# HELOC

> A HELOC is a revolving credit line secured by your home, usually at a variable rate tied to the prime rate, with a draw period and then a repayment period.

URL: https://mortgage-math-us.com/glossary/heloc/  
Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team

## Quick answer

**A HELOC (home equity line of credit)** is a revolving credit line secured by your home: during the draw period you can borrow, repay and borrow again up to a credit limit, then you repay what you owe over a repayment period. The rate is usually variable — an index, most often the prime rate, plus the lender’s margin.

## Key facts

| Fact | Value | Source | As of |
|---|---|---|---|
| Prime rate | 7% | [Federal Reserve H.15](https://www.federalreserve.gov/releases/h15/) | Oct 29, 2026 |
| Draw period (CFPB example) | 10 years | [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-home-equity-line-of-credit-heloc-en-107/) | Aug 28, 2026 |
| Repayment period, often up to | 20 years | [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-home-equity-line-of-credit-heloc-en-107/) | Aug 28, 2026 |
| Notice of a freeze or limit cut, within | 3 business days | [12 CFR 1026.9(c)(1)(iii)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-B/section-1026.9) | Oct 28, 2026 |

## How the limit and the rate are set

Lenders cap the [combined loan-to-value](https://mortgage-math-us.com/glossary/combined-loan-to-value/) of your mortgage plus the line. On a $400,000 home with $250,000 owed, a lender capping it at 85% (an example) could offer a line of up to $90,000. With prime at 7% and a 1-point margin, the rate would be 8%; drawing $40,000 would cost about $267 a month in interest alone. When prime moves, your rate and payment move with it.

## What to watch

The payment can jump when the [draw period](https://mortgage-math-us.com/glossary/draw-period/) ends and principal comes due. A lender may freeze the line or cut the limit if your home’s value falls significantly or your finances change materially; it must tell you in writing within 3 business days after acting. You can also cancel within 3 business days of opening a line on your main home. Model payments with the [HELOC payment calculator](https://mortgage-math-us.com/tools/heloc-payment-calculator/) and read the [HELOC guide](https://mortgage-math-us.com/home-equity/heloc/).

## Related terms

- [Home equity loan](https://mortgage-math-us.com/glossary/home-equity-loan/) and [prime rate](https://mortgage-math-us.com/glossary/prime-rate/)

## Sources

- [Federal Reserve H.15](https://www.federalreserve.gov/releases/h15/) — Bank prime loan rate (Oct 29, 2026)
- [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-home-equity-line-of-credit-heloc-en-107/) — Example HELOC draw period (CFPB); HELOC repayment period, often up to (CFPB) (Aug 28, 2026)
- [12 CFR 1026.9(c)(1)(iii)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-B/section-1026.9) — Lender must send written notice of a HELOC freeze or credit-limit cut within (Oct 28, 2026)
- [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-i-change-my-mind-after-i-sign-the-loan-closing-documents-for-my-second-mortgage-or-refinance-what-is-the-right-of-rescission-en-186/) — Right to cancel a refinance or home equity loan on your principal home (Aug 8, 2024)
- [CFPB: What is a home equity line of credit (HELOC)?](https://www.consumerfinance.gov/ask-cfpb/what-is-a-home-equity-line-of-credit-heloc-en-107/)
- [CFPB: What you should know about home equity lines of credit (brochure)](https://files.consumerfinance.gov/f/documents/cfpb_heloc-brochure_print.pdf)

_General information, not financial advice._