HELOC Calculator: How Much Can You Borrow and What It Costs
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A home equity line of credit (HELOC) limit is your home value times the lender’s maximum combined loan-to-value, minus your mortgage balance. A $450,000 home with a $240,000 mortgage and an 85% limit supports a HELOC of $142,500.
With a home worth $450,000 and a mortgage of $240,000, a combined limit of 85% lets you borrow up to $142,500. Borrowing $60,000 at 8.25% costs about $412.50 a month for 10 years, then $511.24 a month for 20 years.
Year-by-year
| Year | Payments | Interest | Principal | Balance |
|---|---|---|---|---|
| 1 | $4,950 | $4,950 | $0 | $60,000 |
| 2 | $4,950 | $4,950 | $0 | $60,000 |
| 3 | $4,950 | $4,950 | $0 | $60,000 |
| 4 | $4,950 | $4,950 | $0 | $60,000 |
| 5 | $4,950 | $4,950 | $0 | $60,000 |
| 6 | $4,950 | $4,950 | $0 | $60,000 |
| 7 | $4,950 | $4,950 | $0 | $60,000 |
| 8 | $4,950 | $4,950 | $0 | $60,000 |
| 9 | $4,950 | $4,950 | $0 | $60,000 |
| 10 | $4,950 | $4,950 | $0 | $60,000 |
| 11 | $6,135 | $4,904 | $1,231 | $58,769 |
| 12 | $6,135 | $4,799 | $1,336 | $57,433 |
Assumes the full amount is drawn on day one and the rate stays the same.
Show the steps
- Most you can owe in total: $450,000.00 × 85% = $382,500.00.
- Available HELOC: $382,500.00 − $240,000.00 mortgage = $142,500.00.
- Draw-period payment: $60,000.00 × 8.250% ÷ 12 = $412.50 a month (interest only).
- Repayment payment: $60,000.00 over 240 months at 8.250% = $511.24 a month.
HELOC limit and payments
Limit = home value × max CLTV − mortgage balance
Draw payment = balance × annual rate ÷ 12
Repayment = B × r ÷ (1 − (1 + r)^−n)
- Most HELOCs have a variable rate. Your payment can change every month during both periods.
- Your home is the collateral. If you cannot pay, the lender can foreclose.
- Closing costs, annual fees and early closure fees are not included.
Estimates for planning and learning, not financial, tax, legal or medical advice. Check figures with your lender, tax preparer or doctor before you act.
About this calculator
A HELOC works like a credit card secured by your home. During the draw period, usually 10 years, you can borrow and often pay only interest. After that, repayment begins and you pay principal and interest until the balance is zero.
This calculator finds the most you can borrow, the interest-only payment while you draw, the higher payment once repayment starts, and the total interest. It also tests what happens if your variable rate rises.
How to use it
- Enter your home’s current value and what you still owe on the mortgage.
- Pick the maximum combined loan-to-value your lender allows (80%, 85% or 90%).
- Enter how much you plan to borrow and the HELOC rate.
- Set the draw period and the repayment period.
- Open the options to test a rate increase, then read the payments and the schedule.
How lenders set the limit
Lenders add your mortgage and the new line together and compare the total to your home’s value. At an 85% limit on a $450,000 home, total debt can reach $382,500. With a $240,000 mortgage, that leaves $142,500 for the HELOC. Your credit and income decide whether you are approved for the full amount.
Draw period and repayment period
Interest-only payments keep costs low early on, but the balance does not shrink. When repayment starts, the payment jumps because you now pay principal as well. Plan for that higher payment before you borrow.
Risks
- The rate is usually variable, so payments can rise.
- Your home secures the loan.
- Falling home prices can cause the lender to freeze or reduce the line.
Sources
Quick check: test yourself
A home is worth $500,000 and the lender allows 80% combined loan-to-value. The mortgage balance is $250,000. How large can the HELOC be?
Correct answer: $150,000. $500,000 × 0.80 = $400,000, minus the $250,000 mortgage leaves $150,000.
What do you usually pay during a HELOC draw period?
Correct answer: Interest on what you borrowed. Many HELOCs only require interest during the draw period. Principal repayment starts afterward.
A HELOC rate is variable. If rates rise, your payment will usually…
Correct answer: Rise. Variable rates follow a benchmark, so payments rise when it rises.
Pick an answer for each question.
Common questions
How much can I borrow with a HELOC?
Multiply your home value by the lender’s maximum combined loan-to-value, usually 80% to 90%, and subtract your mortgage balance.
What is a draw period?
The first part of the HELOC, often 10 years, when you can borrow and typically pay only interest.
Are HELOC rates fixed?
Most are variable and tied to the prime rate. Some lenders let you lock part of the balance at a fixed rate.
Is HELOC interest tax deductible?
Only when the money is used to buy, build or substantially improve the home that secures the loan. Ask a tax professional.
What happens when the draw period ends?
You can no longer borrow, and you start repaying principal and interest. The payment is usually much higher than before.
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