HELOC vs Home Equity Loan Calculator
Compare a Home Equity Line of Credit (variable rate, revolving access) against a Home Equity Loan (fixed rate, lump sum). Calculate payments, total interest, and identify which product fits your specific financial need.
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HELOC vs Home Equity Loan — Side by Side
HELOC (Variable)
$531/mo
Draw period (interest-only)
$651/mo
Repayment period (P&I)
Home Equity Loan (Fixed)
$910/mo
Fixed payment, every month
Rate never changes
HELOC Total Interest
$144,958
8.5% variable rate
HEL Total Interest
$34,195
8.0% fixed rate
Available Equity (85% CLTV)
$145,000
71.0% combined LTV
HELOC Flexibility
Draw & Repay
Access funds as needed over draw period
Advanced
Rate Risk, Draw Flexibility & Tax Deductibility
Key structural differences that affect your decision
The HELOC rate is variable — tied to the prime rate. If rates rise, your payment rises. Home equity loans are fixed for life. Use the scenario below to see how a rate increase affects your HELOC payment.
% increase
HELOC Today
$531/mo
At 8.5% (IO phase)
HELOC +2.0%
$656/mo
At 10.5%
HEL (Fixed)
$910/mo
Never changes
Rate Cap Risk
+$125/mo
Additional monthly cost if rates rise
Most HELOCs have lifetime rate caps (typically prime + 2-8% margin, with a lifetime cap of 18%). However, rate increases of 2-3% can significantly increase your payment. If you need payment certainty, choose the home equity loan.
Pro
Use-Case Guide, Rate Scenarios & Hybrid Strategy
Match the right product to your specific financial need
Choose HELOC When...
- ✓Funding ongoing renovation over 1-3 years
- ✓Emergency fund backup (only pay if used)
- ✓College tuition spread over 4 years
- ✓Business with variable cash flow needs
- ✓You expect to repay quickly (under 2 years)
- ✓Rates may fall — want floating rate benefit
Choose Home Equity Loan When...
- ✓Single large expense with known cost
- ✓Debt consolidation at fixed rate
- ✓Major renovation with fixed contractor bid
- ✓You need payment predictability for budgeting
- ✓Rising rate environment — lock in now
- ✓Prefer simplicity over flexibility
How to Use the HELOC vs Home Equity Loan Calculator
Enter the Amount Needed from your equity, your Home Value and Mortgage Balance to confirm available equity. Then input the HELOC Rate (variable, check current prime rate) and the Home Equity Loan Rate (fixed) you have been quoted. The calculator shows payment structures, total interest cost, and a side-by-side comparison.
Most lenders cap equity borrowing at 85% combined loan-to-value (CLTV). The calculator will warn you if your requested amount exceeds this threshold.
HELOC vs Home Equity Loan Formula
Available Equity = Home Value × 85% − First Mortgage Balance
Combined LTV = (First Mortgage + Equity Debt) ÷ Home Value
HELOC Draw Period Payment = Balance × (Rate ÷ 12) [interest only]
HELOC Repayment Payment = MonthlyPayment(Balance, Rate, Repay Term)
HEL Monthly Payment = MonthlyPayment(Amount, Fixed Rate, Term)
HEL Total Interest = MonthlyPayment × Months − Principal
Combined LTV = (First Mortgage + Equity Debt) ÷ Home Value
HELOC Draw Period Payment = Balance × (Rate ÷ 12) [interest only]
HELOC Repayment Payment = MonthlyPayment(Balance, Rate, Repay Term)
HEL Monthly Payment = MonthlyPayment(Amount, Fixed Rate, Term)
HEL Total Interest = MonthlyPayment × Months − Principal
Example: $75,000 Home Equity Access
$500,000 home value · $280,000 first mortgage · $75,000 needed
| HELOC (8.5%) | Home Equity Loan (8.0%) | |
| Draw Period Payment | $531/mo (interest only) | N/A (lump sum disbursed) |
| Repayment Payment | ~$653/mo (P&I) | $909/mo (fixed) |
| Rate Risk | Variable — can rise or fall | Fixed — never changes |
| Flexibility | Draw, repay, draw again | Full amount upfront, no reborrowing |
| Best For | Ongoing projects, uncertain timing | Single known expense |
If the $75,000 is for a phased renovation over two years, the HELOC saves money by charging interest only on funds drawn. If it is for a single contractor payment, the home equity loan is simpler and locks in the rate.
Frequently Asked Questions
A HELOC is a revolving line of credit with a variable rate — you draw and repay as needed during the draw period, then enter a repayment phase. A home equity loan is a fixed-rate lump sum disbursed at closing with equal monthly payments for the entire term. Think of a HELOC like a credit card secured by your home and a home equity loan like a second fixed mortgage.
Most lenders allow combined borrowing up to 80-85% of your home's value (combined loan-to-value or CLTV). For a $500,000 home with a $280,000 first mortgage, you could access up to $145,000 at 85% CLTV ($425,000 − $280,000). Some lenders go up to 90% CLTV, particularly for credit unions. Strong credit scores and income may qualify you for higher limits.
HELOC interest is tax deductible only when the funds are used to buy, build, or substantially improve the home that secures the loan. Using a HELOC to renovate your kitchen qualifies. Using it to pay off credit card debt or buy a car does not. The total combined mortgage debt eligible for the deduction is capped at $750,000 under current tax law. Always consult a tax professional.
When the draw period ends (typically 10 years), the HELOC enters a repayment phase. You can no longer draw funds, and your payment switches from interest-only to full principal and interest on the outstanding balance. This "payment shock" can significantly increase your monthly obligation. Some lenders require a balloon payment at the end instead of a repayment period — read your terms carefully.
In a rising rate environment, a home equity loan is generally better because your rate is locked in for the life of the loan. A HELOC rate will rise with the prime rate, increasing your payment. Conversely, in a falling rate environment, a HELOC benefits because your payment decreases without needing to refinance. If you are uncertain, some lenders allow you to lock a portion of your HELOC balance at a fixed rate.