What is a Home Equity Line of Credit (HELOC)? | nbkc

A HELOC is a revolving credit line that allows homeowners to borrow against their home’s equity, using it as collateral, typically with a variable interest rate and flexible withdrawal options.

Check out nbkc’s current HELOC rates¹

An Example of a HELOC

Let’s say you own a home valued at $500,000 and you still owe $300,000 on your mortgage. The difference of $200,000 is your equity.

nbkc can loan up to 85% of your home’s value.

$425,000 (85% of home’s value)
-$300,000 (mortgage balance)
$125,000 Potential line of credit

What are typical HELOC rates?

Anywhere you get one, HELOCs are an adjustable rate product.¹ At nbkc, your rate is Wall Street Prime +1%. When adjustments are made to the prime rate, you will see those changes affect your next billing cycle.

How does a HELOC work?

A home equity line of credit is a form of revolving credit. You can borrow money again and again up to a certain amount. It’s similar to a credit card in that way, but with a HELOC you’re borrowing against the equity of your home to establish that line of credit.

Every HELOC has a Draw Period and a Repayment Period.

The Draw Period at nbkc

The nbkc HELOC offers a 7-year Draw Period.

During this window, draw funds as you need them — up to your limit, of course. Pay it back and borrow again and again until the draw period ends. You only pay interest on what is borrowed.

The Repayment Period at nbkc

The nbkc HELOC offers a 13-year Repayment Period.

This is when you repay the money you drew during the Draw Period plus interest. You’ll make monthly principal and interest payments until your balance is cleared.

How do you use a HELOC?

The most common use of funds from a HELOC is for home-related expenses. Remodels. Major repairs. Using the value of your home to increase the value of your home.

We’ve got another helpful article specifically about using a HELOC for home improvement if you want to dive deeper.

Other ways people use HELOCs:

Cover large medical expenses
Fund tuition or education costs
Starting a business
Consolidating debt
Large purchases

It’s your HELOC. Spend it how you want, no restrictions (other than the overall borrowing amount).

Typical HELOC Requirements

Alright, so you’re ready to get that new home remodel started. Before you apply for an nbkc HELOC, run through the checklist items below on whether or not you qualify.

Property Requirements for a HELOC

If you’re wondering whether your home qualifies for a HELOC, here are the property requirements for a HELOC at nbkc:

Detached single family owner occupied
Primary residence
Maximum of 5 acres
Can be a 1st lien or 2nd lien

Lender Requirements for a HELOC

If you’re wondering if your financial history qualifies for a HELOC, here are a few requirements for a HELOC at nbkc:

FICO Score: generally a 720 or higher
- Check your FICO score for free through your bank, credit card company or a free credit report from one of the major credit bureaus (Experian, Equifax, TransUnion). You get one free report a year from each of the big three.
DTI: Maximum of 45%
- DTI is calculated based on the borrower’s gross monthly income (commissions and bonuses are averaged out through the year).
- Debts are pulled from the borrower’s consumer credit report. We use the minimum monthly payment as this calculation for the debts.
- Included in the debts is the projected payment of the HELOC if the HELOC was used in its entirety with principal and interest repayments.

A HELOC worth writing home about.

Whether you’re making changes to your home or looking to consolidate debt, you can apply for an nbkc HELOC online today if you meet the requirements in this article.

Need more incentive? The nbkc HELOC offers a welcoming introductory APR rate.¹Check out today’s rate

¹Annual Percentage Rate. Offer is not available in the state of Texas or in Puerto Rico, Guam, US Virgin Islands, American Samoa, or Commonwealth of the Northern Mariana Islands. Loan approval and loan amount is subject to underwriting, credit qualifications and bank-determined property value through a desktop appraisal. Property ownership and property type restrictions may apply. nbkc bank does not offer HELOCs for second residences. Rates and offer may change or be discontinued at any time and without notice. Rates are based on the Prime Rate published in the Wall Street Journal plus margin but will never exceed 18% APR. Rates as of 04/25/2025. Consult a tax advisor regarding the deductibility of interest. nbkc bank customers are eligible for bank-paid third-party fees up to $1,000. Borrowers must pay all third-party fees exceeding $1,000 at closing. If a HELOC is modified or refinanced, the borrower does not qualify for bank-paid fees or the introductory rate. The introductory rate is given once per the life of loan on a residence. Minimum loan amount of $25,000.

²Federal Reserve as reported by Forbes , as of March 2025