Home equity line of credit (HELOC)
Also called: HELOC
A revolving credit line secured by your home. You draw what you need during a draw period, then repay the balance over a repayment period.
During the draw period, often around 10 years, you can borrow up to the credit limit, and many lenders only require interest payments. In the repayment period that follows you can't draw more, and the payment rises to pay off principal as well. That jump is called payment shock.
Most HELOC rates are variable: an index such as the prime rate plus the lender's margin. A home equity loan is the fixed-rate alternative: one lump sum, repaid in level payments. How much you can borrow depends on the lender's combined loan-to-value cap.
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Disclaimer: Definitions are general education, not financial, tax, or legal advice. Figures are for the 2026 tax year unless noted.