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HELOC Calculator: Determine How Much You Can Borrow and Calculate Your HELOC Payment

HELOC Calculator
Gina Freeman (Pogol)
Jul 30, 2022
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    7 min read
Key Takeaways:
  • A HELOC loan calculator shows you how much you can borrow with a HELOC loan.
  • You can also see payments for different HELOC loan options.
  • The amount you can borrow with a HELOC loan depends on your equity, credit, and income.
Get an estimate of your Calculator

The home equity line of credit, or HELOC, is a mortgage secured by your home. HELOCs are one of the cheaper sources of money and potentially a suitable loan for many purposes. Our HELOC calculator helps answer your important questions like, “How much can I borrow on my home with a HELOC?” and “What might my HELOC payment be?” You’ll even be able to estimate current interest rates based on your credit rating and how much you might save by improving it.

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HELOC Calculator
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Use our calculator to estimate your max eligible amount, interest rate, and monthly payment.

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We will look up your home value through our third party provider, House Canary.

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Recommendations provided are for estimates and educational purposes only and do not constitute an offer for a loan. Payment information displayed does not include taxes and insurance premiums Information provided such as APRs is subject to change.

How to Use a HELOC Calculator

This home equity line of credit calculator is very straightforward. You only need four pieces of information – your property address, current mortgage balance, desired loan amount, and credit score range. The calculator generates a maximum loan amount, interest rate, and monthly mortgage payment based on your answers.

Step one: home evaluation

Input your property address so that House Canary, a third-party valuation service, can estimate your home value. If House Canary doesn’t have data on your home, or if you need to adjust the House Canary estimate, you can enter your property value.

Step two: current mortgage balance

The next step is determining the total you currently owe against your home – your loan payoff for all outstanding mortgage balances. “Mortgage balances” include any financing that uses your home as collateral – your primary mortgage plus any existing HELOCs, home equity loans, and purchase money second mortgages. (Note: if you plan to refinance (pay off) a home equity loan or HELOC with a new loan, don’t include that balance in this total. 

Step three: desired loan amount

How much would you like to borrow with a HELOC? For most HELOC lenders, the maximum amount you can borrow equals 80% of your home value minus your existing loan balances. If your desired loan amount exceeds this number, you’ll get an error message and be asked to input a lower loan amount. 

Step four: credit score range

Your credit score drives the interest rate HELOC lenders are willing to offer. You may be able to get your FICO or VantageScore from your credit card companies or for free from Experian.com. Input the credit score tier that matches your score.

Your Recommendation

Scroll down, and you’ll see a recommended loan amount, estimated interest rate, and monthly payment – for both the HELOC draw period and the repayment period.

Loan amount

The calculator shows your desired line of credit. It also reveals your maximum line of credit based on your estimated property value and outstanding mortgage balance. It’s important to note that while this calculator sets the maximum loan-to-value (LTV) ratio at 80%, as most HELOC lenders do, individual lenders may allow a higher amount. This is especially true if you are highly qualified. On the other hand, if your credit rating is poor or your debts are high for your income, lenders may limit you to a lower loan amount.

Monthly payment

This section estimates your monthly HELOC payment. You can select two payments in the drop-down menu – the draw period payment and the repayment period payment. Both payments are calculated assuming that you take the maximum available credit at closing and that you only pay the minimum due each month.

Obviously, you’d save money by paying more or borrowing less. 

Note that you can choose to make the minimum monthly payment for up to ten years. However, your loan balance will not drop if you only make the minimum payment.

Once you enter the repayment period of your HELOC, your minimum amount will increase so that the loan will amortize (be paid off) over its remaining term. With a 30-year HELOC, your repayment period is usually 20 years. The calculator assumes that your balance equals your desired loan amount when you enter the repayment phase. 

Other HELOC Considerations

It’s important to understand that the calculator results are estimates only, and there are other considerations when applying for a loan::

  • The calculator assumes an interest rate based on average HELOC mortgage rates from a variety of lenders. That estimate is not an offer or commitment to lend, however. Mortgage rates are tied to movements in financial markets and change without notice. In addition, HELOC lenders base their offers on your entire application – not just a couple of estimates.
  • The calculator assumes that your interest rate will stay the same. Traditionally, HELOCs come with variable interest rates, which means your monthly payment can change periodically.
  • However, lenders have begun offering fixed-rate HELOCs that act a lot like home equity loans. If you want, you could draw your entire HELOC credit line at closing and make a fixed, fully-amortizing home equity loan payment for the entire loan term – saving money and avoiding a payment increase after ten years.
  • Finally, qualifying for a HELOC depends on more than your LTV and credit score. Your strength as a borrower impacts what a specific lender is willing to lend. That can be more or less than the calculator shows. 

How Hard Is it to Get a HELOC or Home Equity Loan?

When you apply for a HELOC, mortgage lenders want to examine your income, debts, credit history, employment history, and property value. Mortgage lenders are required by law to verify that you can afford your mortgage payment when they approve any mortgage – including a HELOC. 

Credit score

If your FICO score is excellent, you’ll most likely be offered the best HELOC rates. And if your debt-to-income ratio checks out, you might borrow against up to 90% of your home value. 

If your credit score is good-to-excellent, and you can afford the loan, you’ll probably secure a competitive interest rate and be allowed to borrow against 80% of your property value. However, if your score is only fair-to-poor, lenders may only lend against 75% or less of your property value. And that’s assuming that your income is reliable and your debts are reasonable.

Your debt-to-income ratio should not exceed 43% for most lenders to approve a HELOC. That means your total debt payments, including the new repayment periodHELOC payment, can’t exceed 43% of your before-tax monthly income. 

One way to reduce your debt-to-income ratio is to use at least some of your loan proceeds for debt consolidation. Debt consolidation means using your HELOC to pay off other debts – usually those with higher interest rates and larger payments.

Frequently Asked Questions

Can you get a HELOC based on a higher home value if you use it for home improvement?

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HELOC lenders generally make lending decisions based on the current property value. However, there are home renovation loans that do consider the improved value when setting your home improvement loan amount. Other options are rehab loans that allow you to buy or refinance a home and add financing for improvements. 

Is HELOC interest tax deductible?

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Home equity loan and HELOC interest are no longer tax-deductible to the extent they used to be. 

  • The IRS states that interest on a home equity line of credit (HELOC) is only tax deductible if you use the funds for renovations to “buy, build, or substantially improve” the property. And you have to use the money for the same home that secures the loan. 

  • In addition, you can only deduct interest on up to $750,000 of ALL your residential loans ($375,000 for a married taxpayer filing separately).

When is a HELOC a bad idea?

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While HELOCs are among the cheapest sources of money, there is a reason for this – your home is collateral for the loan, and the lender gets to foreclose and take your house if you can’t afford the payments. A HELOC may become unaffordable if the interest rate increases or your payment rises sharply when you enter the repayment period. 

HELOCs can also be a bad idea if you use them for short-term items like vacations or weddings. Most personal finance experts do not recommend financing a short-term purchase with a long-term loan. Do you want to be still paying off your honeymoon with a 30-year loan when your children enter college? Fortunately, there’s an easy fix – simply make higher payments and clear your balance sooner. No law says you must make the minimum payment during the draw period.