Home Equity Loan vs HELOC Comparison Calculator
Compare both options side by side. Enter your details below to see monthly payments, total costs, and which option saves you more.
🏠 Home Equity Loan
Lump Sum · Fixed Rate🏦 HELOC
Line of Credit · Variable RateBreak-Even Analysis
💰 Lower Monthly Payment
HELOC has lower initial payments during the draw period
📊 Lower Total Cost
Home Equity Loan saves you $46,211.60 in total interest
⚖️ Break-Even Point
At month 58, costs are equal
* HELOC assumes variable rate stays constant. Actual costs may vary with rate changes.
Home Equity Loan vs HELOC at a Glance
| Feature | Home Equity Loan | HELOC |
|---|---|---|
| Funding Type | Lump sum | Revolving credit line |
| Interest Rate | Fixed | Variable |
| Monthly Payment | Fixed | Changes with rate/draw |
| Repayment Start | Immediately | After draw period |
| Best For | One-time expenses | Ongoing/flexible needs |
| Risk Level | Lower (predictable) | Higher (variable rate) |
| Closing Costs | 2-5% of loan | Often lower/minimal |
| Tax Deductible Interest | If used for home improvement | If used for home improvement |
Essential Guides
Frequently Asked Questions
What is the main difference between a home equity loan and a HELOC?
A home equity loan gives you a lump sum with a fixed interest rate and fixed monthly payments. A HELOC is a revolving line of credit with a variable rate — you borrow only what you need during the draw period and pay interest only on what you've drawn.
Which is better: home equity loan or HELOC?
It depends on your needs. A home equity loan is better for one-time expenses (renovations, debt consolidation) because of predictable payments. A HELOC is better for ongoing or uncertain expenses because you only pay interest on what you use.
How much can I borrow with a home equity loan or HELOC?
Most lenders allow you to borrow up to 80-85% of your home's value minus your current mortgage balance. For example, if your home is worth $400,000 and you owe $200,000, you may be able to borrow up to $140,000 (80% LTV).
Is the interest tax deductible?
Yes, if the funds are used to buy, build, or substantially improve your home (post-TCJA rules). Interest on funds used for other purposes (debt consolidation, education) is generally not deductible. Consult a tax professional for your situation.
What happens to my HELOC when the draw period ends?
When the draw period ends (typically 5-10 years), you enter the repayment period. You can no longer draw funds and must repay the outstanding balance over the remaining term (typically 10-20 years) with principal + interest payments.