Quick overview

A Home Equity Line of Credit (HELOC) is a revolving loan secured by your home. Recharge rules define how repaid principal becomes available again for new withdrawals during the HELOC’s draw period. Unlike a closed-end home equity loan, a HELOC behaves like a credit card: when you pay down principal you usually free up borrowing capacity — but only if your lender’s rules and the property’s value permit it.

In my practice working with homeowners for 15+ years, I see recharge misunderstandings cause the most friction. Borrowers expect automatic reuse of repaid funds but sometimes find their available credit reduced because of lender reviews, falling home values, or account actions like suspensions.

This article explains how recharge rules work, how lenders set limits, common triggers that stop you from re-borrowing, tax considerations, and practical steps to protect and use your HELOC responsibly.

How recharge actually works (step-by-step)

  1. Line is opened and credit limit set: Lender approves a maximum HELOC limit using the home’s appraised value and existing mortgage payoff(s). A common calculation is: maximum combined loan-to-value (CLTV) × appraised value − mortgage balance = available HELOC capacity. For example, with a $400,000 home and a 85% CLTV cap: 0.85 × $400,000 = $340,000 total permitted debt. If you owe $250,000 on your mortgage, up to $90,000 could be available as HELOC.

  2. Draws reduce available credit: If you draw $20,000, your available credit drops by $20,000.

  3. Repayments generally replenish availability: When you repay principal — for example $10,000 — most HELOCs increase your available credit by that amount, assuming no other restrictions.

  4. Lender checks: Lenders can place conditions on re-borrowing. They may require the outstanding balance to remain below the documented credit limit, re‑appraise the home, or run reviews that temporarily block re-borrowing.

  5. Draw period ends: Once the draw period ends (commonly 5–10 years), you typically cannot recharge the line. You move into repayment, which may be interest-only for a period or fully amortized depending on the contract.

For more on timing and interest calculations, see our guide to HELOC draw periods and interest calculations.

Typical recharge rules and lender protections

Lenders include recharge language to manage risk. Common provisions include:

  • Replenishment during draw period only: Most HELOCs allow re-borrowing only while the draw period is active. After that, you enter repayment and cannot draw new funds.
  • Credit limit cap: You can re-borrow only up to your original credit limit (or any adjusted limit after lender action).
  • Periodic reviews or seasonal freezes: Lenders may re-appraise your property or review your credit and income. Declining home values or changes in income can reduce or suspend re-borrowing.
  • Suspension and termination rights: Contract terms commonly give lenders the right to suspend draws or terminate the line if you fall behind on payments, file for bankruptcy, have a materially adverse change in your financial situation, or if the property is damaged.
  • Minimum repayment requirements: Some HELOCs require minimum monthly principal payments; these affect how quickly you can recharge the line.

See our glossary page on HELOC suspension conditions for examples and sample lender language.

Real-world example (practical numbers)

Home value: $450,000
First mortgage balance: $300,000
Lender CLTV cap: 85% → 0.85 × $450,000 = $382,500 total allowable debt
Maximum HELOC = $382,500 − $300,000 = $82,500

You open a HELOC for $82,500, draw $25,000 for renovations and later pay back $15,000. Assuming you are still in the draw period and the lender hasn’t restricted the line, your available credit becomes $82,500 − ($25,000 − $15,000) = $72,500. You can re-borrow any of that $72,500 up to the limit.

But if the home value drops (new appraised value $400,000 → 0.85 × $400,000 = $340,000 total allowable debt), your max HELOC could shrink: $340,000 − $300,000 = $40,000. The lender might reduce your available credit and prevent re-borrowing even though you repaid funds.

When recharge is blocked or limited

Recharge can be restricted for several reasons:

  • Draw period has ended. Most HELOCs only allow re-borrowing during the draw phase.
  • Lender suspends or freezes the account, often triggered by missed payments, bankruptcy, insurance lapse, or material adverse change in value or income.
  • CLTV or property value changes reduce allowable credit below your outstanding balance or desired availability.
  • Contractual caps or seasonal restrictions: some HELOCs impose temporary caps or limits while an appraisal or review is completed.

If your HELOC is frozen or reduced, lenders usually notify you. Review your HELOC agreement for the specific suspension and termination clauses.

Tax considerations

Interest on HELOCs may be tax-deductible, but the rules changed with the Tax Cuts and Jobs Act (TCJA). For tax years through at least 2025, interest is generally deductible only if the funds are used to buy, build, or substantially improve the home that secures the loan. Use of HELOC proceeds for personal expenses (credit card payoff, vacations) usually does not qualify. Always consult IRS guidance or your tax advisor. Useful reference: IRS Publication 936 (Home Mortgage Interest Deduction).

See the Consumer Financial Protection Bureau (CFPB) overview for basic HELOC consumer protections and disclosures.

Practical tips to protect recharge capacity (what I tell clients)

  • Know your draw period dates. Mark the end of the draw period on your calendar and plan preemptively for the repayment phase.
  • Keep your mortgage and HELOC payments current. Missed payments are the fastest way to lose re-borrowing rights and risk foreclosure.
  • Monitor your home’s market value semi‑regularly. If values fall significantly, expect possible reductions in available credit.
  • Understand your contract’s suspension and appraisal clauses. Some lenders can order appraisals at their cost and reduce your credit line.
  • Use HELOC funds for qualifying home improvements when possible — that preserves the chance of deducting interest per IRS rules (consult a tax professional).
  • Maintain a buffer: don’t draw to the absolute limit. A cushion protects against temporary value declines and keeps options during lender reviews.

Common mistakes borrowers make

  • Assuming re-borrowing is automatic after any repayment: not always true if your lender performs a review or the draw period ended.
  • Neglecting the draw-end deadline: many homeowners are surprised when they can no longer draw new funds.
  • Using HELOC funds for non-qualified expenses and counting on an interest deduction without checking IRS rules.
  • Missing notices: lenders typically send notices before downgrading or freezing lines; ignoring them can worsen outcomes.

Questions to ask lenders before you open a HELOC

  • Is re-borrowing allowed only during the draw period? Will it require a new appraisal or documentation?
  • What events give you the right to suspend or reduce my line? What notice will you provide?
  • Do you perform periodic reviews or automated valuations to adjust my limit?
  • Are there conversion or repayment options at the draw-period end (e.g., convert to a fixed-rate installment loan)?

If a lender’s answers are fuzzy, get the terms in writing or consider another product. Compare alternatives such as a fixed home equity loan or a cash-out refinance using our comparison guides.

Related resources on FinHelp

Final takeaways

Recharge rules make HELOCs powerful and flexible when used carefully. They let you re-access repaid principal during the draw period, but that privilege depends on contract language, property value, and your payment history. In my experience, borrowers who plan for the draw-end, keep a repayment cushion, and document qualified home-improvement uses both protect their credit access and limit tax surprises.

Professional disclaimer: This article is educational and does not constitute legal, tax, or financial advice. For advice tailored to your situation, consult a licensed financial advisor, tax professional, or attorney. Authoritative sources referenced include the Consumer Financial Protection Bureau (CFPB) and the IRS (see IRS Publication 936).