Home Equity Line of Credit
(HELOC) Calculator — 2026

Most lenders allow you to borrow up to 80–85% of your home's value minus your outstanding mortgage balance. For example: a $500,000 home at 85% LTV with a $280,000 mortgage gives you a maximum HELOC of $145,000.

The exact formula is: (Home value × LTV limit) − Mortgage balance = Max HELOC. Use our calculator above to model your specific numbers. Keep in mind that your actual approved limit also depends on your credit score, income, and DTI ratio.

A HELOC has two distinct phases:

Draw period (typically 5–10 years): You can borrow up to your limit, repay, and borrow again — like a credit card. During this phase, most lenders only require interest-only payments, keeping your monthly cost low.

Repayment period (typically 10–20 years): The credit line closes and you repay the outstanding balance with fully amortizing principal + interest payments. These are typically 2–3× higher than draw period payments. Budget ahead for this transition.

Most HELOCs have a variable interest rate tied to the Prime Rate (currently 7.50%). Your rate = Prime + lender margin (typically +0.50% to +2.00%). When the Fed raises rates, your HELOC rate — and payment — rises automatically.

Some lenders offer fixed-rate HELOCs or allow you to lock a portion of the balance at a fixed rate. Use the interest rate slider in our calculator to stress-test your payment at +1%, +2%, or +3% scenarios before you commit.

The minimum credit score for most lenders is 620, but you will get significantly better rates with a higher score:

• 720+: Best rates available — typically Prime + 0.50%
• 660–719: Good rates — Prime + 1.00%
• 620–659: Fair — Prime + 1.75%, some lenders may decline
• Below 620: Very difficult to qualify with traditional lenders

A 100-point score improvement can save 0.75–1.5% on your rate — on a $150K HELOC that is over $1,000–$2,250 per year in interest savings.

Your debt-to-income ratio (DTI) is calculated by dividing all monthly debt payments by your gross monthly income.

For a HELOC application, lenders include: existing mortgage payment, car loans, student loans, minimum credit card payments, and — crucially — the estimated new HELOC payment. Most lenders require a DTI under 43%, with a preference for under 36%.

If your DTI is borderline, paying down a credit card or car loan before applying can push you under the threshold and improve your approval odds significantly.

HELOCs have significantly lower closing costs than mortgages. Typical costs include:

• Origination fee: $0–$1,500 (many lenders waive this)
• Appraisal fee: $300–$600 (some lenders use automated valuation)
• Title search & recording: $100–$400
• Annual fee: $0–$100/year
• Total: Usually $0–$2,500

Many online lenders and credit unions offer no-closing-cost HELOCs — but compensate with a slightly higher rate. Use our Closing Costs Calculator to find the break-even point.

HELOC interest may be tax deductible, but only under specific conditions set by the Tax Cuts and Jobs Act of 2017:

✓ The funds must be used to buy, build, or substantially improve the home that secures the HELOC.
✗ Interest on funds used for personal expenses (vacations, car purchases, debt consolidation) is not deductible.

If eligible, you can deduct interest on up to $750,000 of combined mortgage and HELOC debt (for loans after December 2017). Always consult a qualified tax professional before making deductibility assumptions.

Yes — you can pay down or pay off your HELOC balance at any time during the draw period with no prepayment penalty at most lenders. Once paid off during the draw period, the full credit line becomes available again — it works like a revolving credit line.

During the repayment period, extra payments reduce your principal faster and lower your total interest cost, but the credit line does not reopen for new draws.

Some lenders charge a closure fee (typically $300–$500) if you close the HELOC within 2–3 years of opening. Check your loan agreement before closing early.