How to use the HELOC calculator
- Enter the amount drawn from the credit line: the balance you expect to carry when the draw period ends.
- Enter the interest rate. Most HELOCs have a variable rate tied to the prime rate, so try a higher figure as well.
- Enter the length of the draw period, when you can borrow and pay interest only. Ten years is typical.
- Enter the repayment period, when the line closes and the balance is paid off. Ten to 20 years is typical.
- Read the two payments, the jump between them and the year-by-year table.
How HELOC payments are calculated
During the draw period you only have to cover the interest, so the balance doesn't fall unless you pay extra. When the draw period ends, the full balance is spread over the repayment period like a regular loan. Because you start repaying principal and interest at once, the payment can rise sharply. That jump, sometimes called payment shock, is the main thing to plan for.
The calculator assumes you draw the full amount at the start and the rate stays the same. In reality you might draw in stages, which lowers early interest, and a variable rate can move in either direction.
Worked example
The defaults are $50,000 drawn at 8.5%, with a 10-year draw period and a 20-year repayment period:
- Monthly rate: 0.085 ÷ 12 = 0.0070833
- Draw-period payment: 50,000 × 0.0070833 = $354.17
- Repayment payment: 50,000 × 0.0070833 ÷ (1 − 1.0070833^−240) = $433.91
- Payment jump: 433.91 − 354.17 = $79.74 a month, 22.5% more
- Interest during the draw period: 354.17 × 120 = $42,500
- Interest during repayment: 433.91 × 240 − 50,000 = $54,138.79
- Total interest: $96,638.79 on a $50,000 balance
With a 10-year repayment period instead, the payment after the draw period jumps to $619.93, a rise of $265.76 a month, but total interest falls because the balance is cleared sooner.
How rate changes affect a HELOC
For $50,000 with a 20-year repayment period:
| Rate | Draw payment | Repayment payment |
|---|---|---|
| 6.5% | $270.83 | $372.79 |
| 8.5% | $354.17 | $433.91 |
| 10.5% | $437.50 | $499.19 |
Each percentage point adds about $42 a month to the interest-only payment on $50,000. If your budget only works at today's rate, a HELOC carries real risk; some lenders let you lock part of the balance at a fixed rate, which turns that part into something closer to a home equity loan.
Ways to soften the payment jump
Pay some principal during the draw period: even $100 a month knocks $12,000 off a $50,000 balance over ten years, before interest. Draw only what you need, when you need it. As the end of the draw period approaches, compare refinancing the balance into a fixed-rate home equity loan or folding it into a mortgage refinance with the refinance calculator. Some lines also require a balloon payment of the whole balance when the draw period ends, so read your agreement.
Frequently asked questions
What is a HELOC draw period?
It is the first stage of the line, often 10 years, when you can borrow up to your limit, repay and borrow again. Most lenders only require interest payments during this time, though you can pay principal too.
Why does my HELOC payment go up after the draw period?
Because you start repaying the principal as well as interest, over a fixed number of years. On $50,000 at 8.5%, the payment goes from $354.17 to $433.91 over a 20-year repayment period, or to $619.93 over 10 years.
Is a HELOC interest-only?
During the draw period, usually yes. Some lines require a small share of principal as well, such as 1% of the balance a month. In the repayment period every payment includes principal.
How is a HELOC different from a home equity loan?
A home equity loan pays a lump sum at a fixed rate with equal payments from the start. A HELOC is a revolving line with a variable rate and a low early payment that rises later. Use the home equity loan calculator to compare a fixed payment for the same amount.
Related calculators
- Home Equity Loan Calculator — How much equity you can borrow against your home, and the fixed monthly payment on a home equity loan.
- Refinance Calculator — Whether refinancing pays off: new payment, monthly savings, break-even month and lifetime interest.
- Debt Consolidation Calculator — Compare up to four debts with one consolidation loan: monthly payment, total interest, payoff time.
- Interest Rate Calculator — Find the annual interest rate hidden in a loan from the amount, the term and the monthly payment.
Results are estimates for educational purposes and are not financial, tax or legal advice. See our disclaimer.