How this calculator works
A home equity line of credit (HELOC) is a revolving credit line secured by your home, sized against the equity you have above your existing mortgage. This calculator estimates the maximum line a lender might offer using a combined loan-to-value (CLTV) limit, then models the two phases of a typical HELOC: an interest-only draw period, followed by a repayment period where the drawn balance amortizes like a standard installment loan.
HELOC rates are almost always variable, tied to an index such as the prime rate plus a margin. The rate you enter here is treated as fixed for the calculation, but in practice it can rise or fall over the draw and repayment periods, changing both payments shown. Re-run this calculator with a higher rate to see how much room you have if rates move against you.
The formulas
Maximum credit line = (home value × max combined LTV%) − existing mortgage balanceInterest-only draw payment = drawn balance × (annual rate ÷ 12)Repayment payment (amortizing): M = P × i ÷ (1 − (1 + i)^−n)P is the amount drawn, i the monthly rate (annual rate ÷ 12), and n the number of months in the repayment period. The draw-period payment assumes the full draw amount is taken at once and held level — real HELOCs let you draw and repay repeatedly, which changes the interest due each month.
Worked example: $400,000 home, $250,000 mortgage, $50,000 draw at 8%
- Maximum combined debt at 85% CLTV = 400,000 × 0.85 = $340,000; subtract the $250,000 mortgage for an estimated credit line of $90,000.
- Drawing $50,000 during a 10-year draw period at 8%, the interest-only payment is 50,000 × (0.08 ÷ 12) = $333.33 a month.
- Over the full 10-year draw period with a level balance, total interest paid is 333.33 × 120 ≈ $40,000.
- Once repayment begins over 15 years, the amortizing payment is 50,000 × i ÷ (1 − (1+i)^−180) with i = 0.08/12 ≈ $477.83 a month.
Frequently asked questions
Why is the payment so much higher after the draw period ends?
During the draw period most HELOCs only require interest, so the payment only covers that month's interest charge and the balance never goes down on its own. Once repayment starts, the payment must also retire the principal within the remaining years, which is why it jumps even if the rate stays the same.
Is 85% combined loan-to-value a hard limit?
No. It is a commonly used lender ceiling, but the actual maximum varies by lender, credit profile, and loan program — some allow more, some less. Adjust the combined LTV field to match an actual offer once you have one.
Does this account for a HELOC's variable rate changing over time?
No — it uses the single rate you enter for both the draw and repayment periods. A real HELOC's rate is usually variable and can rise or fall with an index like the prime rate, which changes both payments shown here. Re-run the calculator at a higher rate to stress-test your budget.
What happens if I draw more than the estimated credit line?
The calculator still computes payments on whatever draw amount you enter, but it flags when that amount exceeds the estimated maximum line based on your home value, mortgage balance and combined LTV limit — a lender would not approve a line above that estimate without additional equity or a higher CLTV allowance.
How is a HELOC different from a home equity loan?
A HELOC is a revolving line you can draw from and repay repeatedly up to your limit, usually with a variable rate and an interest-only draw period. A home equity loan is a single lump sum with a fixed rate and a fixed amortizing payment from day one — see the home equity loan calculator to compare.