About this calculator
A HELOC (Home Equity Line of Credit) is a revolving line secured by your home, similar to a credit card. You can draw from it during a "draw period" (typically 10 years), pay interest-only, then enter a "repayment period" (10–20 years) where you pay back principal and interest. This calculator estimates your max line, monthly cost during draw, and the higher payment when repayment begins.
How banks calculate your max line
Lenders cap total liens against the home at a combined loan-to-value (CLTV) ratio — typically 80–85%. Max HELOC = (home value × CLTV cap) − existing mortgage balance. On a $600k home with a $300k mortgage and 85% CLTV cap: max = (600 × 0.85) − 300 = $210k available.
The payment shock no one warns about
During draw, you might pay just interest on the drawn balance — $50k drawn at 9% is only $375/month. When draw ends, that flips: you owe principal plus interest amortized over 10–20 years. The same $50k at 9% over 20 years becomes $450/month. Some borrowers' payment doubles or triples overnight when repayment begins.
Smart vs sketchy HELOC uses
- Smart — emergency fund backup (don't draw, just have it available), bridge financing during a move, consolidating higher-rate debt (with discipline not to re-rack the cards), or home improvements that meaningfully raise the home value.
- Sketchy — funding lifestyle (vacations, cars), speculating on stocks/crypto, or using your home equity as a piggy bank. You're putting the house on the line.
Variable rate risk
Most HELOCs have variable rates pegged to prime + a margin. A 2-point hike in prime adds $83/month per $50k drawn. Stress-test against +3% to see if you can absorb a rising-rate environment.