HELOC Calculator (2024)

If you’ve been paying down your mortgage for a few years—especially in housing markets where home prices are shooting up—you’ve likely built up equity in your home that you can now access through a line of credit. This is known as a home equity line of credit (HELOC), and it can be a great way to finance large purchases for which you might not otherwise have the credit. Use this calculator to see if you might qualify and determine how much equity you may be able to borrow.

Disclaimer: This calculator only provides an estimate of how much you might qualify for with a HELOC. Your exact amount and loan pricing will depend on other factors including the lender, type of property and your personal financial profile.

How To Use This HELOC Calculator

To use this calculator, you’ll need three main pieces of information:

1. Your current home value
2. The outstanding balance of your mortgage, plus any other loans secured by your home
3. Your FICO credit score

The calculator will estimate how much you might be able to borrow through a HELOC. It will also display your current loan-to-value (LTV) ratio, which is a metric lenders use to determine how much more you can borrow against the home. Lenders typically require an LTV ratio of no more than 80%, though some might go up to 90%. If you don’t have enough equity in your home or your credit score is low, you may not qualify for a home equity loan.

While the calculator can give an estimate of how much you can borrow, talk to your lender to get accurate results based on a wider range of information.

Is a HELOC a Good Idea?

If you want or need to tap the equity you have accumulated in your home—and you will only need the money incrementally—then a HELOC makes sense. It can be a useful backstop to have a large amount of money on hand as needed.

However, a HELOC usually comes with fees, including an annual fee, so assess your current financial situation to ensure you can afford the costs.

How To Calculate Your Home Equity

To calculate your home equity, you’ll need to find the current value of your home. To do this, you can quickly google your address on a real estate website, such as Zillow, to get a rough estimate. Then, take that number and deduct the outstanding balance on your mortgage as well as any loans secured by your home—like a home equity loan—to get an idea of how much equity you have.

How Does a HELOC Work?

Unlike home loans where you typically get a lump sum upfront and pay it off over time, HELOCs act as a credit line that you can tap into as needed. You can withdraw up to a certain amount for a set period of time (called the draw period). After your draw period, the repayment period begins.

Here’s how each period works:

• Draw period. During the draw period, you’re only responsible for paying the interest on the portion of credit that you use. You can repeatedly pay down and reuse credit during this draw period, which typically lasts 10 to 15 years depending on the lender and the borrower’s creditworthiness.
• Repayment period. After the draw period, you must start making payments on the outstanding balance and interest. This repayment period can last 20 years, but typically you’ll pay back the loan in full if you sell the house during this time. You can also voluntarily start paying the principal down during the draw period if you want to get a head start, but make sure to discuss this with your lender to ensure your payments go toward the principal.

HELOC vs. Home Equity Loan

A home equity loan has a more rigid structure when compared to a HELOC. It functions as a second mortgage separate from your first mortgage, with its own origination fees and payments.

Just like with a conventional mortgage loan, you receive your funding at closing, and repay the loan through fixed payments (covering both principal and interest) for the life of the loan.

Home equity loans are considered much less flexible compared to HELOCs, but are ideal for those who need a lump sum of money for a specific purpose. A home equity loan also offers more certainty in terms of knowing exactly how much you will have to pay each month and when the loan will be fully paid back.

Cash-Out Refinance vs. HELOC

Refinancing a mortgage means you get a new mortgage loan to pay off your existing mortgage, usually with a lower interest rate or better mortgage terms. If you have enough equity built up in the home, you can cash out some or all of it as part of the process.

If you are torn between a HELOC and a cash-out refinance, the decision should come down to your particular needs and situation (i.e. when you plan to use the cash), how much you need and how long you plan to stay in the property.

If you do not need a large sum right away, but want to have it available as needed, then a HELOC makes more sense. However, if you need the entire amount you are borrowing up front and want to lock in favorable loan terms, a cash-out refinance will meet your needs.

It’s important to note: A cash-out refinance is only worth it if you plan to live in your home for at least five years or more. Otherwise, the closing costs could cancel out the interest savings. HELOCs don’t usually have closing costs, although there may be an annual fee.

Current HELOC Rates

Typically, HELOC rates change anytime the Federal Reserve adjusts the federal funds rate. And with the Fed increasing its rate several times in 2022, HELOC rates are likely to continue rising as well.

To give you an idea of what you might pay in interest, the 52-week high on a 10-year HELOC is 6.09%, while the 52-week low is 2.55%, as of August 24, 2022. For a 20-year HELOC, the rate ranged as high as 7.51% and as low as 5.14% in the past year.

Related: Best HELOC Rates

What Can You Use a HELOC For?

A HELOC can be used for nearly any expense but most borrowers use this credit line to repair or improve their home, which can also help boost the value down the road. Other common uses include paying off student loan debt, paying for medical expenses, consolidating other debt into a lower interest rate or covering a large unexpected expense.

How To Get a HELOC

Qualifying for a HELOC is similar to applying for other home loans in that you’ll need to prove your creditworthiness and ability to repay the debt. Lenders will check your credit score, earnings, debt-to-income (DTI) ratio and maximum LTV ratio. Typically, you’ll need a DTI of less than 43%, though some lenders will allow up to 50%. And your LTV should be less than 80%, but no higher than 90% to qualify for a HELOC.

While some lenders have more stringent requirements than others, most want you to have at least 20% equity in your home.

You’ll also need to have some cash on hand to cover potential upfront costs like loan processing or origination fees, and the cost of getting an appraisal, which can run from about $300 to $400 for a single-family home.

How To Find the Best HELOC Lender

To qualify for a HELOC and secure the best rate, it’s critical to shop around. Aim to get three to five quotes so you have a solid comparison.

“Ask your existing lender. It’s a great place to start,” says Marguerita Cheng, CEO of Blue Ocean Global Wealth. Then, “consider researching rates where you already bank and have an established relationship,” she suggests.

Related: Best HELOC Lenders

Credit unions are another place to look, Cheng notes. “Banks and credit unions may waive closing costs if you keep the line of credit open for three years,” she said. “They may also offer more competitive rates for customers that have deposits at a certain level.”

How Much HELOC Can I Get?

How much you can borrow with a HELOCdepends on how much equity you have built up, as well as what your lender’s rules are. Most will allow you to tap 80% of your home equity but some lenders might be ok with up to 90% with a higher interest rate.

The lender subtracts how much you still owe on your first mortgage from the appraised value of your home. The difference—the LTV—establishes how much you can get with a HELOC.

How Does HELOC Repayment Work?

A HELOC’s term has two parts: the draw period and the repayment period. During the draw period—typically, the first five or 10 years of the term—you can borrow from your credit line and, in many cases, make interest-only payments each month. Some lenders may require you to repay principal during the draw period as well.

Once the draw period ends, you can no longer borrow against your HELOC, and you’ll make fully amortizing monthly payments of both principal and interest. Full amortization means you pay the same amount of principal each month until your loan term ends. Since HELOCs usually have a variable interest rate, the amount you’ll owe each month during both parts of the payment term can fluctuate.

Some lenders let you lock in a fixed rate on money you borrow from a HELOC, however, which could give you a stable monthly payment.

Frequently Asked Questions (FAQs)