The HELOC calculator estimates your available credit line based on your home's current value, mortgage balance, and maximum loan-to-value allowed. It then calculates monthly payments based on how much of the credit line you use, the current variable interest rate, and whether you are in the draw period or repayment period. This helps you plan for both the interest-only and fully amortizing payment phases.

HELOC payments change for two reasons: the variable interest rate adjusts with market conditions, and the transition from draw period to repayment period changes your payment structure. During the draw period, you typically pay interest only on the amount borrowed. Once the repayment period starts, payments jump significantly because you must now pay principal plus interest on the remaining balance.

Most lenders require at least 15-20% equity in your home after accounting for your first mortgage. The calculator determines your available credit line by taking your home's appraised value, multiplying by the maximum combined loan-to-value ratio, usually 85%, and subtracting your current mortgage balance. A home worth $400,000 with a $250,000 mortgage could qualify for up to $90,000 in HELOC credit.

Since most HELOCs have variable rates tied to the prime rate, a 1% rate increase on a $100,000 HELOC balance adds approximately $83 per month to your interest-only payment. The calculator lets you model different rate scenarios to stress-test your budget. Many borrowers draw on their HELOC when rates are favorable and pay it down quickly to minimize interest exposure.

The calculator can help you compare both options. A HELOC offers flexible access to funds with variable rates and interest-only payments during the draw period, ideal for ongoing expenses or projects. A home equity loan provides a lump sum with a fixed rate and fixed monthly payments. If you need a specific amount for a defined project, the home equity loan offers more payment predictability.