HomeEquityHow a HELOC works
From application to final payoff — here's exactly what to expect.
1. Apply & verify
You submit an application with income, employment, and property details. The lender pulls your credit and orders a home valuation.
2. Approval & terms
If approved, you'll receive your credit limit, interest rate (usually variable, tied to the prime rate), and fee schedule.
3. Draw period
For roughly 10 years you can borrow as needed — via check, card, or transfer. Pay interest only on what you actually use.
4. Repayment period
Once the draw period ends, you can no longer borrow new funds. You'll repay principal plus interest over ~20 years.
A simple example
Suppose your home is worth $500,000 and you owe $200,000. A lender approves you for 80% combined loan-to-value:
- • Maximum total borrowing: $400,000
- • Minus existing mortgage: −$200,000
- • Available HELOC: $200,000
You don't have to take the full amount — you only pay interest on what you draw.
HELOC Calculator
Estimate how much you could borrow and what your payment might look like.
Estimates only. Actual rates, limits, and terms depend on the lender and your qualifications.
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