How much can you borrow with a HELOC?
Lenders cap the total of all loans on your home, your combined loan-to-value (CLTV), usually at 80% to 90% of the home's value. What's left under that cap after your mortgage is your credit line.
Example: a $400,000 home with a $250,000 mortgage at an 85% limit allows up to $400,000 × 85% − $250,000 = $90,000. Drawing $50,000 at 8.5% costs $354.17 a month interest-only during the 10-year draw period, then $433.91 a month over the 20-year repayment period.
HELOC vs home equity loan
- HELOC: a revolving line, usually with a variable rate. Borrow what you need, when you need it, and pay interest only on what you've used.
- Home equity loan: a lump sum at a fixed rate with fixed payments from day one. Use the loan calculator for that payment.
- Cash-out refinance: replaces your mortgage with a bigger one. Usually only worth it if the new rate is close to your current one; see the refinance calculator.
The payment jump when the draw period ends catches many borrowers out. Interest on a HELOC is tax-deductible only when the money is used to buy, build or substantially improve the home, and only if you itemize.
Frequently asked questions
How much equity do I need for a HELOC?
Most lenders want you to keep at least 10% to 20% equity after the line, which is the same as an 80% to 90% CLTV limit.
Is a HELOC payment interest-only?
During the draw period, usually 10 years, most HELOCs require only interest. After that, you repay principal and interest over the repayment period, so the payment rises.
Can a HELOC rate change?
Most HELOCs have variable rates tied to the prime rate, so your payment changes when rates do. Some lenders let you lock part of the balance at a fixed rate.
Was this calculator helpful?