HELOC Calculator

The short answer

• Lenders usually let all loans on your home reach 80% to 85% of its value. On a $500,000 home with $300,000 owed, 85% allows a line of $125,000.
• The rate is the prime rate, about 7.00% in October 2026, plus a margin. Bankrate’s average was about 7.33% on October 7, 2026.
• Drawing $50,000 at 7.5% costs $312.50 a month interest-only for 10 years, then $402.80 for 20 years.
• Total interest over 30 years: $84,171. The rate can change at any time.

What a HELOC is

A home equity line of credit is a revolving line, like a credit card, secured on your home. The lender approves a limit. During the draw period, usually 10 years, you borrow what you need, repay and borrow again, and pay interest only on what you have drawn. In the repayment period, usually 20 years, you can no longer draw, and the balance is paid off with principal and interest.

1. Day oneLine opens

   You draw by check, card or transfer, up to the limit.

2. Years 1 to 10Draw period

   Interest-only payments on the balance; borrow and repay freely.

3. Years 11 to 30Repayment period

   No new draws; principal and interest pay the balance to zero.

How much you can borrow

Your equity is $200,000, but the lender keeps a cushion of 15% of the value, here $75,000, in case prices fall. Your credit score, income and debt-to-income ratio also count; the debt-to-income calculator shows where you stand.

CLTV limits in practice

Most lenders cap the combined loan-to-value at 80% to 85%. A few credit unions and banks go to 90% or more for borrowers with strong credit, usually at a higher margin. If you already owe more than the limit, there is no room for a HELOC until you pay down the mortgage or the home gains value.

Prime plus a margin

HELOC rates are variable. Most follow the Wall Street Journal prime rate, which sits 3 points above the top of the Federal Reserve’s target range. The Fed raised its range to 3.75% to 4.00% on September 16, 2026, putting prime at about 7.00%. Your lender adds a margin, from below zero for an introductory offer to 2 points or more, depending on your credit score, the CLTV and the line size.

The rate changes whenever prime changes, usually from the next billing cycle. Your agreement sets a lifetime cap, often 18%, and sometimes a floor. Some lenders let you lock part of the balance at a fixed rate.

The draw period

In the draw period most HELOCs ask only for the interest: balance × rate ÷ 12. On $50,000 at 7.5% that is $312.50 a month. Over 10 years you pay $37,500 of interest and still owe the full $50,000. Low payments are the main attraction, and the main trap: an interest-only payment does nothing to reduce the debt.

The repayment period

When the draw period ends, the balance is amortized over the repayment period, like a normal loan. $50,000 at 7.5% over 20 years costs $402.80 a month, with $46,671 of interest. Some lines instead require a balloon payment of the whole balance at the end of the draw period; check your agreement.

A worked example

Total interest over the 30 years is $84,171 at a steady 7.5%: more than one and a half times the $50,000 borrowed.

The payment jump

The step from $312.50 to $402.80 is a rise of $90.30 a month, or 29%. On larger balances, or if rates have risen by then, the jump is bigger. Many borrowers are caught out because ten years of interest-only payments feel normal. Mark the end of your draw period in your calendar and plan for the higher payment well ahead.

If rates rise

Each point on prime adds about $42 a month in the draw period on this balance. Prime has moved by several points within a few years before. The calculator’s table shows your own line at other rates, and you can stress-test the repayment period under More options.

Drawing as you go

A HELOC suits costs that arrive over time, such as a renovation paid in stages or college tuition each fall. You pay interest only on what you have drawn. Drawing $50,000 in equal monthly amounts over 10 years starts at $2.60 a month of interest, reaches $156.25 after five years, and costs $18,906 of interest in the draw period instead of $37,500.

Paying principal early

Nothing stops you paying principal during the draw period. Paying $50,000 as if it were a 30-year loan at 7.5%, $349.61 a month, leaves $43,397 owed after 10 years instead of $50,000, and makes the later jump smaller. For a short-term need, paying it off within a few years is cheapest: $20,000 cleared in 5 years at 7.5% costs $400.76 a month and $4,046 of interest.

Fees and closing costs

Many lenders advertise no closing costs on HELOCs, but read the terms. Common charges include an appraisal, an annual fee of $50 to $100, a fee for each draw, and an early closure fee if you close the line within about three years, often to recover the closing costs the lender paid. Add these under More options to see the full cost.

Good and poor uses

A HELOC is often the cheapest way to borrow a large sum, well below typical credit card and personal loan rates. Home improvements are the classic use: they can add value and the interest may be deductible. Consolidating high-rate debt can save interest, but it turns unsecured debt into debt secured on your home; the debt payoff calculator shows other ways to clear it. Holidays, cars and everyday spending are poor uses: you could still be paying for them decades later.

HELOC or home equity loan

A home equity loan gives you a lump sum at a fixed rate with a fixed payment from the start. It suits one known cost and borrowers who want certainty. A HELOC suits costs spread over time and people who will repay quickly. Bankrate’s October 7, 2026 survey put average HELOC rates at about 7.33% and 10-year home equity loans at about 8.66%, so the line is cheaper today but can rise. The home equity loan calculator compares the two with a cash-out refinance.

Is HELOC interest deductible?

Only if you itemize, and only when the money is used to buy, build or substantially improve the home that secures the line. The One Big Beautiful Bill Act made this rule permanent, along with the $750,000 cap on mortgage debt whose interest you can deduct ($375,000 if married filing separately), counting the first mortgage and the HELOC together (IRS Publication 936). Interest on money used for a car, tuition or credit cards is not deductible. Keep receipts that show where the money went.

The risks

• Your home is the security: if you cannot pay, the lender can foreclose.
• The rate and payment can rise with prime, with little warning.
• The payment jumps when the draw period ends.
• If prices fall, you can owe more than the home is worth, which makes selling or refinancing hard.
• An open line makes it easy to keep borrowing.

When a lender can freeze the line

Under federal rules (Regulation Z), a lender can freeze or reduce your line if the home’s value falls significantly, if your finances change so that it reasonably believes you cannot repay, or if you default on a material term. Many lines were cut this way in 2008 and 2020. Do not count on an unused line as your only emergency fund.

Applying

1. Check your credit report and score; better scores win lower margins.
2. Get quotes from your bank, a credit union and an online lender. Compare the margin, introductory rate, fees, draw and repayment terms and the rate cap.
3. The lender values the home and checks income and debts.
4. On your main home, you have three business days after signing to cancel (the right of rescission).

Using the calculator well

Enter your home’s value, what you owe and the lender’s CLTV limit to see the line you could get. Add the amount you plan to draw and the margin from a quote, and the draw and repayment periods from the offer. Under More options, update the prime rate, choose to draw gradually, add fees and test a higher rate for the repayment years. The table of prime rates shows how sensitive your payments are.

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