Home Equity Line of Credit (HELOC) Calculator

Calculate your HELOC payments instantly with our free calculator. Includes draw/repayment periods, closing costs, fees, APR, and full amortization schedule.

Use Your Homes Value-Without Messing With Your Mortgage

If you have a great interest rate on your main mortgage, the last thing you want to do is refinance it just to get some extra cash. That is where a HELOC (Home Equity Line of Credit) comes in. It is like having a high-limit credit card tied to your home's value, but with much lower interest rates.

As we hit December 2025, rates are finally starting to lean in your favor, hovering around 7.4% to 7.6%. Whether you're planning a "phase-by-phase" home remodel or just want a financial safety net, a HELOC gives you the freedom to take what you need, when you need it. We've built this calculator to help you see the full picture-from the "draw period" to the eventual repayment-so you can borrow exactly what you need and not a penny more.

What Is a Home Equity Line of Credit (HELOC)?

Think of a HELOC as a "Back-Pocket" Safety Net
Most people understand how a credit card works: you have a limit, you spend what you need, and you pay it back. A HELOC is basically that, but it is tied to your home's value (your "equity") rather than a piece of plastic. This means the interest rates are much lower-currently in the mid-7% range-because the bank knows you are a homeowner.

Here is the life cycle of a HELOC in plain English:

Phase 1: The "Draw" (Years 1 to 10): This is the fun part. You are approved for a limit, and you can tap into that cash whenever you want. If you only need $5,000 for a new deck, you only borrow $5,000. During this time, your monthly bill is usually interest-only, which keeps your payments incredibly low.

Phase 2: The "Repayment" (Years 11 to 30): Eventually, the party ends. You stop borrowing and start paying back the principal and the interest. Your monthly payment will go up, but you'll have a clear path to being debt-free.

HELOCs are popular because interest rates have fallen significantly from the higher rates of previous years due to interest rate cuts by the Federal Reserve. The average HELOC rate is now in the low to mid-7% range, making it cheaper than many personal loans or credit cards.

How HELOC Payments Work

HELOC payments vary by phase:
Draw Period: Often interest-only. For example, on a $50,000 balance at 7.5%, you'd pay about $312.50 monthly (just interest).
Repayment Period: Full amortizing payments. Using the same example with a 15-year repayment, payments jump to around $463 monthly.
Factors like closing costs (typically 2-5% of the line, or $2,000-$5,000) and annual fees ($50-$100 common during draw) can increase the true cost. Our calculator includes these for a realistic APR estimate.

The difference between HELOC and Home Equity Loan

Many confuse HELOCs with home equity loans. Here's a quick comparison.

In 2025, HELOCs often edge out for flexibility, especially with falling variable rates.

Pros and Cons of a HELOC in 2025

A HELOC is incredibly popular right now because it's so flexible, but it's not without its quirks. Here's the "good, the bad, and the reality" of using one in late 2025.
The Wins (Pros)
Keep Your Current Mortgage: This is the big one. You do not have to touch your primary mortgage to get cash, so you get to keep that low interest rate you locked in years ago.
Pay Only for What You Use: If you have a $50,000 line of credit but only spend $5,000, you only pay interest on that $5,000. It's much more efficient than taking out a giant loan all at once.
Cheaper Than Plastic: With rates in the mid-7% range, a HELOC is a bargain compared to credit cards (which are often 20% or higher).
Tax Perks: If you're using the money to actually improve your home, you might be able to deduct the interest. It's a nice little "thank you" from the IRS for increasing your property value.

The Risks (Cons)
The "Floating" Rate: Unlike a fixed loan, HELOC rates can move. If the economy shifts and rates go up, your monthly bill will too.
The Payment "Cliff": During the first few years, you might only be paying interest. When the repayment period hits, you'll have to start paying back the principal, which can be a bit of a "payment shock" if you haven't planned for it.
Your Home is on the Line: Because the loan is tied to your house, you have to be disciplined. If you can't keep up with the payments, your home is what's at stake.
The "Nickel and Diming": Watch out for small fees, like annual "membership" fees or charges if you don't use the line of credit often enough.

Do You Qualify for a HELOC? Here's the Checklist.

Getting approved for a HELOC is a bit like getting a second mortgage, so lenders are going to want to see that you've got a solid foundation. Here is what they are looking for as we head into 2026:

The "Skin in the Game" (Equity): Most banks want you to have at least 15% to 20% equity left in your home after you take out the line of credit. Basically, they want to make sure you aren't "underwater" if the market shifts.

Your Credit Story: You can usually get a foot in the door with a score of 620, but if you're hunting for those advertised low rates in the 7% range, you'll likely need a score of 700 or higher.

The Balancing Act (DTI): Lenders look at your "Debt-to-Income" ratio. Ideally, your total monthly debt payments (including the new HELOC) should be under 43% of your gross monthly income.

Steady Paychecks: You'll need to show you've got a stable job and a reliable paper trail of your income.

Pro Tip: If you're looking for the best deal right now, lenders like Navy Federal, Truist, and Bank of America are consistently winning high marks for 2025 for having low fees and great customer service.