A Home Equity Line of Credit, often called a HELOC, is a revolving line of credit that uses a home as collateral to secure the loan. A homeowner may periodically draw funds from the HELOC to pay for major expenses and must make monthly payments to pay it back.

HELOC loans typically have interest rates that vary each month and have a maximum credit limit and a draw period during which withdrawals can be made. At the end of the draw period, the entire payment comes due, either as a balloon payment or as amortized monthly payments.