What Is a HELOC Monthly Payment Calculator?

A HELOC monthly payment calculator is a tool that potential borrowers can use to determine how much you might need to budget each month when it comes time to repay your home equity line of credit. If you’ve ever used a mortgage calculator or a mortgage calculator with taxes and insurance, you know how useful computing payments can be.

The calculator will help you gain a general understanding of the cost of a HELOC, but keep in mind that HELOCs are a revolving line of credit: If you use some of your line of credit but not all of it, or repay some of what you borrowed during the HELOC’s draw period, the amount you owe each month can change. HELOC interest rates are often variable as well, meaning they will change over time.

Recommended: Home Affordability Calculator

How to Use the HELOC Monthly Payment Calculator

Using our monthly HELOC payment calculator is easy. To begin, you’ll enter your:

•   Existing HELOC balance

•   Repayment term

•   Annual percentage rate (APR) offered to you on the HELOC

This calculator assumes you will make monthly payments on your HELOC.

Why Calculate Monthly Payments With a HELOC Calculator?

Calculating monthly payments for your HELOC is important because it can help you understand how much you’ll owe every month if you tap into your home’s equity by using a credit line to borrow money. Once you see the monthly payment estimate, you can review your budget and determine if you can afford to take on this new debt.

If you’re not confident you’ll be able to make each monthly payment, a home equity line of credit might not be right for you. After all, HELOCs are secured by your property. If you fall behind on payments, the lender can foreclose on your home.

Benefits of Using a HELOC Monthly Payment Calculator

There are several benefits of using a HELOC monthly payment calculator, including:

•   Understanding how interest rates impact borrowing money: Having access to cash when you need it — for renovations, debt consolidation, and emergency expenses — sounds nice. But once you see how much the interest rate can affect the cost of borrowing, you might think twice before taking out a HELOC if you’re not able to handle the repayment.

•   Setting budget expectations: Thinking several years into the future can be tough, but it’s crucial that you do that when taking out a HELOC. Seeing what monthly payments will be for the 10 or 20 years can help you build your budget and make sure you have enough flexibility in your spending to afford the repayments.

Recommended: Home Loan Help Center

HELOC Requirements

Just because you want a HELOC and think you can afford one doesn’t mean a lender will necessarily give you one. There are generally a few HELOC requirements that you must meet to qualify, including:

•   Enough home equity: First and foremost, you need to have built up enough equity in your home, because that’s what you’re borrowing against. At a minimum, lenders may want to see 15% equity, and many prefer 20%.

•   Strong credit: Though it can vary by lender, you’ll need at least a credit score of 680, if not 700, to get a HELOC. Have a score below 680? It’s not impossible to get a HELOC, though your choice of lenders may be more limited, and interest rates may be higher. Being on time with payments on your current mortgage is one good way to care for your credit score.

•   A low debt-to-income ratio: Having strong credit is not enough. Lenders also want to see that you’ll be able to afford payments. That means you need to make significantly more money than you owe to outstanding debts (like a mortgage, car loan, or student loan). The lower your debt-to-income (DTI) ratio, the more qualified you are as a borrower.

HELOC Process

The process of applying for a HELOC is straightforward and akin to applying to one of the many different types of mortgage loans:

1.    Shop around: Look for various lenders offering home equity lines of credit. Research their credit score requirements, as well as their interest rates and terms.

2.    Apply: After you’ve selected your preferred lender, apply online or in person. If you went through a mortgage preapproval process, you’ll find this process is similar. You will likely need a home appraisal, and the lender will review your income, assets, and credit score.

3.    Accept the offer: HELOCs take one to two months for approval. Once you’re approved, you can review the offer from the lender and begin drawing funds if you accept it.

HELOC Example

In general, with a home equity line of credit, you can borrow up to 80% of the equity you’ve built in your home (though this can vary). Let’s see how that breaks down with an example:

•   Home value: $500,000

•   Amount still owed on the house: $200,000

•   Equity built: $300,000

Assuming you are approved for 80% of your equity, your line of credit can be as large as $240,000. Of course, you might not need to use the maximum credit line. HELOCs can be especially helpful in situations, such as a home renovation, when you aren’t sure exactly what a project will cost (it can be hard to get a precise estimate as the cost of living differs by state).

Tips on HELOCs

Thinking about getting a HELOC? Here are some tips for getting approved and managing your line of credit responsibly. Many are the same tips to qualify for a mortgage you may have followed when you purchased your home:

•   Shop around for lenders: Don’t go with the first lender you find. Compare rates, terms, and customer reviews.

•   Improve your credit before applying: Pay down debts as much as possible to reduce your DTI, and make on-time payments and reduce your credit utilization to boost your credit score. This will help your chances of approval — and at a lower rate.

•   Use a monthly HELOC payment calculator: Before accepting a HELOC offer, use our calculator to determine what your monthly payments will look like during the credit line’s repayment period. Review your budget to make sure you’ll be able to afford the repayments. Remember that during the HELOC’s “draw” period which is typically 5 or 10 years, you can borrow against the line of credit and pay only interest. But during the repayment period, your payments will get larger.

•   Don’t overdraw: Only use your home equity line of credit for necessary expenses. Just because you have money available to borrow does not mean you have to borrow it all.

•   Read the fine print: Make sure you understand how your repayments work, as well as potential fees, such as early cancellation penalties. Remember that if you decide a HELOC isn’t for you, there are other ways to access cash based on your home equity, including a mortgage refinance that could free up cash.

The Takeaway

A HELOC can be a great way to tap into your home’s equity to fund renovations, pay down higher-interest debt, or cover unexpected expenses that life throws at you. However, it’s important to understand what you’re getting into by using a monthly HELOC payment calculator before applying.

SoFi now partners with Spring EQ to offer flexible HELOCs. Our HELOC options allow you to access up to 90% of your home’s value, or $500,000, at competitively lower rates. And the application process is quick and convenient.

Unlock your home’s value with a home equity line of credit brokered by SoFi.

FAQ

What is the monthly payment on a $50,000 HELOC?

The monthly payment on a $50,000 HELOC depends on the interest rate and the term. For instance, if the interest rate is 7.00% and the repayment term is 20 years, the monthly payment would be $387. (This assumes a draw period of 10 years during which you make only interest payments on what you have borrowed.) A HELOC monthly payment calculator can help you do the math.

How do you calculate the HELOC payment monthly?

To calculate your HELOC’s monthly payment, you can use a monthly HELOC payment calculator. You’ll need to know the amount borrowed, the interest rate, and the repayment term.

What is the monthly payment on a $100,000 home equity line of credit?

The monthly payment on a $100,000 HELOC depends on the interest rate and the term. For instance, if the interest rate is 5.00% and the term is 30 years, the monthly payment would be $537. (This assumes a draw period of 10 years during which you make only interest payments on what you have borrowed.) However, this amount can change if you have a variable interest rate.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOHL-Q224-1915669-V1

What Is a Home Equity Loan Calculator?

A home equity loan calculator gives you an idea of whether you can qualify for a home equity loan, along with how much you can borrow and your monthly payment amount. The calculator bases these figures on your current home value and existing mortgage balance.

You usually need at least 15% to 20% equity in your home to qualify for a home equity loan. Equity is the difference between your home’s value and current mortgage loan balance (plus any other loans secured by your home, such as a home equity loan or line of credit).

How to Use the Home Equity Loan Calculator

Using the home equity loan calculator is easy. All you need to do is enter two basic pieces of information:

•   Home’s estimated value (remember, this is not what you paid for your home but rather its current estimated market value)

•   Existing mortgage balance (include the balance on all loans or credit lines you have that are secured by your home)

After you provide this information, the home equity loan calculator will reveal your estimated maximum home equity loan amount. Note that this calculator assumes good or excellent credit. If you have weaker credit, you might have higher loan costs or not qualify for a home equity loan. Keep in mind that this calculator only provides an estimate. You’ll need to work with a lender directly to get a specific offer based on your financial situation.

Recommended: Home Loan Help Center

Benefits of Using a Home Equity Loan Calculator

Here are the main advantages of using a home equity loan calculator.

•   It crunches the numbers for you. Instantly estimate your potential loan amount without doing the math by hand.

•   It shows your maximum loan amount. This calculator shows the most you might be able to borrow — but remember that you don’t have to borrow the full amount if it exceeds your financing needs.

What Is a Home Equity Loan?

A home equity loan is a type of loan that’s secured by your home. It provides a lump-sum of funding upfront that you pay back in monthly installments over time. You can usually choose a repayment term that ranges anywhere from five to 30 years.

You’ll pay interest on the loan, along with any additional fees. Similar to a mortgage, home equity loans typically come with closing costs, which may total between 2% and 5% of your loan amount.

Benefits of a Home Equity Loan

There are several benefits to taking out a home equity loan, including:

•   High loan amounts: Depending on how much equity you have in your home, you may be able to access a large loan amount. This may be helpful if you’re looking to pay for a pricey renovation or other high-cost project.

•   Competitive interest rates: Since home equity loans are secured by your home, they may offer better interest rates than unsecured personal loans.

•   Lengthy repayment terms: Depending on the lender, you might get to choose a repayment term as long as 30 years.

•   Fixed interest rate: Most home equity loans come with a fixed interest rate, so you don’t have to worry about your rate increasing over time. A fixed rate also makes it easy to estimate your long-term loan costs up front.

•   Predictable monthly payments: Your monthly payments will stay the same over the life of your loan, making it easier to work them into your budget.

•   Possible tax breaks: Through 2025, you can claim a tax deduction on your home equity loan interest if you use the loan to “buy, build, or substantially improve [your] residence.”

Recommended: First-Time Homebuyer Guide

Home Equity Loan Requirements

Specific requirements for a home equity loan will vary by lender, but to get a home equity loan you’ll have to go through a process similar to the mortgage preapproval process. Lenders generally consider the following:

•   Loan-to-value (LTV) ratio: LTV compares the amount you owe against your home with its current value. Lenders usually want to see an LTV no higher than 80%. (LTV = Loan Value ÷ Property Value.) On a $400,000 home, for example, that means that you should owe no more than $320,000.

•   Credit score and history: You’ll need a good or excellent credit score to qualify for the best rates. Lenders also review your credit report for any red flags, such as missed payments or loan delinquencies.

•   Income: You’ll need to show that you have sufficient income to pay back your home equity loan in addition to making your mortgage payment or other debt payments.

•   Debt-to-income (DTI) ratio: Your DTI compares your monthly debt payments with your gross income. Lenders generally prefer a DTI lower than 50%.

Home Equity Loan Process

If you decide to take out a home equity loan, here are the steps you’ll need to take:

1.    Shop around: Get prequalified with multiple lenders so you can compare several offers from home equity loans. Taking the time to research your options and find the best deal could save you thousands of dollars in the long run.

2.    Fill out the application: Once you’ve selected a lender, you can fill out a complete application with your personal and financial details. You’ll need to upload verifying documentation, too, such as pay stubs, W-2s, and bank statements.

3.    Prepare for an appraisal: You might need to get an in-person appraisal to assess your current home value. However, some lenders can complete this process online without requiring an in-person visit.

4.    Close on your loan: It may take two to six weeks for the lender to process your application and underwrite your loan. Your final steps in the process will be paying closing costs and signing your loan agreement.

5.    Receive your loan and start repayment: The lender will send your home equity loan funds as a lump sum. You’ll start paying back your loan on a monthly basis on your agreed-upon terms.

Home Equity Loan Example

Let’s say that you own a home worth $400,000 and have an outstanding mortgage balance of $200,000. In this case, you’d hold 50% equity in your home, which is sufficient to qualify for a home equity loan.

Now let’s say that you took out a $100,000 home equity loan at an 8% interest rate. Here’s what your monthly payments and long-term interest costs would be on different repayment terms, according to a mortgage calculator.

Tips on Home Equity Loans

Home equity loans can be a useful financing option, especially if you’re using them toward a renovation or other project that will boost the value of your home. They’re also useful if you have a fixed-cost project, such as a deck installation or roof replacement.

If you aren’t sure how much a big project will cost or you just want a more flexible form of financing, a home equity line of credit (HELOC) might be preferable. HELOCs also let you tap into your home equity, but you can borrow from them on an as-needed basis and only pay interest on the amount you take out.

Keep in mind, however, that both home equity loans and HELOCs use your home as collateral. If you can’t afford repayment, the lender can seize your home through foreclosure. You could also end up underwater if your home value decreases, which occurs when you owe more debt on your home than it’s worth.

Another option if you need cash for a big home project is a mortgage refinance, and specifically a cash-out refinance, which allows borrowers to refinance their loan while also taking out funds based on their home equity. As with any refinancing, you’ll end up with a new mortgage interest rate and a new loan term, which could be longer or shorter than your current term.

The Takeaway

Home equity loans can offer large loan amounts, competitive interest rates, and predictable monthly payments for qualifying homeowners. Plus, you might qualify for a tax break if you’re using your loan to improve your home.

At the same time, borrowing against your home is risky if you can’t afford the monthly loan payments. Before you borrow, use a home equity loan calculator to estimate how much you might be able to borrow.

SoFi now partners with Spring EQ to offer flexible HELOCs. Our HELOC options allow you to access up to 90% of your home’s value, or $500,000, at competitively lower rates. And the application process is quick and convenient.

Unlock your home’s value with a home equity line of credit brokered by SoFi.

FAQ

How do you calculate home equity loan payments?

You can calculate home equity loan payments based on your loan amount, interest rate, and repayment term.

How much would a $75,000 home equity loan cost per month?

The monthly cost of a $75,000 home equity loan would depend on your interest rate and repayment term. If you assume an 8% interest rate, your monthly payments would be $1,521 on a five-year term, $910 on a 10-year term, $627 on a 20-year term, and $550 on a 30-year term. Expect lower payments with a lower interest rate and higher payments with a higher rate.

What is a risk of taking out a home equity loan?

The main risk of taking out a home equity loan is losing your home to foreclosure if you can’t afford repayment. It’s also possible that you could end up owing more on your home than the property is worth if your home value goes down.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOHL-Q224-1922092-V1