HELOC Payment Calculator
Calculate HELOC payments during the interest-only draw period and the fully amortizing repayment period.
Results
Visualization
How It Works
A HELOC (Home Equity Line of Credit) has two phases. During the draw period (typically 5-10 years), you can borrow against your credit line and usually only pay interest on the amount drawn. During the repayment period (10-20 years), the line closes and you make fully amortizing payments of principal plus interest.
The Formula
Repayment Payment = Balance x r / (1 - (1 + r)^-n) (fully amortizing)
Variables
- Balance — Amount drawn from the HELOC
- r — Monthly interest rate (annual rate / 12)
- n — Number of months in the repayment period
Worked Example
You draw $50,000 from a HELOC at 8.5%. During the 10-year draw period, you pay $354/month (interest only). When the repayment period begins, your payment jumps to $434/month for 20 years as you pay down the principal.
Practical Tips
- Budget for payment shock: when the draw period ends, your payment can increase 50% or more as principal is added.
- HELOC rates are usually variable and tied to the prime rate, so payments can change monthly.
- Making principal payments during the draw period reduces future repayment amounts significantly.
- Some HELOCs allow converting portions to a fixed rate, which can protect against rate increases.
- Interest on HELOC funds may be tax-deductible if used for home improvements (consult a tax advisor).
Frequently Asked Questions
What happens at the end of the draw period?
The HELOC converts to a repayment phase. You can no longer borrow, and you begin making fully amortizing payments (principal + interest) to pay off the balance.
Can I pay off a HELOC early?
Yes. Most HELOCs have no prepayment penalty, so you can pay off the balance at any time without extra charges.
What is the difference between a HELOC and home equity loan?
A HELOC is a revolving credit line with variable rates, while a home equity loan gives a lump sum with a fixed rate and fixed payments from day one.
How much can I borrow with a HELOC?
Lenders typically allow borrowing up to 80-85% of your home value minus your mortgage balance. Some lenders go up to 90% for qualified borrowers.
Do I have to use the full credit limit?
No. You only pay interest on the amount you draw, not the full credit limit. You can borrow and repay as needed during the draw period.