I loan - the same $50,000 balance at 8.5% over 20 years jumps to about $434/month. The transition can cause significant "payment shock" if you have not been paying down principal voluntarily.

Lenders typically allow a combined loan-to-value (CLTV) of 80%–85% - your existing mortgage plus the HELOC. On a $500,000 home with a $300,000 mortgage at 85% CLTV, your maximum HELOC line is $500,000 × 0.85 − $300,000 = $125,000. Credit score, debt-to-income, and home equity all affect the final approved limit.

Under the 2017 Tax Cuts and Jobs Act, HELOC interest is deductible only if the funds are used to "buy, build, or substantially improve" the home that secures the loan. Using a HELOC to pay off credit cards, cover tuition, or fund a vacation makes the interest non-deductible. Combined mortgage + HELOC debt eligible for the deduction is capped at $750,000 ($375,000 if married filing separately).

HELOCs use variable rates tied to the prime rate. When the Fed raises rates, your payment rises too - a 2% rate increase on a $100,000 balance adds about $167/month during the draw phase. Additionally, lenders can freeze or reduce your line if home values drop or your credit changes, and the repayment phase typically doubles your minimum payment overnight.