Use this calculator to estimate your potential Home Equity Line of Credit (HELOC) amount and your estimated monthly payments. A HELOC allows you to borrow against the equity in your home, providing a revolving line of credit.
Estimated Monthly Principal & Interest Payment (during repayment period):$0.00
Understanding Your Home Equity Line of Credit (HELOC)
A Home Equity Line of Credit (HELOC) is a revolving credit line, much like a credit card, but it's secured by the equity in your home. This means your home serves as collateral for the loan. HELOCs are popular for funding home renovations, consolidating debt, paying for education, or covering other significant expenses.
How HELOCs Work
HELOCs typically have two phases: a draw period and a repayment period.
Draw Period: This is usually 5 to 10 years long. During this time, you can borrow money as needed, up to your approved credit limit. You only make interest-only payments on the amount you've drawn.
Repayment Period: Once the draw period ends, you can no longer borrow money. You then begin making principal and interest payments on the outstanding balance, similar to a traditional mortgage. This period can last 10 to 20 years.
Key Factors in HELOC Qualification and Cost
Home Value: The current market value of your property is the foundation for determining your available equity.
Outstanding Mortgage Balance: The amount you still owe on your primary mortgage directly reduces your available equity.
Loan-to-Value (LTV) Ratio: Lenders typically have a maximum LTV ratio (e.g., 80% or 85%) they will allow. This means the total amount of all loans secured by your home (including your primary mortgage and the HELOC) cannot exceed this percentage of your home's value.
Annual Percentage Rate (APR): HELOCs usually have variable interest rates, meaning your APR can change over time based on a benchmark index (like the prime rate). This calculator uses a fixed APR for estimation purposes.
Credit Score and Debt-to-Income Ratio: While not included in this calculator, lenders will also assess your creditworthiness and your ability to manage additional debt.
Calculating Your Potential HELOC
The calculator above helps you understand:
Your Current Home Equity: This is simply your home's value minus your outstanding mortgage balance.
Maximum HELOC You Could Qualify For: This is calculated by taking your home's value, multiplying it by the lender's maximum LTV ratio, and then subtracting your outstanding mortgage balance. This gives you the absolute maximum you could potentially borrow.
Your Effective HELOC Credit Line: This is the lesser of your desired credit line and the maximum you qualify for. Lenders will not approve a line of credit higher than their LTV limits allow.
Estimated Monthly Interest-Only Payment: During the draw period, you typically pay only the interest on the amount you've actually borrowed (drawn). This is calculated based on your effective credit line and the HELOC APR.
Estimated Monthly Principal & Interest Payment: Once the repayment period begins, you'll pay both principal and interest. This calculation provides an estimate for a fully amortized loan over the specified repayment period.
It's important to remember that this calculator provides estimates. Actual HELOC offers and terms will vary based on the lender, your financial situation, and market conditions. Always consult with a financial advisor and multiple lenders before making a decision.
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function calculateHeloc() {
var homeValue = parseFloat(document.getElementById('homeValue').value);
var mortgageBalance = parseFloat(document.getElementById('mortgageBalance').value);
var ltvLimit = parseFloat(document.getElementById('ltvLimit').value);
var desiredCreditLine = parseFloat(document.getElementById('desiredCreditLine').value);
var helocAPR = parseFloat(document.getElementById('helocAPR').value);
var repaymentPeriodYears = parseFloat(document.getElementById('repaymentPeriodYears').value);
// Input validation
if (isNaN(homeValue) || homeValue < 0) {
alert('Please enter a valid current estimated home value.');
return;
}
if (isNaN(mortgageBalance) || mortgageBalance < 0) {
alert('Please enter a valid current outstanding mortgage balance.');
return;
}
if (isNaN(ltvLimit) || ltvLimit 100) {
alert('Please enter a valid LTV ratio between 0 and 100.');
return;
}
if (isNaN(desiredCreditLine) || desiredCreditLine < 0) {
alert('Please enter a valid desired HELOC credit line amount.');
return;
}
if (isNaN(helocAPR) || helocAPR < 0) {
alert('Please enter a valid Annual Percentage Rate (APR).');
return;
}
if (isNaN(repaymentPeriodYears) || repaymentPeriodYears <= 0) {
alert('Please enter a valid repayment period in years.');
return;
}
// 1. Calculate Available Equity
var availableEquity = homeValue – mortgageBalance;
if (availableEquity < 0) {
availableEquity = 0; // Cannot have negative equity for HELOC purposes
}
// 2. Calculate Maximum Borrowable Amount (based on LTV)
var maxLTVAmount = (homeValue * (ltvLimit / 100));
var maxBorrowable = maxLTVAmount – mortgageBalance;
if (maxBorrowable 0 && monthlyInterestRate > 0) {
// Standard loan payment formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
// P = effectiveCreditLine, i = monthlyInterestRate, n = repaymentMonths
monthlyPAndI = effectiveCreditLine * monthlyInterestRate * Math.pow((1 + monthlyInterestRate), repaymentMonths) / (Math.pow((1 + monthlyInterestRate), repaymentMonths) – 1);
} else if (effectiveCreditLine > 0 && monthlyInterestRate === 0) {
// If APR is 0, then it's just principal divided by months
monthlyPAndI = effectiveCreditLine / repaymentMonths;
}
// Display results
document.getElementById('availableEquity').innerText = '$' + availableEquity.toFixed(2);
document.getElementById('maxBorrowable').innerText = '$' + maxBorrowable.toFixed(2);
document.getElementById('effectiveCreditLine').innerText = '$' + effectiveCreditLine.toFixed(2);
document.getElementById('monthlyInterestOnly').innerText = '$' + monthlyInterestOnly.toFixed(2);
document.getElementById('monthlyPAndI').innerText = '$' + monthlyPAndI.toFixed(2);
}
// Run calculation on page load with default values
window.onload = calculateHeloc;