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A HELOC (Home Equity Line of Credit) is a revolving credit line that allows you to borrow against your home's equity. You can typically draw funds during an initial draw period and then enter a repayment period where you pay back the borrowed amount plus interest.

Lenders typically allow you to borrow up to 85% of your home's value to protect themselves if the home's value declines. This 85% loan-to-value (LTV) ratio is a standard lending guideline, though some lenders may offer higher limits with stricter requirements or lower limits depending on your credit profile.

During the draw period, you typically make interest-only payments on whatever amount you've borrowed, giving you lower monthly costs. After the draw period ends, the repayment period begins, and you start paying down the principal plus interest until the balance is fully paid.

Yes, most HELOCs have variable interest rates tied to a benchmark rate, so your rate and monthly payment can fluctuate over time. Some lenders offer fixed-rate options or the ability to lock in a fixed rate for part of the balance. Always review your agreement carefully.

HELOC interest may be tax-deductible if you use the borrowed funds to substantially improve your home. Interest on borrowing for other purposes is generally not deductible. Consult a tax professional or review IRS guidelines to understand your specific situation.

HELOCs may include origination fees, annual maintenance fees, early closure fees, and transaction fees. These vary by lender, so compare offers carefully and ask about all fees before opening a HELOC.