HELOC Calculator (Home Equity Line of Credit)
A home equity line of credit (HELOC) is a revolving credit line secured by the equity in your home. Instead of a lump sum, the lender approves a credit limit you can draw from, repay, and draw again — much like a credit card, but backed by your house and at a far lower rate. During the draw period (commonly 10 years) most HELOCs let you pay interest only on the balance you've actually used, which keeps the monthly cost low while you have access to the cash.
How big can the line be? Lenders size it off your combined loan-to-value (CLTV) — the first mortgage plus the new line, divided by the home's value — and cap it (often around 85%). On a $500,000 home, an 85% cap means total secured debt can reach $425,000. Subtract the $250,000 you still owe and the available line is $175,000. Draw $50,000 of it at an illustrative 8.5% APR and the interest-only payment is just $354 a month, while your CLTV sits at 60%.
The calculator above takes your home value, mortgage balance, CLTV cap, the amount you plan to draw and the rate, then returns your available credit line, the interest-only monthly payment, and your resulting CLTV. One caveat governs the whole page: HELOC rates are variable — typically prime plus a margin — so the 8.5% here is illustrative, and your payment will move as the prime rate moves. Because your home is the collateral, missing payments can put it at risk.
How the calculator sizes a HELOC
Available credit line
The line is whatever room is left under the lender's CLTV cap after your existing mortgage:
Available credit = Home value × CLTV cap − Mortgage balance (never below zero)
| Symbol | Meaning |
|---|---|
| Home value | The appraised value of the property ($500,000) |
| CLTV cap | Maximum combined loan-to-value the lender allows (85%) |
| Mortgage balance | What you still owe on the first mortgage ($250,000) |
Plugging in the defaults: $500,000 × 85% = $425,000, minus the $250,000 mortgage, leaves $175,000. If your mortgage already exceeded the cap, the formula floors the result at zero — there'd be no equity to lend against.
Interest-only draw payment
During the draw period the typical minimum is interest on the drawn balance only:
Interest-only monthly = Drawn amount × APR ÷ 12
So $50,000 × 8.5% ÷ 12 = $354 per month. This pays nothing toward principal — the balance stays put until you make extra payments or the repayment period begins, when the payment jumps to fully amortise what's left.
Combined loan-to-value (CLTV)
CLTV = (Mortgage balance + Drawn amount) ÷ Home value
With the defaults: ($250,000 + $50,000) ÷ $500,000 = 60%. The lower your CLTV, the more cushion you keep against a price decline — and the better the rate you'll usually be offered.
What the model leaves out
The calculator shows the interest-only draw payment, not the higher amortising payment you'll owe once repayment begins. It assumes a single fixed rate, while real HELOCs are variable. It also ignores annual fees, closing costs, and the lender's minimum-draw or balance requirements. Treat the output as a clean snapshot of your borrowing room, not a full repayment schedule.
Worked example: a $500,000 home with a $250,000 mortgage
Illustrative assumptions: an 85% CLTV cap, an 8.5% variable APR (for illustration only), and interest-only payments during the draw period.
| Step | Calculation | Result |
|---|---|---|
| Max secured debt | $500,000 × 85% | $425,000 |
| Available credit line | $425,000 − $250,000 | $175,000 |
| Interest-only payment on $50,000 | $50,000 × 8.5% ÷ 12 | $354/mo |
| CLTV after the draw | ($250,000 + $50,000) ÷ $500,000 | 60% |
Three things stand out.
- You don't have to draw the whole line. The $175,000 is a limit, not a balance. Draw $50,000 and you pay interest on $50,000 — $354 a month — not on the full line.
- Interest-only is cheap but deceptive. $354 a month feels painless, yet none of it reduces the $50,000 balance. When the repayment period starts, the payment climbs sharply because you then amortise the principal too.
- Drawing more raises your CLTV. Tap the entire $175,000 line and your interest-only payment jumps to $1,240 a month while CLTV hits the 85% cap — leaving no equity buffer if home prices dip.
Re-run the calculator with your own appraisal and mortgage balance, and test a higher rate to see how a variable APR would stretch the payment. FiMo's refinance and LTV calculators help you compare a HELOC against a cash-out refinance.
Frequently asked questions
How much can I borrow with a HELOC?
Your line is capped by the lender's combined loan-to-value (CLTV) limit. Take your home value, multiply by the CLTV cap, then subtract your existing mortgage: Available credit = Home value × CLTV cap − Mortgage balance. Example: a $500,000 home at an 85% cap allows $425,000 of total secured debt; minus a $250,000 mortgage, the available line is $175,000. If your mortgage already exceeds the cap, there's no room and the line is zero.
How is the HELOC interest-only payment calculated?
During the draw period the typical minimum is interest on the drawn balance only: Interest-only monthly = Drawn amount × APR ÷ 12. Drawing $50,000 at an illustrative 8.5% costs $50,000 × 8.5% ÷ 12 = $354 a month. None of that reduces the $50,000 principal — the balance only falls when you pay extra or enter the repayment period.
What is CLTV and why does it matter for a HELOC?
Combined loan-to-value (CLTV) is all the debt secured by your home — the first mortgage plus the HELOC draw — divided by the home's value: CLTV = (Mortgage balance + Drawn amount) ÷ Home value. With the defaults, ($250,000 + $50,000) ÷ $500,000 = 60%. Lenders cap CLTV (often 85%) to keep a cushion against falling home prices; a lower CLTV usually earns you a better rate.
Is a HELOC better than a home equity loan or cash-out refinance?
It depends on how you'll use the money. A HELOC is a revolving line with a variable rate and flexible, interest-only draws — ideal for ongoing or uncertain costs like a phased renovation. A home equity loan gives a lump sum at a fixed rate, better for a known one-time expense. A cash-out refinance replaces your whole mortgage, which only makes sense if today's rates beat your current one. Because a HELOC's rate floats, budget for the payment rising if the prime rate climbs.
Is the 8.5% rate fixed for the life of the HELOC?
No. Almost all HELOCs carry a variable rate — usually the prime rate plus a lender margin — so it changes whenever the prime rate moves. The 8.5% used on this page is an illustrative assumption to keep the math clear, not a quote. Because the rate floats, your $354 interest-only payment on a $50,000 draw would rise or fall with prime. Stress-test a higher rate in the calculator before you rely on the line.
What happens when the HELOC draw period ends?
The line shifts from the draw period (when you can borrow and typically pay interest only) into the repayment period (often 20 years), when you can no longer draw and must repay principal plus interest. That makes the payment jump sharply: a $50,000 balance that cost $354 a month interest-only will require a much larger amortising payment. Plan for that step-up — many borrowers refinance or pay the balance down before it hits.
Can I lose my home if I take out a HELOC?
Yes — a HELOC is secured by your house, so it's a second lien behind your first mortgage. If you fail to make payments, the lender can foreclose, just as with the primary mortgage. That collateral is exactly why HELOC rates are far lower than unsecured credit. Borrow only what you can comfortably repay, remember the payment can rise with a variable rate, and keep a CLTV buffer (the default scenario sits at 60%, below the 85% cap) so a price dip doesn't leave you underwater.