HELOC vs. Home Equity Loan Calculator

Compare a HELOC (line of credit) against a fixed-rate home equity loan for the same amount borrowed. See side-by-side monthly payments, total interest, total cost, and combined loan-to-value (CLTV).

Example: $40,000 Borrowed, HELOC vs. Home Equity Loan

HELOC: 9.00% draw-period rate (10-year draw), 9.00% repayment-period rate (20-year repayment). Home equity loan: 8.00% fixed rate, 20-year term. Values are rounded estimates.

Metric	HELOC	Home Equity Loan
Draw-phase monthly payment	$300.00	$334.58
Repayment-phase monthly payment	$359.89	$334.58
Total interest	$82,373.69	$40,298.25
Total cost	$122,373.69	$80,298.25

This tool provides estimates for comparison only. Actual HELOC and home equity loan terms vary by lender, including index rates, rate caps, underwriting criteria, and fees. Review your lender's official disclosures before deciding.

HELOC vs. Home Equity Loan: What's the Difference?

A HELOC (Home Equity Line of Credit) and a home equity loan both let you borrow against the equity in your home, but they work very differently. A HELOC is a revolving credit line — you draw only what you need, usually pay interest-only during a draw period, and then fully repay the balance during a separate repayment period at a variable rate. A home equity loan pays out the full amount as a lump sum at closing and starts fixed-rate, fully amortizing repayment right away.

This calculator lets you enter the same borrowed amount for both products, along with each product's own rate and term assumptions, and shows the monthly payment, total interest, and total cost side by side — plus your combined loan-to-value (CLTV) against your home's value.

How to Use This Comparison

Enter your home value and existing mortgage Provide your home's current value, your existing mortgage balance, and its monthly payment (used only to calculate CLTV; leave the payment at 0 if you don't have an existing mortgage).
Enter the amount you want to borrow This same amount is used for both the HELOC and the home equity loan, so the comparison is apples-to-apples.
Enter the HELOC's draw and repayment terms Provide the interest-only draw-period rate and length, and the fully amortizing repayment-period rate and length.
Enter the home equity loan's rate and term Provide the fixed annual rate and repayment term in years.
Compare the results Review the monthly payment in each phase, total interest, total cost, and CLTV to see which product costs less for your situation.

Tips for getting more out of it

A HELOC's draw-period payment looks cheaper mainly because it's interest-only — once repayment begins, the payment can jump above what a home equity loan would have cost from day one.
Because HELOC rates are usually variable, try running both the draw and repayment periods at a higher rate to see how much the gap with the fixed-rate home equity loan could widen.
A longer combined HELOC term (draw + repayment) versus the home equity loan's term changes the total interest a lot — keep the total number of years similar for a fair comparison.
If your combined loan-to-value (CLTV) is already close to 85%, check both products' underwriting limits, since one may be declined even if the other is approved.

When to Compare a HELOC and a Home Equity Loan

Funding a home renovation in phases

If you're not sure exactly how much a multi-phase renovation will cost, a HELOC lets you draw only what each phase needs, while a home equity loan locks in one lump sum up front.

Consolidating variable-rate debt

If you want a predictable payment for budgeting, compare the home equity loan's fixed rate against the HELOC's variable rate before consolidating credit card or other debt.

Planning for rising rates

Because a HELOC's draw and repayment rates can both increase, run this comparison at a higher assumed rate to see how much the payment gap could widen if rates rise.

Deciding between one-time and ongoing access to funds

A home equity loan suits a single known expense; a HELOC suits ongoing or uncertain expenses where you don't want to pay interest on funds you haven't used yet.

Glossary

HELOC (Home Equity Line of Credit): A revolving credit line secured by your home equity. You draw only what you need, typically pay interest-only during the draw period, and then repay the balance in full during the repayment period, usually at a variable rate.
Home equity loan: A second mortgage that pays out a fixed lump sum at closing and starts fixed-rate, fully amortizing repayment immediately, similar to a typical mortgage.
Draw period: The phase of a HELOC during which you can borrow against the credit line and typically pay interest only, so the principal does not fall on its own.
Repayment period: The phase after a HELOC's draw period ends, during which the outstanding balance is fully amortized (principal and interest) over the remaining term.
Combined loan-to-value (CLTV): Your existing mortgage balance plus the new HELOC or home equity loan, divided by your home's value. Most lenders cap CLTV at around 80-85%.
Second mortgage: A loan secured by a home that already has an existing (first) mortgage. Both a HELOC and a home equity loan are typically structured as second mortgages.

HELOC vs. Home Equity Loan FAQ

It depends on the rates and terms each lender offers. A HELOC's draw-period payment is often lower because it's interest-only, but its variable rate and the payment jump at repayment can make its total interest higher than a fixed-rate home equity loan over a similar time horizon. Compare both using your actual quoted rates rather than assuming one is always cheaper.

During the draw period you typically pay interest only, so the principal never falls on its own. Once repayment begins, the full remaining balance must be amortized over the repayment period, so the payment jumps to cover both principal and interest — an effect sometimes called "payment shock."

In principle yes, as long as your combined loan-to-value (CLTV) across all liens stays within your lender's limit, but most people choose one or the other rather than stacking both, since each adds its own lien and monthly obligation.

Most HELOCs have a variable rate tied to an index such as the prime rate, though some lenders offer a rate-lock option on part of the balance. A home equity loan, by contrast, is fixed-rate for the entire term, which is why this calculator lets you set independent rates for each product.

CLTV is your existing mortgage balance plus the new HELOC or home equity loan, divided by your home's value. It's the same for both products here since they use the same borrowed amount, but a high CLTV can still affect which product a lender is willing to approve and at what rate.

Side Note — Same Collateral, Two Different Repayment Shapes

A HELOC and a home equity loan both use the same collateral — the equity in your home — but the shape of the repayment could hardly be more different. A home equity loan behaves like a small version of your original mortgage: you receive a lump sum, and from the very first payment you're paying down both principal and interest at a fixed rate. A HELOC behaves more like a credit card with a fixed limit: you draw what you need, pay interest only on what you've drawn during the draw period, and only start paying down principal once the separate repayment period begins.

That structural difference is exactly why comparing the two products on "monthly payment" alone can be misleading. Early in a HELOC's draw period, the payment is often lower than a home equity loan's payment on the same balance, simply because no principal is being repaid yet. Once the draw period ends, the HELOC's payment typically rises — sometimes sharply — because the same principal now has to be paid off over a shorter remaining window, often at a variable rate that may have moved since the draw period began.

Because of this, the more useful comparison is usually total interest and total cost over a similar overall time horizon, not just the payment in any single month. This calculator lets you line up a HELOC's draw-plus-repayment period against a home equity loan's term so you can see which structure actually costs less for your borrowed amount, rather than being drawn in by a lower payment today that may not last.

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