HELOC Calculator

Model a home equity line of credit through its interest-only draw and repayment phases.

About HELOC Calculator

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

Worked example

With the default values below, HELOC Calculator returns Monthly Payment (Draw Phase) of $566.67. Change any input above and every figure here is recalculated in your browser.

Inputs used

HELOC Credit Lineaccepts 1,000–2,000,000 $: 100,000 $
Amount Drawnaccepts 0–2,000,000 $: 80,000 $
Draw Period Rateaccepts 0–30 %: 8.5 %
Draw Periodaccepts 1–20 years: 10 years
Repayment Period Rateaccepts 0–30 %: 8.5 %
Repayment Periodaccepts 1–40 years: 20 years

Results

Monthly Payment (Draw Phase): $566.67
Monthly Payment (Repayment Phase): $694.26
Payment Increase at Repayment StartHow much your payment rises when the draw period ends.: $127.59
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: 30 years

Step by step

1Draw period: interest-only monthly payment= $566.67
2Total interest during draw period= $68,000
3Repayment period: fully amortizing payment= $694.26
4Payment increase when draw period ends= $127.59This payment shock is a common source of financial stress for HELOC borrowers.
5Total interest over both phases= $154,622

Assumptions and limits

The result is derived only from the 6 inputs listed above. Anything not among them is not part of the calculation.
In particular, this calculator does not take inflation, tax or fees or charges into account.
Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
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.
This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

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.