Home Equity Tools
HELOC Calculator
Estimate your home equity line of credit, available credit, and monthly payments during draw and repayment periods.
HELOC Details
Maximum HELOC Available
$0
Based on home value and equity limits
Insights
How HELOC Works in 2026
A Home Equity Line of Credit (HELOC) is a revolving line of credit secured by your home equity. Unlike a traditional home equity loan that disburses funds in a single lump sum, a HELOC allows you to borrow, repay, and re-borrow funds as needed during a specified draw period—typically lasting 5 to 10 years.
During the draw period, most lenders require only interest-only payments on the amount you have actually borrowed. This keeps initial monthly payments low. However, once the draw period ends, the loan enters the repayment period (often 10 to 20 years), during which you must make fully amortizing payments covering both principal and interest.
Lenders determine your borrowing limit using Combined Loan-to-Value (CLTV) ratios, typically capping total debt (remaining mortgage plus HELOC limit) at 85% to 90% of your home's appraised market value, depending on your credit score and financial profile.
HELOC vs Home Equity Loan
Choosing between a HELOC and a home equity loan depends on how you plan to use the funds. A HELOC offers flexibility with variable interest rates and access to cash over time, making it ideal for home renovations, education expenses, or emergency reserves. A home equity loan provides a fixed interest rate and a lump sum disbursement, offering predictable monthly payments from day one, which suits major one-time purchases.
Frequently asked questions
How much can I borrow with a HELOC?
Most lenders allow you to borrow up to 80% to 90% of your home's appraised value, minus your remaining mortgage balance. For example, on a $450,000 home with a $280,000 mortgage and a 90% CLTV limit, your maximum line of credit would be $125,000.
What is a payment shock on a HELOC?
Payment shock occurs when your HELOC transitions from the initial draw period (where you often pay interest only) to the repayment period (where you must pay both principal and interest). Your monthly payment can double or triple depending on your balance and remaining term.
Is HELOC interest tax-deductible?
Under IRS rules, HELOC interest is tax-deductible only if the borrowed funds are used to buy, build, or substantially improve the home that secures the loan. Using a HELOC for debt consolidation or personal expenses is generally not tax-deductible.
What credit score do I need for a HELOC?
Most lenders look for a credit score of 620 or higher to qualify for a HELOC, with the best interest rates and highest borrowing limits reserved for borrowers with scores of 740 or above.
HELOC vs home equity loan — which is better?
A HELOC works like a revolving credit card with a variable interest rate, ideal for ongoing projects or flexible borrowing. A home equity loan provides a single lump sum with a fixed interest rate, best for one-time major expenses where predictable monthly payments are desired.