HELOC Calculator
Estimate your available Home Equity Line of Credit (HELOC) based on your home's appraised value, lender's maximum LTV ratio, and your outstanding mortgage balance. Also calculates estimated interest-only payment.
How to use this tool
- Enter appraised home value, lender maximum ltv (%), outstanding mortgage balance, heloc interest rate (apr) and amount you plan to draw in the fields above.
- Results update instantly as you type — or click Calculate.
- Read your available heloc credit and the full breakdown beneath it.
⚠ This tool provides general estimates for education only and is not financial, tax or legal advice. Figures may not reflect your situation — verify with a qualified professional.
Formula
Available Credit = Home Value × (LTV% / 100) − Mortgage Balance
Monthly Interest = Draw Amount × (APR / 12)
Combined LTV = (Mortgage Balance + Draw) / Home Value × 100
How it works
A HELOC allows homeowners to borrow against the equity in their home up to a lender-set combined loan-to-value (CLTV) limit, typically 80–90% of appraised value. The available credit line equals the maximum borrowing capacity (home value × LTV limit) minus the existing first mortgage balance. During the draw period, most HELOCs require only interest payments calculated on the outstanding drawn balance at the variable APR.
Worked example
HELOC on a $400,000 home
- Max borrowing = $400,000 × 85% = $340,000
- Available HELOC = $340,000 − $250,000 (mortgage) = $90,000
- Monthly interest on $50,000 draw = $50,000 × (8.5% / 12) = $354.17
- Combined LTV = ($250,000 + $50,000) / $400,000 × 100 = 75.00%
Available HELOC credit = $90,000; monthly interest-only payment on $50,000 draw = $354.17
Common mistakes to avoid
- Confusing the available credit limit with actual equity: the HELOC line depends on lender LTV limits (typically 80-85% of appraised value minus the mortgage balance), not on the full equity amount.
- Ignoring the draw period vs. repayment period distinction: HELOC payments are interest-only during the draw period (commonly 10 years), but convert to fully amortizing principal-and-interest payments during repayment, which can more than double the monthly obligation.
- Treating the initial APR as fixed: most HELOCs have variable rates tied to the prime rate or SOFR. A low introductory rate can rise substantially if benchmark rates increase during the draw period.
Key terms
- What is a HELOC?
- A Home Equity Line of Credit (HELOC) is a revolving credit line secured by your home, allowing you to borrow up to a set limit during a draw period, typically 5–10 years.
- What is the LTV limit for a HELOC?
- Most lenders allow a combined LTV (first mortgage plus HELOC) of 80–85% of the home's appraised value, though some go up to 90%.
- How is HELOC interest calculated?
- HELOC interest is typically variable (tied to the prime rate) and calculated only on the amount drawn, not the full credit limit.
- What is the difference between draw period and repayment period?
- During the draw period you can borrow and repay repeatedly with interest-only payments. During the repayment period (typically 10–20 years) you repay principal plus interest.
Frequently asked questions
- How is a HELOC different from a home equity loan?
- A HELOC is a revolving line of credit: you draw and repay as needed up to the limit, and interest accrues only on the outstanding balance. A home equity loan disburses a lump sum upfront at a fixed rate, with fixed monthly principal-and-interest payments from day one.
- Is HELOC interest tax-deductible?
- Under the Tax Cuts and Jobs Act (TCJA), HELOC interest is deductible only if the funds are used to buy, build, or substantially improve the home that secures the loan. Interest on HELOC funds used for personal expenses (debt consolidation, vacations) is no longer deductible through at least 2025.
- What happens if my home value drops after I open a HELOC?
- If your home's appraised value falls, the lender can reduce or freeze your available credit line, even if you have not drawn on it. Lenders periodically review collateral values and have the contractual right to restrict access if your combined LTV rises above their threshold.