Heloc Calculator

A home equity line of credit (HELOC) lets you borrow against your home's equity as a revolving line: you draw what you need during a draw period, pay interest only on the drawn balance, then repay principal and interest in a second phase. This calculator models the full lifecycle — how much you could draw, the interest-only payment, the repayment payment that follows, and the total interest across both phases.

How It Works

The calculator runs three steps:

Available equity. Your home value is multiplied by the lender's maximum loan-to-value (LTV) ratio — 80% by default — and your existing mortgage balance is subtracted. The result, floored at zero, is the maximum line.
Draw phase. If you specify a draw amount, it is capped at the available equity; if you leave it out, the calculator assumes you draw the full line. During the draw period (10 years by default) the monthly payment is interest only: drawn balance times the monthly rate.
Repayment phase. When the draw period ends, the full drawn balance is amortized over the repayment period (20 years by default) with a standard annuity payment, and the calculator shows the payment jump between the two phases plus a year-by-year balance schedule for the repayment years.

Rates are treated as fixed for the projection — a simplification, since most real HELOCs are variable-rate.

The Formulas

$\text{Available Equity} = \max\bigl(0,\ \text{Home Value} \times \text{Max LTV} - \text{Mortgage Balance}\bigr)$

$\text{Draw Payment} = \text{Draw Amount} \times \frac{\text{Annual Rate}}{12}$

$\text{Repayment Payment} = \text{Draw Amount} \times \frac{i}{1 - (1 + i)^{-n}}$

where $i$ is the annual rate divided by 12 and $n$ is the repayment period in months. Total draw interest is the draw payment times the draw months; total repayment interest is the repayment payment times its months minus the amount drawn.

Input Parameters

| Parameter | Unit | Description | |---|---|---| | Home Value | Currency | Current market or appraised value of the property. | | Mortgage Balance | Currency | What you still owe on the primary mortgage; defaults to 0. | | Max LTV | % | The lender's combined loan-to-value cap; defaults to 80%. | | Annual Rate | % per year | The HELOC interest rate applied to drawn balances. | | Draw Amount | Currency | Optional; what you plan to draw. Blank means the full available line. | | Draw Years | Years | Length of the interest-only draw period; defaults to 10. | | Repay Years | Years | Length of the repayment period; defaults to 20. |

Worked Example

A homeowner with a $500,000 home, a$ 300,000 mortgage, an 80% LTV cap and a 7.5% rate draws $40,000 for a renovation, with the standard 10-year draw and 20-year repayment periods.

Available equity: $500,000 × 80% −$ 300,000 = ** $100,000** (the$ 40,000 draw fits comfortably).
Draw payment: $40,000 × 0.075 ÷ 12 = **$ 250.00 per month**, interest only.
Repayment payment: amortizing $40,000 over 240 months at 7.5% = **$ 322.24 per month**.
Payment jump: $72.24 more per month when repayment begins.
Total interest: $250.00 × 120 months = **$ 30,000.00** during the draw phase, plus $322.24 × 240 −$ 40,000 = $37,336.95** during repayment — **$ 67,336.95 in total, for a total payback of $107,336.95.

The balance schedule shows why the repayment phase feels slow at first: after 5 repayment years the balance is still $34,760.84, after 10 years$ 27,146.80, and after 15 years $16,081.35 — most principal reduction happens late. Note the figures scale linearly with the draw: the full$ 100,000 line would mean a $625.00 draw payment jumping to$ 805.60.

Interpreting the Results

Available equity is a ceiling, not a target. You are charged interest only on what you draw, so an undrawn line costs nothing in this model.
The payment jump is the number to plan around. A 29% rise in this example is mild because the draw was modest relative to the line; maxing the line makes both payments — and the jump — two and a half times larger.
Total interest over a 30-year combined term is substantial: borrowing $40,000 costs$ 67,336.95 in interest at a constant 7.5%. Shortening the repayment period is the most powerful lever after the rate itself.

HELOC vs Home Equity Loan

A HELOC is revolving and interest-only during the draw phase, which suits staged spending like a renovation with uncertain costs. A home equity loan pays a lump sum and amortizes from day one — payments are higher immediately but the debt falls from the first month and the rate is usually fixed. If you know the exact amount and want certainty, the loan structure is easier to budget; if flexibility matters more, the HELOC wins, provided you can absorb the payment jump later.

Limitations

Variable rates. Most HELOC rates float with the prime rate; this projection holds the rate constant, so real interest costs will differ as rates move.
Draws over time. The model assumes the full draw happens immediately. Drawing gradually lowers draw-phase interest; drawing more later raises it.
No fees. Appraisal, origination and annual fees are not included, and lenders can freeze or reduce lines if property values fall or your circumstances change.

Frequently Asked Questions

What happens if my mortgage balance exceeds the LTV allowance?

Available equity floors at zero — the calculator reports no drawable line. That is the lender's buffer working as intended: at an 80% cap, a fifth of the home's value must remain unencumbered.

Do I pay interest on the full line or only what I draw?

Only on what you draw. The draw payment in this calculator is calculated on the drawn amount, which defaults to the full line if you do not specify a smaller draw.

Why does the payment jump when the draw period ends?

During the draw period you pay interest only and the balance never falls. Repayment must then amortize the entire balance over the repayment years, so the payment adds a principal component on top of the interest — $322.24 versus$ 250.00 in the example.