Using the Home Equity Line of Credit calculator
This home equity loan calculator makes it easy to determine what you can borrow, as well as showing how that amount would vary if the appraised value of your home is more or less than you expect.
To use it, enter the estimated value of your home, the amount owed on your mortgage and any second liens, and the maximum loan-to-value ratio allowed by your lender in the boxes indicated. The line of credit available to you will be displayed in the blue box at the top.
Notice that you can vary these figures using the sliding green triangles on the chart if you want to explore a range of values.
The chart with the three colored lines shows you how your available line of credit would vary across a range of appraised home values, given the figures you entered into the calculator. The lines correspond to the loan-to-value ratio your lender will allow.
The home equity line of credit calculator automatically displays lines corresponding to ratios of 80%, 90% and 100%; it can also display one additional line based on any value you wish to enter. For example, if your lender will allow a 95% ratio, the calculator can draw that line for you, in addition to the other three.
The range of home values are listed along the bottom and are centered on the value you entered; the figures for the available line of credit are listed at left on the vertical axis.
Want to calculate your payments for a home equity line of credit? Then use our Line of Credit Payments Calculator to figure your payments during the draw phase or our Home Equity Loan and HELOC Calculator to estimate payments over the entire loan.
How much can you borrow with a HELOC?
The amount you can borrow with any home equity loan is determined by how much equity you have – that is, the current value of your home minus the balance owed on your mortgage. So if your home is worth $250,000 and you owe $150,000 on your mortgage, you have $100,000 in home equity.
That doesn't mean you'll be able to borrow up to $100,000, though. Few, if any, lenders these days will allow you to borrow against the full amount of your home equity, although that was common during the pre-crash days.
As a rule of thumb, lenders will generally allow you to borrow up to 75-90 percent of your available equity, depending on the lender and your credit and income. So in the example above, you'd be able to establish a line of credit of up to $80,000-$90,000 with a home equity line of credit.
A home equity loan calculator like this one takes that all into account to figure how just how much of a line of credit you may be able to obtain, depending on all those factors.
Of course, the line of credit you can set up will vary depending on the value of your home and the balance on your mortgage (including any second mortgages, if applicable).
Qualifying for a home equity line of credit
Having equity alone doesn't guarantee you'll be able to qualify for a home equity line of credit. You'll also need to have decent credit – most lenders want to see FICO scores of at least 660 or more, and many have even stricter requirements. But 720 or more should put you in good shape.
You also can't be carrying too much debt – your total monthly debts, including your mortgage payments and all other loans, should not exceed 45 percent of your gross monthly income.
Lenders consider all these factors together when you apply for a HELOC. For example, they may allow a lower credit score or more debt if you have a lot of home equity available. Similarly, if you have a lower credit score they might only allow you to use 75 percent of your total home equity rather than the 90 percent they might allow someone with strong credit.
About home equity lines of credit
A home equity line of credit, or HELOC, is a special type of home equity loan. Rather than borrowing a specific sum of money and repaying it, a HELOC gives you a line of credit that lets you borrow money as needed, up to a certain limit, and repay it over time. It's like having a credit card secured by your home equity.
How much can you borrow? That's where a home equity loan calculator comes in. It helps you figure how much of a line of credit you can secure with your available home equity.
All home equity loans and HELOCs are secured by the equity in your home – that is, you're using your home equity as collateral. That allows you to get a much lower interest rate than you can get with a credit card or other unsecured loan. And because home equity loans are a type of mortgage, the interest you pay is tax-deductible up to certain limits.
HELOCs and other home equity loans are considered second liens; that is, they are second in line behind your primary home loan when it comes to getting repaid in the event of a loan default or foreclosure. As a result, they are somewhat riskier for lenders than primary mortgages are, so they charge higher interest rates and generally have stricter qualification standards than regular mortgages do.
A HELOC has two phases. A draw period, during which you can borrow against the line of credit as you wish, and a repayment period, during which you must repay the money you've borrowed. HELOCs are usually set up as adjustable-rate loans during the draw period, but often convert to a fixed-rate during the repayment phase.
HELOCs typically function as interest-only loans during the draw phase, which is usually 5-10 years. In other words, you're only required to pay the interest charges during this time and don't have to repay any loan principle. The repayment phase is typically 10-20 years and you cannot borrow additional funds during this time.
While you do not have to repay principle during an interest-only draw phase of a HELOC, you can usually do so without penalty. This not only reduces what you have to eventually repay when the draw period ends, but also allows borrowers to use a HELOC for cash-flow management, borrowing as needed and repaying when they can. This is helpful for people who have irregular incomes or expenses and are seeking to smooth out the peaks and valleys of their finances.
Some borrowers choose to refinance into a new HELOC at the end of the draw period. This may be to avoid the payment shock of the higher monthly payments required to repay both loan principle and ongoing interest charges, but may also be done to just to keep the line of credit open.
Want to see what sort of rate you can get on a HELOC? Use the "Get Free Quote" tab at the top of this page.