HELOC & Home Equity Loan Calculator

Both products let you borrow against the equity you've built in your home, and both use your house as collateral — but they release the money and structure repayment very differently. A Home Equity Loan hands you a fixed lump sum with a fixed rate and a fixed monthly payment for the life of the term, which makes it predictable and well-suited to a one-time expense like a renovation. A HELOC instead gives you a revolving credit line, usually with a variable rate, that you can draw against as needed during a draw period (often 10 years), typically paying interest-only on the drawn balance until a repayment period kicks in.

Worked Example: Finding Your Equity, Then Comparing Both Options

Suppose your home is worth $450,000, you still owe $220,000 on your first mortgage, and your lender caps combined borrowing at 80% loan-to-value. Your available equity is: ($450,000 × 80%) − $220,000 = $360,000 − $220,000 = $140,000. That's the maximum you could borrow across a HELOC or home equity loan combined with your existing mortgage.

Now say you only want to draw $50,000 of that $140,000 at an 8.5% annual rate. Two very different monthly payments come out of the same $50,000, depending on which product you choose:

• Interest-only HELOC payment: $50,000 × (8.5% ÷ 12) = $50,000 × 0.0070833 = $354.17 per month. None of this reduces the $50,000 balance — it's purely the cost of carrying the draw.
• Fully-amortizing Home Equity Loan payment (15-year term): using the same installment formula as a mortgage, M = P × r(1+r)ⁿ ÷ [(1+r)ⁿ − 1] with P = $50,000, r = 0.0070833, and n = 180 months, gives M = $492.37 per month. Over 15 years that totals $88,626.56 paid, of which $38,626.56 is interest — but the balance is fully paid off at the end.

Toggle the Payment Mode selector above between the two options with these exact numbers ($450,000 home, $220,000 mortgage, 80% LTV, $50,000 draw, 8.5% rate, 15-year term) to reproduce both figures yourself.

Which One Should You Use?

If you need a known amount for a one-time cost — debt consolidation, a single renovation project, a major purchase — a Home Equity Loan's fixed payment and fixed payoff date make budgeting easier. If your borrowing need is ongoing or uncertain in size — a multi-phase renovation, covering irregular expenses, or wanting a financial cushion you only pay for when you use it — a HELOC's draw-as-needed structure and lower initial interest-only payments are usually the better fit, provided you plan for the payment jump when the draw period ends. If you're specifically weighing a home equity loan against refinancing your entire first mortgage, the Mortgage Payment Calculator can help you compare a cash-out refinance payment against the numbers here. And if the real goal behind a HELOC draw is paying off higher-interest debt, run the numbers side by side in the Debt Consolidation Savings Calculator before deciding — the lower rate doesn't always outweigh putting unsecured debt onto a secured, house-backed loan.

A Few Things This Calculator Doesn't Cover

HELOC rates are usually variable and tied to an index like the prime rate, so your real payment can rise or fall over the draw period — this tool assumes a fixed rate for simplicity. It also doesn't account for closing costs, annual fees, or the repayment-period payment jump that follows a HELOC's draw period, all of which you should ask your lender about directly.

Further reading: Investopedia — HELOC and Wikipedia — Home Equity Line of Credit.