1. What Is A HELOC?

A Home Equity Line of Credit (HELOC) is a revolving line of credit that allows homeowners to borrow against the equity in their home. It functions similarly to a credit card but uses your home as collateral.

2. How Does HELOC Work?

HELOCs typically have two phases: a draw period (usually 5-10 years) where you can borrow funds and make interest-only payments, followed by a repayment period (10-20 years) where you must pay back both principal and interest.

3. Current HELOC Rates

As of October 20, 2025, the average HELOC rate is 7.84%. Rates can vary based on your credit score, loan-to-value ratio, and the lender's policies.

4. Using The Calculator

Tips: Enter your desired loan amount, current interest rate (default is average rate), loan term in years, and select your preferred payment type during the draw period.

5. Frequently Asked Questions (FAQ)

Q1: What is the difference between HELOC and home equity loan?
A: A HELOC is a revolving line of credit with variable rates, while a home equity loan provides a lump sum with fixed rates and payments.

Q2: How is HELOC interest calculated?
A: HELOC interest is typically calculated daily based on your outstanding balance and the current variable interest rate.

Q3: What factors affect HELOC rates?
A: Credit score, loan-to-value ratio, debt-to-income ratio, and market conditions all influence HELOC rates.

Q4: Are HELOC payments tax deductible?
A: Interest on HELOCs may be tax deductible if used for home improvements, but consult a tax professional for specific advice.

Q5: What are the risks of HELOCs?
A: Variable rates can increase payments, and using your home as collateral means risk of foreclosure if you default.