How much can I borrow with a HELOC?

Most lenders allow a combined loan-to-value (CLTV) of 80–90%. Subtract your mortgage balance from 85% of your home value to find your maximum credit line. For example: $400,000 home × 85% = $340,000 − $250,000 mortgage = $90,000 HELOC.

What is the difference between the draw period and repayment period?

During the draw period (typically 10 years), you can borrow funds and usually only pay interest on what you've drawn. During the repayment period (typically 20 years), the line closes and you repay the balance in full amortizing payments.

Are HELOC interest rates fixed or variable?

HELOCs typically have variable rates tied to the prime rate. When the Fed raises rates, your HELOC rate rises too. Some lenders offer a fixed-rate conversion option for a portion of your balance.

Is HELOC interest tax deductible?

HELOC interest may be deductible if funds are used to buy, build, or substantially improve the home securing the loan. Interest for other purposes (debt consolidation, vacations) is generally not deductible. Consult a tax advisor.

What credit score do I need for a HELOC?

Most lenders require a minimum 620 credit score, though 700+ will get you better rates. You'll also typically need at least 15–20% equity in your home and a debt-to-income ratio below 43%.

HELOC Calculator

Calculate your available home equity line of credit, draw period payments, and repayment costs.

Home Value

Mortgage Balance

Credit Limit (% of value)

HELOC Interest Rate

Draw Amount

Draw Period

yrs

Repayment Period

yrs

Available Credit Line

$90,000

Based on 85% combined LTV · Combined LTV: 75.0%

Draw Period Payment

$354/mo

Repayment Payment

$434/mo

Total Interest Paid

$96,639

Draw Interest

$42,500

How HELOC payments work: During the 10-year draw period you pay interest-only on the amount drawn. After that, the $50,000 balance converts to a fully amortized loan over 20 years.

How to Use This HELOC Calculator

Enter your Home Value and Mortgage Balance to see how much equity you can access. Adjust the Credit Limit % to match your lender's combined LTV limit (typically 80–90%). Then enter your planned Draw Amount and the duration of your draw and repayment periods to see full payment projections.

Draw Period vs. Repayment Period

During the draw period (usually 10 years), you can borrow and repay funds flexibly, typically paying interest only on the outstanding balance. When the draw period ends, the line closes and any balance converts to a fully amortizing loan repaid over the repayment period.

Understanding the Rate

HELOC rates are variable and tied to the prime rate (currently WSJ Prime Rate). Your actual rate = prime rate + lender margin (typically 0–2%). Use a slightly higher rate than today's to stress-test your budget against potential rate increases.

HELOC Payment Formulas

Draw Period (Interest-Only):
Monthly Payment = Balance × (Annual Rate ÷ 12)

Repayment Period (Fully Amortizing):
Monthly Payment = Balance × [r(1+r)^n] / [(1+r)^n - 1]

Available Credit:
Max Credit Line = (Home Value × CLTV%) − Mortgage Balance

For example: $400,000 home, $250,000 mortgage, 85% CLTV. Available credit = ($400,000 × 0.85) − $250,000 = $90,000. If you draw $50,000 at 8.5%, your draw payment = $50,000 × (0.085/12) = $354/month. After 10 years, the $50,000 balance converts to a 20-year loan at 8.5% = $434/month.

Example: Kitchen Renovation with a HELOC

The Chen Family — Using Home Equity for Renovations

Home value: $450,000. Mortgage balance: $280,000. They want to renovate their kitchen ($65,000 budget).

Available Credit (85% CLTV)	$102,500
Draw Amount	$65,000
HELOC Rate	8.75% (variable)
Draw Period Payment (interest-only)	$474/month
Repayment Period Payment	$571/month (20 yr)
Total Interest Paid	$80,060

The renovation adds an estimated $45,000 to home value — not a full return on cost, but the family gains a kitchen they'll enjoy for years. They plan to pay down the balance aggressively during the draw period to reduce the repayment burden.

Frequently Asked Questions

Most lenders allow a combined loan-to-value (CLTV) of 80–90%. To find your maximum: multiply your home value by 85%, then subtract your mortgage balance. A $400,000 home with a $250,000 mortgage gives you up to $90,000 in available credit at 85% CLTV.

During the draw period (typically 10 years), you can borrow and repay funds as needed, paying interest only on what you've drawn. During the repayment period (typically 20 years), the line closes and you repay the outstanding balance in full amortizing payments — often a significant payment shock.

HELOCs are typically variable rate, tied to the prime rate. When the Fed raises rates, your HELOC payment rises. Some lenders offer a fixed-rate lock for a portion of your balance. Budget for rates 2–3% higher than today's to ensure your payment remains manageable.

HELOC interest is deductible only when the funds are used to buy, build, or substantially improve the home securing the loan. Interest on HELOCs used for debt consolidation, vacations, or other purposes is not deductible under current IRS rules. Always consult a tax advisor.

Most lenders require a minimum 620 credit score, but 700+ earns significantly better rates. You'll also typically need at least 15–20% equity, a debt-to-income ratio below 43%, and stable income documentation.