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HELOC Calculator
A home equity line has two lives: the interest-only draw years, then full repayment. This HELOC calculator models both phases so you see the monthly payment now and the payment jump coming later — before it happens, not after.
See how this works on a $50,000 line of credit — 3 real examples
Interest-only payment during the 10-year draw period
$0
Repayment-phase payment
$0
Payment jump
$0
Total interest
$0
Total cost
$0
What the line costs you
Available to borrow at 85% combined LTV: $0 · CLTV with this draw: 0%
Balance across both phases
Variable-rate stress test
If your rate rises by 2.00 pp to 10.50%, the interest-only payment becomes $0 () and the repayment-phase payment becomes $0 ().
Move the rate-change slider to model your payments if the prime rate rises or falls. HELOC rates float, so a +2 pp stress test is a sensible planning check.
Year-by-year scheduleBoth phases, year by year
| Year | Phase | Monthly payment | Interest paid | Principal paid | End balance |
|---|
How your HELOC payment is calculated
During the draw period the minimum payment covers interest only, so the balance never falls:
Draw payment = B × r / 12
where B is the drawn balance and r the annual rate. When the repayment period begins, the balance amortizes with the standard loan-payment formula:
Repay payment = B · i / (1 − (1 + i)−n), i = r/12, n = repay months
Available credit is home value × max CLTV% − mortgage balance. Assumptions worth knowing: the full amount is drawn on day one and held through the entire draw period with interest-only minimums (paying principal early reduces the totals shown); the rate is held constant across both phases even though real HELOCs are variable — index plus margin — which is exactly what the rate-change stress test models; and annual fees, origination costs and rate floors are excluded.
One $50,000 draw, three ways it plays out
Interest-only years feel cheap. What the line really costs depends on the repayment clock and the rate — both are on display here.
Ten draw years, twenty to repay
per month, years 1–10$354.17
- For ten years the minimum is $354.17, and the $50,000 balance does not move.
- Month 121 brings the step up: $433.91, a rise of 22.5%.
- The easy decade alone costs $42,500 in interest; the full run costs $96,639.
A decade of easy minimums; the bill for them is spread across the next twenty years.
Load this example (opens in a new tab)Same line, half the payback time
per month after year 10$619.93
- The draw decade is identical: $354.17 a month while the balance holds still.
- Then the cliff: the payment leaps 75% to $619.93 in month 121.
- Interest stops at $66,891, down from $96,639 on the twenty-year schedule.
The scarier jump is the cheaper line — almost $30,000 of interest never accrues.
Load this example (opens in a new tab)The same line at 10.5%
per month, years 1–10$437.50
- Two extra points make the easy years pricier: $437.50 a month from the start.
- The later step up looks smaller — 14.1% — only because the starting bill is higher.
- Total interest reaches $122,306, well over twice the $50,000 drawn.
The rate floats with the market, and two points is a normal-sized move, not a disaster case.
Load this example (opens in a new tab)Illustrations only, not financial advice. Your own rate, taxes and insurance will differ — check with a qualified financial advisor before acting on any of this.
How a HELOC works, in plain English
- Two phases. The draw period (≈10 yrs) is interest-only and reusable; the repayment period (≈20 yrs) amortizes the balance and closes the line.
- Watch the payment jump. If you only paid interest, the full balance must amortize when the draw ends — the default case jumps 22.5%, more with a shorter term or higher rate.
- The rate floats. HELOCs price at an index (usually prime) plus a margin, so payments move with the Fed — stress-test a +2 pp rise.
- CLTV sets your limit. Available credit = home value × max CLTV − mortgage balance; income and credit can lower the approved line.
- Interest only on what you draw. You pay nothing on the unused limit, so a larger line can double as an emergency reserve.
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Frequently asked questions
How is a HELOC payment calculated?
During the draw period the minimum monthly payment is usually interest-only: balance × annual rate ÷ 12. Drawing $50,000 at 8.5% costs $50,000 × 0.085 ÷ 12 = $354.17 a month. When the repayment period starts, the balance amortizes like a regular loan — the same $50,000 over 20 years at 8.5% runs $433.91 a month. This HELOC calculator shows the payment for both phases.
What is the difference between the draw period and the repayment period?
The draw period — typically the first 10 years — is when you can borrow against the line, repay, and borrow again, with interest-only minimum payments. The repayment period that follows (often 20 years) closes the line to new borrowing and requires principal-plus-interest payments until the balance hits zero.
How much can I borrow with a HELOC?
Most lenders cap your combined loan-to-value (CLTV) — first mortgage plus HELOC — at 80–90% of the home’s value. On a $400,000 home with a $250,000 mortgage and an 85% cap, that is $400,000 × 0.85 − $250,000 = $90,000 of available credit. Income, debts and credit score can lower the approved line further. With a first-lien HELOC that replaces your mortgage, the full CLTV cap is available to the line.
What happens to my payment after the draw period ends?
It jumps, often sharply — lenders call this payment shock. If you only made interest-only payments, the entire balance must now amortize over the repayment term: in the default scenario above the payment climbs from $354.17 to $433.91, a 22.5% increase. Shorter repayment terms or a rate rise at the transition make the jump bigger.
Is a HELOC better than a home equity loan?
They solve different problems. A HELOC is a reusable credit line with a variable rate — good for staged expenses like an ongoing renovation, since you pay interest only on what you draw. A home equity loan hands you a lump sum at a fixed rate with a predictable payment from day one — better when you need a known amount and want certainty.
Why is a HELOC rate variable, and what does index plus margin mean?
Most HELOCs price at an index — almost always the prime rate — plus a fixed margin set by your credit and CLTV. If prime is 7.5% and your margin is 1%, you pay 8.5%; when the Federal Reserve moves rates, prime and your payment move with it. Use the rate-change slider above to stress-test that risk.
Is HELOC interest tax-deductible?
Only if the money is used to buy, build or substantially improve the home that secures the line, and only if you itemize deductions. Interest on draws used for cars, tuition or debt consolidation is not deductible under current rules, and the combined mortgage-debt limit for the deduction is $750,000. Confirm your situation with a tax professional.
Disclaimer: these calculators are educational tools, not financial advice. They model your inputs with published formulas, but they cannot know your full situation — for decisions with real stakes, talk to a qualified professional. Formulas and defaults last reviewed .