Home Equity Loan vs HELOC Calculator
Compare costs, payments, and total interest side-by-side to find the best option for your situation.
How to Use This Home Equity Loan vs HELOC Calculator
Enter your home's current value, your remaining mortgage balance, and how much you want to borrow. Then fill in the rate and term details for both the home equity loan and the HELOC. Click Compare Loan vs HELOC to see a full side-by-side cost breakdown, payment schedule, and visual comparison.
Why This Matters
Choosing between a home equity loan and a HELOC is one of the most impactful financial decisions homeowners make — often involving $30,000 to $150,000 or more. The wrong choice can cost thousands of dollars in unnecessary interest.
A home equity loan is a lump-sum, fixed-rate loan ideal when you know exactly what you need — say, a $60,000 kitchen renovation. Your payment is the same every month, making budgeting simple. A HELOC is a revolving credit line — great for ongoing projects like a multi-phase home addition where you draw funds as needed. If you borrow $60,000 on a HELOC but only use $30,000 in year one, you're only paying interest on the $30,000 drawn.
The catch: HELOC rates are variable. If rates rise from 8.25% to 13.25% (the lifetime cap), your monthly payments could jump by 40–60%. This calculator shows you both the best-case and worst-case HELOC scenarios so you can make a truly informed decision.
How It's Calculated
Home Equity Loan: Standard amortizing loan formula.
M = P × [r(1+r)ⁿ] / [(1+r)ⁿ − 1]
where P = principal, r = monthly rate, n = months
HELOC: During the draw period, only interest is charged on the outstanding balance. After the draw period, the remaining balance amortizes over the repayment period. The "worst case" models a linear rate increase from the initial rate to the lifetime cap over the draw period.
Tips & Common Mistakes
- Don't ignore closing costs. A home equity loan with $3,000 in fees can erase the rate advantage over a no-fee HELOC if you only borrow for 2–3 years.
- HELOC annual fees add up. A $75/year fee on a 30-year HELOC (10+20) totals $2,250 before a single dollar of interest.
- 80% LTV is the common limit. Most lenders cap combined loan-to-value at 80%. Your maximum borrowing is roughly (Home Value × 0.80) − Mortgage Balance.
- Only draw what you need. A HELOC's interest-only draw period feels cheap but the repayment phase can shock you — run the worst-case numbers.
- Tax deductibility isn't guaranteed. Interest may be deductible only if funds are used to "buy, build, or substantially improve" the home. Consult a tax advisor.
Frequently Asked Questions
What is the main difference between a home equity loan and a HELOC?
A home equity loan gives you a lump sum upfront at a fixed interest rate — payments are the same every month. A HELOC is a revolving line of credit with a variable rate; you draw funds as needed during the draw period and only pay interest on what you've used.
Which has a lower interest rate — home equity loan or HELOC?
HELOCs typically start lower because they're variable-rate products. However, if rates rise significantly over the draw or repayment period, the total interest paid on a HELOC can far exceed that of a fixed-rate home equity loan. This calculator shows you both scenarios.
How much equity do I need to qualify?
Most lenders require at least 15–20% equity in your home after the new loan. In practice, the maximum combined loan-to-value (CLTV) is usually 80–85%. If your home is worth $400,000 and you owe $300,000, you likely have $20,000–$40,000 available to borrow.
Can I pay off a HELOC early?
Yes, most HELOCs allow early payoff without penalty (verify with your lender). Paying down principal during the draw period reduces your interest costs and can dramatically lower your repayment-phase payments. This is one of the key advantages of HELOCs over fixed home equity loans.