HELOC basics: how a home equity line of credit works
October 12, 2026
A home equity line of credit, usually called a HELOC, can be one of the most flexible ways to tap the value you have built in your house. Instead of taking one lump sum, you borrow what you need, when you need it, up to an approved limit. That flexibility is also why it deserves a closer look before you sign anything. Here is how it works and where it fits.
A HELOC is a revolving credit line secured by your home. During the draw period, you can borrow, repay, and borrow again, usually paying interest only on the amount you have drawn. Once the draw period ends, the account moves into a repayment period where principal and interest payments begin and new borrowing typically stops. Most HELOCs carry a variable rate tied to a benchmark index, so the monthly payment can rise or fall as market conditions change. Lenders also look at how much equity you hold and how much debt is already secured by the property before approving a line, and because the home is collateral, falling behind on payments puts the property itself at risk.