Loan basics
Home equity line of credit (HELOC)
Abbreviation: HELOC
Definition
A home equity line of credit (HELOC) is a revolving credit line secured by a home, typically with a variable rate. During the draw period the borrower can borrow and repay, often paying interest only; in the repayment period the balance amortizes. Available credit depends on equity and combined loan-to-value.
Home equity line of credit (HELOC), explained
A home equity loan, by contrast, is a lump sum with a fixed rate and payment.
See HELOC in a calculator
The HELOC Calculator shows how this works with real numbers. Home equity line of credit — interest-only draw period and repayment-period payments.
Open the HELOC CalculatorRelated terms
- Loan-to-value ratio (LTV)Loan-to-value (LTV) is the loan amount divided by the property’s appraised value or price, whichever is lower, expressed as a percentage.
- Cash-out refinanceA cash-out refinance replaces an existing mortgage with a larger new loan and pays the difference to the borrower in cash.
Q.01What is HELOC (Home equity line of credit)?
A home equity line of credit (HELOC) is a revolving credit line secured by a home, typically with a variable rate. During the draw period the borrower can borrow and repay, often paying interest only; in the repayment period the balance amortizes. Available credit depends on equity and combined loan-to-value.
Q.02HELOC or cash-out refinance?
A HELOC keeps your first mortgage rate; a cash-out refinance replaces it. If your current rate is low, a HELOC often costs less overall.
Explain it with their numbers
Calculators turn definitions into a borrower’s real payment — and a lead for you.
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