What's the difference between a home equity loan and a HELOC?

A home equity loan gives you a fixed lump sum upfront at a fixed rate, repaid on a set monthly schedule — like a second mortgage. A HELOC (home equity line of credit) works more like a credit card: you draw money as needed up to a limit, usually pay interest-only during a draw period, and then repay the balance (principal and interest) once the draw period ends. HELOC rates are also typically variable, while home equity loan rates are usually fixed.

Why is a HELOC's payment shown as two different numbers?

Because a HELOC has two distinct phases. During the draw period, many lenders only require an interest-only payment on whatever balance you've drawn. Once the draw period ends, the loan enters repayment, and the balance is repaid on a fully amortizing schedule (principal and interest) over the remaining years — which is usually a noticeably higher payment than the interest-only one.

Why do HELOC rates change over time?

Most HELOCs carry a variable rate tied to an index (commonly the prime rate) plus a margin, so your actual rate — and payment — can rise or fall over the life of the loan. This calculator uses a single rate you enter as a snapshot estimate; it can't predict future rate changes, so treat the result as a starting point rather than a guaranteed payment.

Is HELOC or home equity loan interest tax-deductible?

In the U.S., interest may be deductible if the loan proceeds are used to 'buy, build, or substantially improve' the home securing the loan, subject to overall mortgage debt limits — but not if the money is used for other purposes like debt consolidation or a vacation. Rules and limits can change, so confirm your specific situation with a tax professional rather than relying on a general rule.

What happens if I go over my combined loan-to-value limit?

Most lenders simply won't approve a loan or credit line that would push your combined loan-to-value above their maximum — this calculator flags when your entered amount exceeds the CLTV-based ceiling so you can adjust it before assuming that amount is available.

Is my data stored anywhere?

No. All calculations run locally in your browser. Nothing you enter is transmitted to a server or stored.

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Home Equity Loan / HELOC Calculator

Find how much home equity you can borrow, then compare a fixed home equity loan's monthly payment against a HELOC's interest-only draw period and repayment-period payment.

Last updated August 24, 2026

Your home & existing mortgage

Home value ($)

Current mortgage balance ($)

Max combined loan-to-value (%)

85% is a common lender maximum.

Current home equity

$200,000

Available to borrow

$132,500

Loan amount ($)

Interest rate (%)

Loan term (years)

Monthly payment

$984.74/mo

Total interest

$77,253

Total paid

$177,253

Because home equity loans feature a fixed interest rate and a structured repayment schedule, your monthly payment remains completely predictable from the first month to the last. Meeting the combined loan-to-value limit means your total debt relative to your home value sits within standard lending guidelines, though individual underwriting requirements still apply. Lenders evaluate credit history, debt-to-income ratios, and verified income independently alongside property valuation before issuing a final approval decision.

AI-generated insight

How to use the HELOC calculator

1
Enter your home value, current mortgage balance, and max combined loan-to-value (85% is a common lender maximum).
2
Choose Home Equity Loan (fixed lump sum) or HELOC (line of credit).
3
Enter the amount, rate, and either a loan term or a HELOC's draw and repayment periods.
4
Your available equity, monthly payment, and total interest update instantly.

How available equity is calculated

Home value and your max combined loan-to-value set a borrowing ceiling; subtracting your existing mortgage balance from that ceiling gives what's actually available.

Available to borrow = (home value × max CLTV%) − existing mortgage balance

Worked example: a $450,000 home with a $250,000 mortgage balance and an 85% max CLTV: max total borrowable = $450,000 × 0.85 = $382,500, minus the $250,000 already owed = $132,500 available to borrow. Your raw equity ($450,000 − $250,000 = $200,000) is higher than what you can actually borrow, since lenders keep a cushion above 100% CLTV.

On that same $100,000 borrowed at 8.5%: a 15-year home equity loan costs about $984.74/month with $77,253 total interest. A HELOC with a 10-year interest-only draw period followed by a 20-year repayment period costs $708.33/month during the draw period, then jumps to about $867.82/month once repayment begins — with $193,278 total interest across both phases, notably more than the fixed loan due to the longer overall term and interest-only years.

Home equity loan vs. HELOC

	Home equity loan	HELOC
How you get the money	One lump sum upfront	Draw as needed, up to a limit
Rate type	Usually fixed	Usually variable
Early payments	Fixed principal & interest from day one	Often interest-only during the draw period
Best for	A known, one-time expense	Ongoing or uncertain expenses

Comparing this against refinancing your first mortgage entirely instead? Our Refinance Calculator → shows the break-even point on a full mortgage refinance.

See how a home equity loan fits into your full financial picture with our Net Worth Calculator →.

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