HELOC Calculator

Determine your maximum borrowing limit, monthly interest-only payments during draw, and avoid repayment payment shock.

Reviewed for Mathematical Accuracy Last updated: 2026

Property & HELOC Terms

Borrowing & Payment Analysis

Draw Phase Monthly Payment

$354.17

Interest-only for the first 10 years

$120,000

Max Available Line

$433.91

Repayment Phase/Mo

+22.5%

Payment Shock Delta

$70,000

Unused Line Remaining

$42,500

Draw Period Interest

$54,138

Repay Phase Interest

Phase Comparison Timeline Payment Shift: +$79.74/mo

Financial Disclaimer: Calculations and projections displayed are for educational and scenario planning purposes only. They do not constitute formal investment advice, loan commitments, or credit approval. Market-linked returns fluctuate, and lender terms vary. Consult a qualified financial advisor before executing financial agreements.

HELOC vs. Home Equity Loan: Which Is Better?

A Home Equity Line of Credit (HELOC) functions like a credit card secured by your home equity. You only pay interest on the money you actively draw, and as you repay principal, your available credit replenishes. In contrast, a closed-end Home Equity Loan delivers a lump-sum payout with fixed monthly payments and a fixed interest rate from day one.

For related problem solving and complete calculations, you can also explore our Mortgage Calculator and Mortgage Refinance Calculator.

Understanding the 2 Phases of a HELOC

Draw Period (Years 1 to 10): You can borrow, repay, and borrow again up to your approved limit. Most lenders require only interest payments on the outstanding balance, keeping payments relatively low.
Repayment Period (Years 11 to 30): The credit line closes. You can no longer withdraw funds, and the balance amortizes over 10 to 20 years. Your monthly bill increases to cover both principal reduction and ongoing interest.

Frequently Asked Questions

How is the maximum HELOC borrowing limit calculated?

Lenders calculate your maximum HELOC using Combined Loan-to-Value (CLTV), typically capped between 80% and 85%. The formula is: (Appraised Home Value × Maximum CLTV %) - Remaining Mortgage Balance. For instance, on a $500,000 home with an 80% CLTV limit ($400,000) and an existing $280,000 mortgage, your maximum available credit line is $120,000.

What is HELOC payment shock?

HELOC payment shock occurs when the initial draw period (typically 10 years of interest-only payments) ends, and the loan transitions into the 20-year repayment phase where both principal and interest must be repaid. Monthly payments often double or triple abruptly.

Can you pay principal during the HELOC draw period?

Yes, most HELOC lenders allow you to pay down principal during the draw period without prepayment penalties. Making regular principal payments during the draw period reduces your balance and helps you avoid payment shock when the repayment phase begins.

How much equity do I need to qualify for a HELOC?

Most lenders require homeowners to retain at least 15% to 20% equity in their property after factoring in both the primary mortgage and the new line of credit (a maximum CLTV of 80% to 85%).

Is HELOC interest tax-deductible?

Under current IRS tax regulations, interest paid on a HELOC is only tax-deductible if the borrowed funds are used strictly to buy, build, or substantially improve the taxpayer's primary or secondary residence that secures the loan.