Does a HELOC have different rules than a cash-out?

Yes — HELOCs and home equity loans allow up to ~85% CLTV and often skip a full appraisal, while a cash-out refinance caps at 80% LTV and resets your first mortgage.

HELOC Draw and Repayment Periods

Here is what lenders actually require for heloc draw and repayment periods in 2026, in plain English.

The rule for 2026

A HELOC has two phases: a draw period of about 10 years where you borrow and usually pay interest only, followed by a repayment period of roughly 20 years of principal and interest. A home equity loan skips the draw phase and amortizes fully from day one. Watch for payment shock when a HELOC enters repayment.

Lenders set their own overlays on top of the basics. Meet the standard below first, then confirm whether your lender layers anything extra.

Documentation you'll typically need

Recent pay stubs and two years of W-2s or returns
Two months of bank statements
Your current mortgage statement and homeowners insurance
A recent appraisal or automated valuation

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Frequently Asked Questions

HELOC Draw and Repayment Periods — the bottom line for 2026?: A HELOC has two phases: a draw period of about 10 years where you borrow and usually pay interest only, followed by a repayment period of roughly 20 years of principal and interest. A home equity loan skips the draw phase and amortizes fully from day one. Watch for payment shock when a HELOC enters repayment.
Does a HELOC have different rules than a cash-out?: Yes — HELOCs and home equity loans allow up to ~85% CLTV and often skip a full appraisal, while a cash-out refinance caps at 80% LTV and resets your first mortgage.