HELOC Calculator

Equity is not the line

In the worked example — a fictional $400,000 home with $250,000 still owed — the owner holds $150,000 of equity, but a lender cap of 80% combined loan-to-value prices total home-secured debt at $320,000, leaving an available line of $70,000. Drawing $50,000 at an illustrative 9% costs $375.00 a month interest-only during the draw period. The 20% of the value the cap holds back — $80,000 here — is exactly the difference between the equity and the line. Every figure on this page is computed when the page is built by the same tested engine that powers the calculator above; the values, caps and rates in the examples are illustrative inputs chosen for the arithmetic, not quotes or any lender's terms.

Each extra dollar of value adds a dollar of equity but only 80 cents of line, because the cap multiplies the value; each extra dollar of balance removes a dollar from both.

What the engine computes, step by step

The form hands your inputs to one engine function, which validates them, runs the steps below in order, and returns a typed result. The interface only formats what comes back; it never does arithmetic of its own.

1. Validation. The home value must be greater than zero; the balance and the drawn amount may be zero but not negative; the cap and the rate must fall inside the engine's ranges. A blank cap field falls back to the engine's default of 80%; blank draw and rate fields are read as zero.
2. Equity = home value − mortgage balance: $400,000 − $250,000 = $150,000.
3. Current LTV = mortgage balance ÷ home value, shown as a percentage: 62.5% here. It describes the first mortgage alone, before any draw.
4. Lender cap = home value × the combined-LTV cap you enter: $400,000 × 80% = $320,000.
5. Available line = lender cap − mortgage balance, floored at zero: $320,000 − $250,000 = $70,000. When the balance already exceeds the cap, the line is reported as zero, never as a negative amount.
6. Draw check. A drawn amount larger than the available line is refused before any payment is priced, with the engine's own message: "The drawn amount exceeds the available line." Asking for $80,000 against the $70,000 line triggers it.
7. Interest-only payment = drawn amount × (annual rate ÷ 12): $50,000 × 0.75% = $375.00. The engine prices a draw this way because HELOC draw periods typically bill interest only. With no draw entered it returns no payment, and the result omits the line.

The cap, not the equity, sets the line

Hold the home and the balance fixed and move only the cap, and the line moves by $4,000 per percentage point — one percent of the $400,000 value — because the cap multiplies the value, not the equity. Example B runs the same $400,000 home and $250,000 balance through three other illustrative caps.

Between the 70% and 90% rows the lender cap rises by $80,000 and the line by the same $80,000: the balance is subtracted once whatever the cap, so every dollar the cap adds to the maximum reaches the line. Equity is $150,000 on every row, untouched by the cap.

When the line is zero

Example C keeps the $400,000 home and the 80% cap but raises the balance to $330,000. Equity is still positive — $70,000 — but the current LTV is 82.5%, already above the cap, so the cap's $320,000 maximum sits below the balance and the available line is $0. The engine floors the line at zero rather than reporting the $10,000 shortfall as a negative line. It also accepts a balance larger than the value: at $420,000 owed on the same home, equity is reported as -$20,000, the current LTV is 105%, and the line is again $0. The same subtraction runs in every case; only the available line is floored, and any draw entered against a zero line is refused.

The interest-only payment, and what it leaves alone

The payment is a single multiplication — the drawn amount times the annual rate ÷ 12, the same monthly charge the engine's amortization schedules apply to a balance — so it is proportional to both inputs. Example D keeps the $50,000 draw and moves the rate: at an illustrative 6% the payment is $250.00, at 9% it is $375.00, and at 12% it is $500.00 — exactly twice the 6% figure, because the rate doubled. Keep 9% and draw the full $70,000 line instead, and the payment is $525.00. At a rate of zero the payment is $0.00: priced, not omitted.

What the payment does not do is reduce the balance. Over an illustrative draw period of 10 years — 120 monthly payments — the $375.00 payments total $45,000, and the drawn balance at the end of them is still $50,000, because every dollar paid was interest. The calculator takes no draw-period length and does not compute this total; it is the payment multiplied out here. The engine reports the payment per month and nothing beyond it.

An amortizing payment on the same balance

The engine prices the draw period, when interest only is billed on what is drawn; it does not price what follows, when the balance is repaid. For that, Example E hands the same $50,000 balance at the same 9% to the Loan Calculator's engine function — the standard amortized-loan (PMT) formula with monthly compounding, the convention behind US mortgages and most consumer loans — over two illustrative repayment terms. Amortized over 20 years, the level payment is $449.86 — $74.86 a month more than the interest-only figure — and the schedule charges $57,967 of interest before the balance reaches $0; over 10 years the payment is $633.38 and the interest $26,005.

The three rows answer three different questions, and the engine ranks none of them: the interest-only payment keeps the balance where it is; each amortizing payment retires it on a set schedule, the shorter term paying more per month and less in total. The Loan Calculator runs the amortizing arithmetic for any balance, rate and term, and Reading an amortization schedule explains how to read its rows. If the rate on a real line changes over time, none of these calculators can follow it: whatever rate is entered is held fixed for every month.

How to read the result

• The large "available line" figure is cap × value − balance, floored at zero — $70,000 in Example A. It is the most the inputs support, not an amount drawn.
• Home equity is value − balance, $150,000 here. It can exceed the line (Example A), stay positive while the line is zero (Example C), or go negative when the balance is above the value.
• Current LTV is the first-mortgage balance ÷ value, 62.5%. It includes neither the line nor any draw; the combined ratio after the example's draw is 75%.
• Lender cap at …% combined LTV is the dollar maximum the cap implies: $320,000.
• Interest-only payment on … drawn appears only when a draw is entered, and is labelled per month.

Dollar lines are shown to whole dollars and the payment to the cent; the LTV is shown to a small number of decimals. Internally every calculation keeps the full precision of IEEE-754 double-precision arithmetic, and nothing is rounded between steps. Your lender's figure may differ by a few cents depending on their rounding and day-count conventions — the difference is presentational, not an error. The Copy result button places a one-line summary — line, equity and current LTV — on your clipboard.

Where the calculator stops

The limits are the engine's, and the methodology page states the general ones. This calculator sizes a line and prices one month's interest-only payment on a draw. It does not know the length of a draw period or a repayment period — neither is an input — and it neither runs a schedule of interest-only payments nor computes the amortizing payment that follows. Whatever rate you enter is held fixed: the calculators model fixed-rate, fully amortizing loans and do not model adjustable-rate mortgages, interest-only periods, balloon payments, or negative amortization. There are no fee, closing-cost, appraisal or minimum-draw inputs. The cap is yours to enter: the calculator does not know any lender's combined-LTV limit. Inputs are validated before any arithmetic runs; a zero home value is answered with "The home value must be greater than 0." a cap outside its range with "Enter a maximum combined LTV between 1% and 100%." and a rate past the engine's limit with "Enter an interest rate below 100%." A correct calculation can still be the wrong calculation for your situation — choosing the right loan for a real-world decision is judgment we cannot automate. The Refinance Calculator runs the comparison this page does not: an existing loan against a new rate and term.

Frequently asked questions

Not financial advice: a general educational estimate. Actual lines depend on credit, income verification, and lender-specific CLTV caps; borrowing against your home puts the home at risk. Values are processed locally in your browser and never transmitted. See the methodology page.