HELOC Calculator
A Credit Line Secured by the House, Not a Second Loan for the Full Amount
A home equity line of credit works more like a credit card than a traditional loan — a maximum limit is established, and the homeowner draws against it as needed rather than receiving the full amount upfront. That limit isn't arbitrary: lenders calculate it from a combined loan-to-value ceiling applied against the home's value, netting out whatever is already owed on the first mortgage.
The Formula
If a draw amount is entered, the calculator also computes the interest-only payment on that draw at the stated rate — the typical payment structure during a HELOC's draw period, before repayment terms convert to amortizing principal and interest.
Where This Calculation Matters
- Estimating borrowing power before applying — knowing the likely credit line in advance avoids wasted applications against homes with insufficient equity.
- Funding renovations in stages — unlike a lump-sum loan, a HELOC lets a homeowner draw only what's needed for each phase of a project, paying interest only on the amount actually drawn.
- Comparing against a cash-out refinance — a HELOC leaves the existing first mortgage untouched, which matters if that mortgage carries a lower rate than what's currently available.
- Budgeting the draw-period payment — interest-only payments during the draw period are lower than amortizing payments, but the full balance still needs a repayment plan once the draw period ends.
Available Credit Line at Different CLTV Caps
On a $500,000 home with a $300,000 existing mortgage balance:
| Max CLTV | Max credit line |
|---|---|
| 70% | $50,000.00 |
| 80% | $100,000.00 |
| 85% | $125,000.00 |
| 90% | $150,000.00 |
Lenders vary widely in the CLTV cap they'll extend — 80–85% is common, though some go higher for borrowers with strong credit.
How to Use This Calculator
- Enter Home Value and Existing Mortgage Balance.
- Adjust Max Combined LTV % if your lender's cap differs from the 85% default.
- Optionally enter Interest Rate and a Draw Amount to see the interest-only monthly payment on that draw.
- Select Calculate to see the maximum available credit line and, if a draw was entered, its monthly cost.
Related Calculations
Check total equity first with the Home Equity Calculator, or compare against pulling cash out through a full refinance with the Cash-out Refinance Calculator.