HELOC Calculator
Max credit line, interest-only draw vs amortizing repayment
Last updated: June 2026 · Variable rate disclosure per 12 CFR §1026.40
HELOC Inputs
Current LTV: 50.0%
Typical 80% (90% for excellent credit). Max available = home value × cap − mortgage.
New CLTV after draw: 62.5%
Most HELOCs are Prime + a margin and reset with Fed moves.
Variable rate disclosure
HELOC rates are typically tied to WSJ Prime + a margin and reset when the Fed moves. A 1.00% rate increase on a $75,000 balance raises your interest-only payment by about $63/month. Plan for rate volatility and ask your lender about the lifetime cap (the maximum APR your line can ever reach).
HELOC Balance Over Time
Flat through year 10 (interest-only draw period), then amortizes to zero over the 20-year repayment phase.
Cost Summary
Understanding How a HELOC Works
CLTV Caps and Max Credit Line
Lenders size HELOC limits using combined loan-to-value: CLTV = (first mortgage balance + HELOC limit) divided by appraised home value. The industry-standard ceiling is 80%, with select lenders going to 85% or 90% for 740+ credit scores and conservative DTI. On a $600,000 home with a $300,000 first mortgage, 80% CLTV gives a max HELOC of $180,000 (= 600,000 × 0.80 − 300,000). Some lenders also apply a separate combined limit (e.g. $750k or $1M) for jumbo borrowers.
Two-Phase Payment Structure
HELOCs differ from home equity loans by separating the borrowing from the repayment. During the draw period (typically 10 years) you can borrow, repay, and re-borrow against the line. Minimum monthly payment is usually just the interest on the outstanding balance, very low cash flow burden, but the principal never reduces. When the draw period ends, the line closes (no new draws), and you must repay the balance with fully amortizing P&I payments over 10-20 years. This creates payment shock: a $100,000 balance at 8.5% jumps from $708/month interest-only to about $980/month amortizing.
Mortgage Interest Deduction Limits
Under TCJA (made permanent by OBBBA in 2025), interest on home-equity debt is deductible only when used to "buy, build, or substantially improve" the home that secures the loan. Personal-use HELOCs (debt consolidation, tuition, vacation) generate NO interest deduction. Even when used for home improvement, the deduction is subject to the combined acquisition + home-equity debt cap of $750,000 ($375,000 MFS). Track proceeds carefully and keep receipts, the IRS expects documentation if challenged.
Variable Rate Risk
HELOC APRs are nearly always Prime + a margin. WSJ Prime moves with the Fed Funds rate (each FOMC change typically translates 1:1 to Prime within a few days). Your payment can rise mid-loan, often with little notice. Ask your lender for the lifetime APR cap (the maximum your line can reach) and the per-period adjustment cap. Some lenders offer fixed-rate conversion options that lock part of your balance at a fixed rate during the draw period.
Risk of HELOC Freezes
Reg Z (12 CFR §1026.40) lets lenders freeze or reduce a HELOC if home value drops materially or your financial condition deteriorates. This happened en masse during the 2008-09 financial crisis (thousands of HELOCs frozen mid-draw) and in March 2020 (Wells Fargo, JPMorgan Chase, and others paused new originations and froze undrawn portions). Treat unused HELOC capacity as a soft backstop, not a guaranteed emergency line, especially during recessions.
Frequently Asked Questions
HELOC vs HELoan vs cash-out refinance?
HELOC: revolving variable-rate line with a 5-10 year draw period and 10-20 year repayment, flexible for staged needs. HELoan: fixed-rate lump-sum second mortgage, simple for a known one-time cost. Cash-out refi: replaces your first mortgage with a larger one, best when current rates are at or below your existing rate.
When is HELOC interest tax-deductible?
Only when proceeds are used to "buy, build, or substantially improve" the home (TCJA, made permanent by OBBBA). The combined acquisition + home-equity debt is capped at $750,000 ($375k MFS) for the deduction. Using a HELOC for credit-card payoff, tuition, or vacations makes the interest fully nondeductible.
How much can I borrow, 80% or 90% CLTV?
Most lenders cap CLTV at 80%. Some lenders go to 85-90% for 740+ credit scores and conservative DTI. CLTV = (first mortgage + HELOC limit) / appraised value. On a $600k home with a $300k first at 80% CLTV the max HELOC = $180k.
Why does my HELOC rate change, what is prime?
HELOC APRs are Prime + a margin. WSJ Prime moves 1:1 with the Fed Funds rate. If the Fed cuts 100 bps, your HELOC rate drops 100 bps; if they hike, you pay more. Ask your lender for the lifetime APR cap so you know your worst case.
Draw period vs repayment period, what changes?
Draw period (5-10 yrs): you borrow, repay, re-borrow; minimum payment is typically interest-only. Repayment period (10-20 yrs): no new draws; you make fully amortizing P&I payments. The transition usually causes payment shock, plan ahead.
Can my lender freeze my HELOC?
Yes. Under Reg Z (12 CFR §1026.40), lenders can freeze a HELOC if home value drops materially or your financial condition deteriorates. This happened broadly in 2008-09 and again in March 2020 (Wells Fargo and Chase paused HELOC originations). Treat unused HELOC capacity as a soft backstop, not a guaranteed line, in recessions.