See how large a home equity line of credit your equity supports and what it will cost. Enter your home value, mortgage balance and the lender’s combined loan-to-value limit for the available line, then the amount you plan to draw, the rate and the draw and repayment periods for the interest-only payment, the repayment payment and total interest.
Credit line you could get
$102,500
85 % of value − mortgage
Interest-only payment on $50,000
$354.17
per month during the draw period
Repayment-period payment
$433.91
20 years, principal + interest
Total interest if rate stays
$96,639
$42,500 draw + $54,139 repay
Current equity $170,000 (38 % of value). Paying principal during the draw period cuts the total interest sharply — the interest-only minimum is the most expensive path.
📌 HELOC rates are variable (prime plus a margin), so payments change with the Fed; the figures assume the rate you enter stays constant. Closing costs of 0–2 % and an annual fee may apply. Interest is tax-deductible only when the money is used to buy, build or substantially improve the home.
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Available HELOC by home value and mortgage balance (85 % CLTV)
Home value
Owe $150k
Owe $250k
Owe $350k
Owe $450k
$300,000
$105,000
$5,000
—
—
$400,000
$190,000
$90,000
—
—
$500,000
$275,000
$175,000
$75,000
—
$600,000
$360,000
$260,000
$160,000
$60,000
$800,000
$530,000
$430,000
$330,000
$230,000
Worked example
Home worth $450,000, mortgage $280,000, lender allows 85 % CLTV: 0.85 × 450,000 = $382,500 − 280,000 = $102,500 available. Drawing $50,000 at 8.5 % costs $354 a month interest-only for the 10-year draw period ($42,500 of interest if the balance never falls), then $434 a month for 20 years of repayment ($54,100 interest). Paying $434 from the start instead clears it in 20 years and saves the whole $42,500 of draw-period interest.
Lenders cap the mortgage plus the credit line at a combined loan-to-value (CLTV) of 80–90 % of the appraised value. On a $450,000 home with a $280,000 mortgage, 85 % CLTV allows $382,500 of total debt, so the line is up to $102,500. Credit score and debt-to-income ratio can reduce it, and the lender may also cap the absolute amount.
Two phases. During the draw period (usually 10 years) you can borrow, repay and borrow again, and the minimum payment is interest only on what you have drawn: $50,000 at 8.5 % is $354 a month. When the draw period ends the balance converts to a fixed amortizing loan over the repayment period (15–20 years): $50,000 over 20 years at 8.5 % is $434 a month. Rates are variable, so both figures move with the prime rate.
A HELOC is a revolving line with a variable rate, ideal for costs that arrive in stages (a renovation, tuition) because you pay interest only on what you use. A home equity loan is a lump sum at a fixed rate with level payments from day one, better for a single known expense and for people who want payment certainty. Some lenders let you fix the rate on a portion of a HELOC balance.
Often little: many lenders waive closing costs if the line stays open 3 years, though appraisal ($300–500), annual fees ($50–100) and early-closure fees are common. The real cost is interest-only minimums that never reduce the balance — on $50,000 that is $42,500 of interest over a 10-year draw period if you pay only the minimum.
Only when the borrowed money is used to buy, build or substantially improve the home securing the loan, within the overall mortgage interest limits. Using a HELOC to pay off credit cards, buy a car or fund tuition makes the interest non-deductible. Keep records of how the funds were used.