Home Improvement HELOC

How to use this calculator

1. Project. Enter the price from your contractor's bid (or your own estimate), a cushion for surprises, how many months the work will take and the cash you plan to put in.
2. Home. Enter what the home is worth, everything you owe on it and your state. Texas gets a lower cap.
3. Rates. Enter the rates from your quotes. The starting values are examples, explained below.
4. Results. See the amount to borrow, whether it fits your line, the interest while the work is underway and the monthly payment once it is done. The breakdown spells out the math.

How much to borrow for a renovation

Start with a written bid, then add a cushion for costs nobody could see in advance. Both numbers go into the calculator, and the cushion is part of what you borrow.

One benchmark comes from the FHA's Standard 203(k) rehab mortgages. HUD's handbook calls the cushion a contingency reserve: money set aside for unforeseen project costs. For homes 30 years or older it must be at least 10% and at most 20% of the repair costs, and at least 15% when the utilities do not work. On newer homes it is optional unless there is termite damage, and still capped at 20%. The calculator starts at 10% and goes up to 20%.

Amount to borrow = project cost + cushion − your cash
Example: $50,000 + 10% ($5,000) − $10,000 = $45,000

The calculator borrows and draws the whole cushion, so its numbers show the cost if you spend all of it. With a HELOC, any part of the cushion you never draw adds no interest; with a lump-sum loan, interest on the cushion starts on day one whether you spend it or not.

Will the project fit under your line?

Lenders limit everything secured by the home, the new line included, to a percentage of its value. Bank of America's general limit is 85% of the home's value, less the balance you still owe; Chase and KeyBank publish 80%, and Spring EQ 90%. Texas sets its own ceiling: a home equity loan or line on a homestead plus all other debt against it may not exceed 80% of fair market value. For homestead properties there, the Texas HELOC calculator checks that cap alongside closing schedules and fee guidelines.

Estimated line = home value × 85% − everything you owe on the home
Example: $450,000 × 85% − $250,000 = $132,500

Small jobs can meet the other limit, a minimum line. Navy Federal starts at $10,000, Citizens at $17,500, TD at $25,000 and Chase at $35,000. Interest is charged only on what you draw, so the unused part of a line adds no interest.

Interest while the work is underway

During the draw period you can borrow up to your limit at any time, typically with special checks or a card, and many HELOCs set the minimum payment from the balance you carry. When a job is paid in stages, a line charges interest on what has been spent so far. A home equity loan or personal loan pays out everything at closing, and interest runs on all of it from the start.

HELOC interest during the project = amount × monthly rate × (months + 1) ÷ 2
This assumes equal draws at the start of each month, so the balance climbs one step a month. A lump sum costs amount × monthly rate for every month instead, minus a little as payments reduce it.

The calculator's example: a $50,000 job with a 10% cushion and $10,000 of cash, so $45,000 borrowed over 6 months, with the HELOC and the home equity loan both at 8% and the personal loan at 11.9%:

How much the line saves depends on the lender's draw rules. The CFPB notes that some plans require a minimum amount for each draw, for example $300, and some make you take an initial amount when the line is opened. Chase requires 85% of the line to be paid out at closing, and Figure's line is drawn in full at origination; with either, the interest looks like the “drawn in full” row. Citizens advertises draws of any amount, TD lists no minimum draw, and Navy Federal's minimum advance is $1. In Texas, each advance on a home equity line must be at least $4,000.

Payments after the project

Once the last bill is paid, the three options ask for very different monthly payments. Some HELOC plans allow interest-only payments during the draw period, as the CFPB explains. When it ends, repayment begins, and the CFPB warns that payments are often significantly higher then. The calculator assumes 10 years of draws followed by 20 years of repayment, the term Bank of America describes for its HELOC, and interest-only payments during the draw period. Lenders differ here: Bank of America's own minimum payment repays principal and interest from the start. A home equity loan and a personal loan charge their full payment from the first month and keep it fixed: 10 years and 5 years here.

For a line on its own, with a year-by-year schedule, try the HELOC calculator. For one fixed payment on a lump sum, the home equity loan calculator shows the payoff year and total cost.

HELOC, home equity loan or personal loan for a renovation

A line fits work with an uncertain final price or a long schedule. A home equity loan fits a fixed price paid up front by someone who wants one steady payment. A personal loan keeps the house out of the deal and costs more: the Federal Reserve's average rate on 24-month personal loans at commercial banks was 11.9% in August 2026 (a preliminary figure, released October 7, 2026). The calculator applies that 24-month rate to a 5-year loan as an example. The 8% example HELOC rate is the prime rate (7% on October 2, 2026) plus 1 point; lenders set their own margin.

Risks to weigh before borrowing against your home

• The house secures the debt. In the CFPB's words, if you fall behind or can't repay the loan on schedule, you could lose your home. Paying for the work with a HELOC instead of an unsecured personal loan puts that debt on the house.
• The line can shrink mid-project. Federal rules let a lender stop new draws or cut the limit if the home's value falls significantly below its appraised value, or if it reasonably believes a material change in your finances leaves you unable to repay. A job that still needs later draws could stall.
• The rate can move. With a variable rate, the payment can change even when you draw nothing new.
• Taxes. Interest is deductible only if you use the money to buy, build or substantially improve the home that secures the loan, and only if you itemize (IRS Publication 936, for 2025 returns). The 2025 tax law (Public Law 119-21) made this rule permanent. To evaluate qualifying projects and itemizing thresholds, review our HELOC tax deduction calculator.

Questions about financing home improvements

Sources

1. CFPB: What is a home equity line of credit (HELOC)? - draw period, minimum draws, payments based on the balance, risk of losing the home
2. CFPB: What is the difference between a home equity loan and a HELOC? - lump sum vs. line, housing counselors
3. CFPB: What you should know about home equity lines of credit - interest-only payments, variable-rate payments
4. HUD Handbook 4000.1 (revised August 12, 2026), 203(k) contingency reserves - page 397 (Standard 203(k)) and the Limited 203(k) rule after it
5. Federal Reserve G.19 Consumer Credit, released October 7, 2026 - 24-month personal loan rate at commercial banks
6. FRED: Bank prime loan rate (DPRIME)
7. Regulation Z, 12 CFR 1026.40(f)(3)(vi) - when a lender may freeze or reduce a line
8. IRS Publication 936 (2025)
9. Texas Constitution, article XVI, section 50 - 80% limit, $4,000 minimum advance
10. Bank of America: home equity - 85% guideline
11. Bank of America: HELOC assumptions - 10-year draw, 20-year repayment
12. Chase: HELOC - 80%, $35,000 minimum line
13. Chase: HELOC calculator page - 85% paid out at closing
14. Citizens: HELOC
15. Citizens: HELOC disclosures
16. TD Bank: home equity line of credit
17. Navy Federal: HELOC
18. Navy Federal: HELOC important terms
19. Figure: home equity line
20. KeyBank: home equity line of credit
21. Spring EQ: variable-rate HELOC

Last reviewed October 12, 2026. See how we calculate. This page is general information, not financial or tax advice.