HELOC Calculator · Practical guide
HELOC vs Home Equity Loan
Both borrow against your equity, but one is a flexible credit line and the other is a fixed lump sum. The cost difference is real.
At a glance
The short answer
A HELOC is a revolving line of credit: you draw what you need during a 5-10 year draw period, usually at a variable rate, and can pay interest-only until the repayment period begins. A home equity loan delivers one lump sum at a fixed rate with fully amortizing payments from day one. For a single defined expense, the loan is usually cheaper and safer; for ongoing projects, the HELOC's flexibility wins.
Interactive tool
HELOC Calculator
Enter your own values, then compare the result with the examples below.
Side-by-side comparison
| Feature | HELOC | Home Equity Loan |
|---|---|---|
| Payout | Draw as needed, up to a limit | One lump sum |
| Rate type | Usually variable | Fixed |
| Early payments | Interest-only allowed | Principal + interest immediately |
| Payment predictability | Low — rate and balance move | High — same payment for the term |
| Best for | Phased projects, emergency reserve | One-time expenses, debt consolidation |
What $50,000 costs under each structure
Borrow $50,000 through a home equity loan at a fixed 6.5% over 15 years: the payment is $435.55 every month, total interest about $28,400, and you are done in 15 years. The same $50,000 drawn on a HELOC at 7% costs $291.67 a month interest-only during a 10-year draw — cheaper now, but if you pay only the interest, the balance is still $50,000 when repayment starts, and total interest over the 30-year life reaches about $78,035.
How to decide
Ask two questions. First, do you know exactly how much you need? A defined cost — a roof, a consolidation payoff — argues for the loan's fixed payment. Second, will you draw the money in stages? A year-long remodel argues for the HELOC, since you only pay interest on what you have drawn. Either way, run the numbers with the calculator above before signing; both products put your home on the line.
Frequently Asked Questions
Which has lower closing costs, a HELOC or home equity loan?
HELOCs usually carry lower upfront costs — some lenders even waive them — while home equity loans charge closing costs similar to a small mortgage, often 2-5% of the loan amount.
Is interest on either product tax deductible?
Potentially, for both. Interest may be deductible when the funds are used to buy, build, or substantially improve the home securing the debt. Using the money for other purposes generally makes it non-deductible. Confirm with a tax advisor.
Can I convert a HELOC to a fixed rate?
Many lenders offer a fixed-rate conversion option that locks some or all of your HELOC balance at a fixed rate with set payments, giving you loan-like predictability without refinancing.
How much equity do I need for either product?
Most lenders allow a combined loan-to-value of 80-85%, counting your first mortgage plus the new debt. On a $400,000 home with a $250,000 mortgage, that leaves roughly $70,000-$90,000 of borrowing room.