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Draw Period
January 19, 2023
A home equity line of credit (HELOC) is a sort of revolving credit that allows you to borrow against your house's equity. The "draw period" of a HELOC is the amount of time you have to use the available credit. As you pay down your mortgage, you develop equity—the difference between the amount you owe on your mortgage and the current value of your home. If you owe $300,000 on your mortgage and your home is valued at $600,000, you have $300,000 in equity. A HELOC allows you to borrow up to a percentage of your equity—typically 60% to 85%, depending on your credit score, debt-to-income ratio, and other considerations.
Related Topics
When Is the First Mortgage Payment Due?
What Does Foreclosure Mean?
What Is a HELOC Loan?
Loan Default
Financial Considerations (For First-Time Home Buyers)
Mortgage Loan Types
Payment and Debt Ratios
Home Value: Appraised, Estimated, Actual