Make informed decisions about your home equity with our comprehensive HELOC calculator. Calculate payments, compare options, and understand your borrowing power.
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A Home Equity Line of Credit (HELOC) is a revolving line of credit that uses your home's equity as collateral. Unlike a traditional home equity loan, a HELOC works similarly to a credit card - you can borrow, repay, and borrow again up to your credit limit during the draw period.
Apply with a lender who will assess your home value, credit score, income, and existing debts.
Get approved for a credit limit based on your home equity and financial profile. Typically 80-85% of home value minus mortgage.
Access funds as needed during the draw period (typically 10 years). Make interest-only or minimum payments.
After draw period ends, repay principal plus interest over 10-20 years. No more borrowing allowed.
| Feature | HELOC | Home Equity Loan | Cash-Out Refinance |
|---|---|---|---|
| Type | Revolving credit line | Lump sum loan | New mortgage |
| Interest Rate | Variable (adjustable) | Fixed | Fixed or Variable |
| Access to Funds | As needed during draw period | One-time lump sum | One-time lump sum |
| Payment Structure | Interest-only then principal+interest | Fixed monthly payments | Fixed monthly payments |
| Typical Rates (2025) | 7.0% - 10.0% | 8.0% - 11.0% | 6.5% - 8.5% |
| Closing Costs | Low to none | 2% - 5% of loan | 2% - 6% of loan |
| Best For | Ongoing projects, emergency fund | One-time large expense | Lower rate on first mortgage |
Most lenders require a credit score of at least 620, but you'll get better rates with a score of 700 or higher. Some lenders may require 680+ for approval.
Typically, you can borrow up to 85% of your home's value minus your existing mortgage balance. The exact amount depends on your lender, credit score, income, and debt-to-income ratio.
As of 2025, HELOC rates typically range from 7% to 10%, depending on the prime rate, your credit score, and lender. Rates are variable and tied to the prime rate.
Yes, you can pay off a HELOC early. However, some lenders charge early closure fees if you close the line within the first 2-3 years. Check your loan agreement for prepayment penalties.
Since your home secures the HELOC, failure to make payments can result in foreclosure. Contact your lender immediately if you're having trouble making payments to discuss options.
HELOC interest may be tax-deductible if you use the funds to "buy, build, or substantially improve" your home. Consult a tax professional for your specific situation.
The approval process typically takes 2-6 weeks, depending on the lender and your financial situation. You'll need a home appraisal and documentation of income and assets.
Yes, but it's more difficult. Lenders consider both mortgages when calculating your loan-to-value ratio and may require a higher equity stake in your home.
Common fees include application fees ($0-$500), appraisal fees ($300-$500), annual fees ($25-$100), and early closure fees. Some lenders offer no-closing-cost HELOCs.
While HELOCs typically have variable rates, some lenders offer the option to convert a portion or all of your balance to a fixed rate for a set period.
The draw period is the time (usually 5-10 years) during which you can borrow from your HELOC. During this time, you typically make interest-only payments.
No, you only borrow what you need. You're only charged interest on the amount you actually draw, not your entire credit limit.
Requirements typically include: 15-20% equity in your home, credit score of 620+, debt-to-income ratio below 43%, and stable income.
Calculate your available equity and decide how much credit you need. Use our calculator above to estimate your borrowing power.
Compare rates, fees, and terms from multiple lenders including banks, credit unions, and online lenders. Look at APR, not just interest rates.
Prepare: recent pay stubs, tax returns (2 years), bank statements, mortgage statement, proof of homeowners insurance, and government ID.
Complete the lender's application with accurate information about your income, assets, debts, and property details.
The lender will order an appraisal to determine your home's current market value. This typically costs $300-$500.
The lender reviews your application, credit, income, and appraisal. This process takes 1-3 weeks.
Review and sign loan documents. You'll have a 3-day right of rescission period before the HELOC becomes active.
Once active, access your HELOC through checks, credit cards, or online transfers. Track your balance and make timely payments.
Pay bills on time, reduce credit card balances, and avoid new credit applications before applying.
The more equity you have, the better rates you'll qualify for. Consider paying down your mortgage first.
Reduce your debt-to-income ratio by paying off debts or increasing income before applying.
Get quotes from at least 3-5 lenders to compare rates and terms. Don't just go with your current bank.
Apply when interest rates are favorable and you have stable employment and income.
Some lenders offer rate discounts if you have other accounts or set up autopay.
The total yearly cost of borrowing including interest and fees, expressed as a percentage.
The ratio of all loans secured by your home to its appraised value. Lenders use this to assess risk.
Your total monthly debt payments divided by your gross monthly income, expressed as a percentage.
The time during which you can borrow from your HELOC, typically 5-10 years.
The difference between your home's current market value and the amount you owe on your mortgage.
A benchmark interest rate (like prime rate) that your HELOC rate is based on.
A payment that covers only the interest charges, not the principal balance.
The ratio of your mortgage balance to your home's appraised value.
The percentage points added to the index to determine your interest rate.
The interest rate banks charge their most creditworthy customers, often used as an index for HELOCs.
The time after the draw period when you must repay the principal plus interest, typically 10-20 years.
When a HELOC lender agrees to remain in second position if you refinance your first mortgage.
Use our free calculator to estimate your payments and make informed decisions about your home equity.
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