HELOC Calculator

How a HELOC Works

A Home Equity Line of Credit (HELOC) is a revolving line of credit secured by your home. Lenders typically allow you to borrow up to 80% of your home’s value minus your outstanding mortgage balance (Combined Loan-to-Value ratio of 80%). Some lenders extend to 85% or 90% CLTV for well-qualified borrowers.

Draw Period vs. Repayment Period

HELOCs have two distinct phases. During the draw period (commonly 5 to 10 years), you can borrow from your credit line as needed and typically make interest-only payments on the outstanding balance. After the draw period ends, you enter the repayment period (commonly 10 to 20 years), during which you can no longer draw funds and must repay the remaining balance through fully-amortizing principal and interest payments.

Variable Interest Rates

HELOCs use a variable interest rate tied to the Wall Street Journal Prime Rate, which is itself based on the Federal Funds Rate set by the Federal Reserve. As of June 26, 2026, the Federal Reserve H.15 report confirms the Bank Prime Loan Rate at 6.75%. Your actual HELOC rate equals Prime plus a margin set by your lender, typically ranging from 0.50% to 3.00% depending on your credit profile, equity, and lender.

Rate Caps (Regulation Z)

Under Regulation Z (12 CFR 1026.40), lenders must disclose rate cap information at account opening. Most HELOCs include a periodic rate cap (often 2% per year) limiting how much the rate can increase or decrease at each adjustment, and a lifetime cap (often 18% maximum per federal guidelines, though many lenders set a lower cap of 16%). Some HELOCs also have a rate floor preventing the rate from falling below a set minimum.

Available Equity Formula

Maximum HELOC amount = (Home Value x 0.80) – Current Mortgage Balance. For example, a $400,000 home with a $200,000 mortgage allows up to $120,000 in HELOC credit at an 80% CLTV limit.

Interest-Only Draw Payment

During the draw period, monthly interest-only payment = (Outstanding Balance x Annual Rate) / 12. If your drawn balance is $50,000 and your rate is 7.75%, your monthly payment is $323.00.

Fully-Amortizing Repayment Payment

During the repayment period, your payment is calculated using standard amortization: P = L x [r(1+r)^n] / [(1+r)^n – 1], where L is the outstanding balance, r is the monthly rate, and n is the number of repayment months.

Ways to Use a HELOC Wisely

Because the draw period typically allows interest-only payments, it can be easy to underestimate what your payment will look like once the repayment period begins and principal is added in. Running this calculator with your expected drawn balance for both the draw and repayment periods before you open a HELOC can help you budget for that transition rather than being surprised by it later.

Since HELOC rates are variable, it is also worth checking your lender’s specific margin, periodic rate cap, and lifetime cap, since these can vary by lender even when they are all tied to the same Prime Rate. A HELOC used for a large, one-time expense may also be worth comparing against a fixed-rate home equity loan, which offers predictable payments instead of a rate that moves with the market.