HELOC Calculator
Model a HELOC through its interest-only draw phase and fully-amortizing repayment phase.
Inputs
Amount actually borrowed. Cannot exceed the credit line.
Interest rate during the draw period (often variable, prime-linked).
Rate during repayment. May differ if the rate resets.
Monthly Payment (Draw Phase)
$566.67
Monthly Payment (Repayment Phase)
$694.26
Payment Increase at Repayment Start
$127.59
How much your payment rises when the draw period ends.
Interest During Draw Period
$68,000
Interest During Repayment Period
$86,622
Total Interest Paid
$154,622
Total Amount Paid
$234,622
Total Loan Duration
30years
Step by step
Draw period: interest-only monthly payment
$80,000 × 8.5% ÷ 12
= $566.67
Total interest during draw period
$566.67 × 120 months
= $68,000
Repayment period: fully amortizing payment
pmt($80,000, 8.5% ÷ 12, 240 periods)
= $694.26
Payment increase when draw period ends
$694.26 − $566.67
= $127.59
This payment shock is a common source of financial stress for HELOC borrowers.
Total interest over both phases
$68,000 + $86,622
= $154,622
How it works
A HELOC is a revolving credit line secured by your home. During the draw period (typically 5–10 years) you can borrow and repay freely; minimum payments are usually interest-only on whatever balance is outstanding. When the draw period ends, the outstanding balance converts to a fully amortizing loan for the repayment period (typically 10–20 years). The transition from interest-only to fully amortizing payments is often a significant payment shock — commonly 50–100% higher — which this calculator quantifies so you can plan ahead.
Formulas
Draw period: interest-only payment
Monthly interest-only = Balance × (Draw rate ÷ 12)
Repayment period: amortizing payment
Repayment payment = P × r(1+r)ⁿ / ((1+r)ⁿ − 1)
- P
- Outstanding balance at end of draw period
- r
- Monthly repayment rate
- n
- Repayment periods
HELOC rates are variable in practice. This calculator uses fixed rates for each phase as a scenario model. Actual payments will vary with market rate changes.
Frequently Asked Questions
Can I pay down the principal during the draw period?
Yes. Most HELOCs allow (and even encourage) principal payments during the draw period — they reduce your balance and therefore your interest. This calculator assumes interest-only payments as a conservative baseline. Any principal repayment you make will lower the repayment phase payments.
What happens if I cannot afford the repayment phase payment?
Some lenders allow refinancing the HELOC into a home equity loan at the end of the draw period. Others require the balance to be repaid in full (balloon). Review your HELOC agreement carefully. The payment shock shown in this calculator is the reason financial advisors recommend planning for it years in advance.
Is HELOC interest tax-deductible?
Under current US tax law, HELOC interest is deductible only when the funds are used to buy, build or substantially improve the home securing the loan. Interest on HELOC funds used for other purposes (debt consolidation, vacations) is not deductible.
How does a HELOC differ from a home equity loan?
A home equity loan gives you a lump sum at a fixed rate and fixed term — payments start immediately. A HELOC is a revolving line at a variable rate with a draw phase first. Use the Home Equity Loan Calculator to compare a lump sum fixed option side by side.