HELOC Calculator
Calculate your Home Equity Line of Credit (HELOC) payments, available credit, and borrowing costs. HELOCs allow you to borrow against your home's equity with a flexible line of credit, typically at variable interest rates.
Property Information
HELOC Terms
Typically 75-90% of available equity
Variable rate, typically prime + margin
Draw and Repayment
Amount you plan to borrow initially
Years to repay if converted to fixed loan
Equity Analysis
Home Equity:
$0.00
Available Credit:
$0.00
Credit Utilization:
0.00%
Payment Information
Minimum Payment:
$0.00
Interest-Only Payment:
$0.00
Full Repayment Payment:
$0.00
Cost Analysis
Total Interest (20 years):
$0.00
Total Payments:
$0.00
Effective Cost:
$0.00
Understanding HELOCs
A Home Equity Line of Credit (HELOC) is a revolving line of credit secured by your home. It functions like a credit card but typically offers lower interest rates and allows you to borrow against the equity you've built in your home.
How HELOCs Work
Draw Period
- Typically 5-10 years
- Borrow as needed
- Pay interest only
- Revolving credit line
Repayment Period
- Usually 10-20 years
- Fixed monthly payments
- Principal + interest
- Cannot borrow more
Advantages
- Lower interest rates
- Large borrowing amounts
- Tax-deductible interest
- Flexible access to funds
Risks
- Home as collateral
- Variable interest rates
- Potential for foreclosure
- Closing costs and fees
HELOC vs Other Options
| Option | Interest Rate | Payment Structure | Best For |
|---|---|---|---|
| HELOC | Variable (Prime + 2-4%) | Interest-only or principal + interest | Ongoing borrowing needs |
| Cash-Out Refinance | Fixed (3-5%) | Fixed monthly payments | One-time large expense |
| Home Equity Loan | Fixed (4-7%) | Fixed monthly payments | Known expense amount |
| Personal Loan | Fixed (6-36%) | Fixed monthly payments | Unsecured borrowing |
HELOC Interest Rates
Understanding Variable Rates
Rate Components
- Prime rate (current ~6.5%)
- Lender's margin (2-4%)
- Total rate = Prime + Margin
- Adjusts monthly or quarterly
Rate Caps
- Initial cap (first adjustment)
- Periodic cap (subsequent adjustments)
- Lifetime cap (maximum rate)
- Floor rate (minimum rate)
Current Rates
- Prime rate: ~6.5%
- HELOC rates: 8.5-11.5%
- Introductory rates available
- Discounts for auto-pay
Rate Trends
- Follows Federal Reserve policy
- Rise during economic expansion
- Fall during recessions
- Historical range: 4-18%
HELOC Eligibility
Credit Requirements:
- Credit score 620+
- Stable income
- Debt-to-income ratio
- Clean payment history
Property Requirements:
- Primary residence
- Sufficient equity (20%+)
- Current on mortgage
- Property appraisal
HELOC Costs and Fees
Closing Costs:
- Appraisal fee ($300-500)
- Title search ($200-400)
- Origination fee (0-2%)
- Attorney fees ($200-500)
Ongoing Fees:
- Annual fee ($50-100)
- Transaction fees ($0-10)
- Late payment fees ($25-50)
- Returned payment fees ($25-35)
Tax Implications
Tax Benefits:
- Interest may be deductible
- Home improvement projects
- Taxable income reduction
- Itemized deduction option
Tax Rules:
- Interest on $750k debt limit
- Married filing jointly
- Acquisition indebtedness
- Home equity indebtedness
Key Takeaways for HELOCs
- HELOCs provide flexible access to home equity with revolving credit
- Variable interest rates typically offer lower initial rates than fixed loans
- Available credit based on home equity minus mortgage balance
- Draw period allows interest-only payments, repayment period requires full payments
- Tax-deductible interest makes HELOCs attractive for certain uses
- Risks include variable rates and potential loss of home if payments missed
- Best for ongoing borrowing needs rather than one-time expenses
- Compare HELOC rates and terms with other borrowing options