What is a HELOC?
A home equity line of credit (HELOC) is a credit line secured by your home. Like a credit card, you borrow what you need up to a limit, pay it back and borrow again. A HELOC has two stages: during the draw period, usually 5 to 10 years, you can borrow and the minimum payment covers only the interest; during the repayment period, usually 10 to 20 years, you can no longer borrow and pay back the balance with interest.
This HELOC calculator assumes you draw the whole amount at the start and keep the rate fixed. It shows both monthly payments, the total interest and, with closing costs and fees, the full cost of the line and its APR. The How much can you borrow tab estimates your credit limit from your home's value. If you need the money once, at a fixed rate, compare with the home equity loan calculator.
How HELOC payments are calculated
- Draw period payment = balance × annual rate / 12 — interest only, so the balance does not fall;
- Repayment period payment M = P × r × (1 + r)n / ((1 + r)n − 1), where P is the balance, r the monthly rate and n the months of the repayment period;
- Total interest = all payments − the balance;
- APR = the yearly rate at which all payments and annual fees repay only the money you receive after closing costs.
Example: you draw $50,000 at 7.49% with a 5-year draw period and a 15-year repayment period. For the first 5 years you pay $312.08 a month in interest only. Then the payment rises to $463.22 a month, about 48% more, for 15 years. Over 20 years you pay $52,105 in interest. With $2,000 of closing costs and a $50 annual fee, the line costs $54,355 in total, an APR of 8.032%.
HELOC payments by balance
At 7.49%, with a 15-year repayment period:
| Balance | Draw period (interest only) | Repayment period |
|---|---|---|
| $25,000 | $156 | $232 |
| $50,000 | $312 | $463 |
| $100,000 | $624 | $926 |
| $150,000 | $936 | $1,390 |
| $200,000 | $1,248 | $1,853 |
The jump between the two columns is called payment shock. Plan for it before the draw period ends, especially if your budget is built around the interest-only payment.
When the rate changes
Most HELOCs have a variable rate tied to the prime rate, so the payment moves when the prime rate does. On a $50,000 balance:
| Rate | Interest-only payment | Repayment payment |
|---|---|---|
| 7% | $292 | $449 |
| 8% | $333 | $478 |
| 9% | $375 | $507 |
| 10% | $417 | $537 |
Some lenders let you lock part of the balance at a fixed rate. Run the calculator at a higher rate to see how much room your budget has.
How much can you borrow with a HELOC?
Lenders cap the combined loan-to-value (CLTV) ratio: your mortgage plus the credit line, divided by the home's value. Most allow 80% to 85%.
Credit limit = home value × maximum CLTV − mortgage balance
For a $600,000 home with $250,000 left on the mortgage, 85% allows all loans up to $510,000, so the credit line can be up to $260,000. Your credit score and debt-to-income ratio also matter.
HELOC vs. home equity loan vs. cash-out refinance
- HELOC: borrow as needed, pay interest only on what you use, usually at a variable rate.
- Home equity loan: one lump sum at a fixed rate with fixed payments from the start.
- Cash-out refinance: replaces your mortgage with a larger one; it can make sense when current rates are below your mortgage rate. See the refinance calculator.
Tips for using a HELOC
- pay some principal during the draw period: repaying $50,000 over all 20 years at $402.49 a month costs $46,598 in interest instead of $52,105;
- draw only what you need — interest is charged on the balance, not on the credit limit;
- the lender can freeze or lower the line if your home's value drops;
- the line is secured by your home, so missed payments can lead to foreclosure;
- using it to pay off credit cards saves money only if the balances stay paid — the debt consolidation calculator runs the numbers.
Is HELOC interest tax deductible?
In the U.S., only when the money is used to buy, build or substantially improve the home that secures the line, and only if you itemize, within the $750,000 limit on mortgage debt. Interest on money used for other purposes is not deductible. The One Big Beautiful Bill Act of 2025 made these rules permanent.