REAL ESTATE
HELOC Calculator - Home Equity Line of Credit Payments
By Worldtickers ·
Estimate your HELOC payments during both the draw and repayment periods. Compare interest-only vs fully amortizing payments and understand the total cost of borrowing.
This heloc tool focuses on estimate your HELOC payments during both the draw and repayment periods. Compare interest-only vs fully amortizing payments and understand the total cost of borrowing. Use it to analyze property numbers such as cash flow, costs, returns, taxes, rent, and financing assumptions before buying, selling, refinancing, or comparing rental scenarios.
HELOC Calculator
HELOC Calculator
Compare interest-only and amortized payment options.
What Is a HELOC?
A Home Equity Line of Credit, or HELOC, is a revolving line of credit secured by your home's equity. Unlike a home equity loan that provides a lump sum upfront, a HELOC gives you a credit limit you can draw from as needed during the draw period, repay, and borrow again. It functions similarly to a credit card but with significantly lower interest rates because it is backed by your property.
HELOCs have two distinct phases. During the draw period (typically 10 years), you can access your credit line and many lenders offer interest-only payment options, keeping your monthly cost low. After the draw period ends, the HELOC converts to a repayment period (usually 10 to 20 years) where you make fully amortizing payments that include both principal and interest.
HELOCs are popular for home improvements, education expenses, debt consolidation, and other major expenses because they offer flexibility and relatively low rates. However, they carry risks including payment shock when the repayment period begins and the possibility of foreclosure if you cannot make payments.
How to Use This Calculator
Enter your HELOC credit limit, the amount you plan to draw, your interest rate, the draw period length, and the repayment period length. Choose between interest-only or fully amortizing payments during the draw period. The calculator shows your monthly payments for each phase and the total cost of borrowing.
Credit Limit and Draw Amount
Enter the total credit limit approved by your lender and the amount you plan to actually use. You do not have to borrow the full limit — you only pay interest on the amount you actually draw. The calculator shows payments based on your actual draw amount, not the credit limit.
Interest Rate
Enter your HELOC's annual interest rate, which is typically the prime rate plus a margin (for example, prime + 1.5%). Since HELOC rates are variable, your actual rate will change over time. Use your current rate for the initial estimate, but be aware that payments could increase if rates rise.
Draw and Repayment Periods
The draw period is typically 10 years, and the repayment period is typically 10 to 20 years. Adjust these fields to match your specific HELOC terms. A shorter repayment period means higher monthly payments but less total interest paid.
Formula
During the draw period with interest-only payments, the monthly payment is: Monthly Payment = (Drawn Amount × Annual Rate) / 12. This covers only the interest accrued each month, keeping the principal balance unchanged until the repayment period begins.
During the repayment period, the HELOC amortizes like a traditional loan: M = P × r × (1 + r)^n / [(1 + r)^n − 1], where P is the outstanding balance, r is the monthly interest rate, and n is the total number of monthly payments in the repayment period.
Total interest paid is the sum of all interest-only payments during the draw period plus all interest paid during the repayment period, minus the principal repaid. This gives you the full cost of borrowing over the life of the HELOC.
Examples
Example 1: Interest-Only Draw Period
You have a $100,000 HELOC at 7.5% with a 10-year draw period and 15-year repayment period. During the draw period, interest-only payments are $100,000 × 0.075 / 12 = $625 per month. If you maintain the full $100,000 balance, at the end of the draw period you begin repaying with fully amortizing payments of approximately $927 per month over 15 years. Total interest paid over 25 years: approximately $118,000.
Example 2: Paying During the Draw Period
Using the same $100,000 HELOC at 7.5%, you make interest-only payments of $625 during the draw period but also pay an extra $400 per month toward principal. By the end of the 10-year draw period, your balance has fallen to approximately $52,000. Your repayment payments drop to about $484 per month over 15 years. Total interest paid drops to approximately $78,000 — saving you $40,000 compared to interest-only payments alone.
Example 3: Shorter Repayment Period
You draw $75,000 from a HELOC at 8% with a 10-year draw period and choose a 10-year repayment period instead of 15. Interest-only payments during the draw period are $500 per month. During the 10-year repayment period, payments jump to approximately$910 per month. While the repayment payments are higher, total interest paid is roughly $50,000 — significantly less than the approximately $65,000 in interest over a 15-year repayment period.
Tips
Plan for the Repayment Period Before You Borrow
The biggest mistake HELOC borrowers make is focusing only on the low interest-only payments during the draw period without planning for the repayment period. When payments jump to include principal, many borrowers are surprised by the increase. Calculate your repayment payments before borrowing and make sure you can afford them.
Pay More Than Interest During the Draw Period
Even if your HELOC allows interest-only payments, paying extra toward principal during the draw period reduces your balance before the repayment period begins. This lowers your future monthly payments and saves substantial interest. Treat your HELOC like an installment loan rather than a credit card to avoid the trap of never paying down the balance.
Watch for Rate Increases
HELOC rates are variable and adjust with the prime rate. A 2% increase in your rate on a $100,000 balance adds approximately $167 per month in interest costs. If you are near the maximum of what you can afford, a rate increase could make your HELOC unaffordable. Build a buffer into your budget for potential rate increases.
Consider a Fixed-Rate Option
Some HELOCs allow you to convert a portion of your balance to a fixed rate. This can provide certainty if rates are rising or if you have a large balance you plan to carry for several years. Compare the fixed-rate option cost against the variable rate to determine if the stability is worth any premium.
FAQ
What is the difference between a HELOC and a home equity loan?
A HELOC is a revolving line of credit that you can draw from as needed during a draw period, typically 10 years. A home equity loan provides a lump sum upfront with fixed payments. HELOCs usually have variable interest rates, while home equity loans typically offer fixed rates. A HELOC works like a credit card secured by your home, while a home equity loan is more like a traditional installment loan.
How does the draw period work?
During the draw period (usually 10 years), you can borrow up to your credit limit, repay, and borrow again. Many HELOCs require interest-only payments during this period, keeping monthly costs low. However, interest-only payments do not reduce the principal balance. At the end of the draw period, the HELOC converts to a repayment period with fully amortizing payments over 10 to 20 years.
What happens when the HELOC repayment period starts?
When the draw period ends, your HELOC converts to a repayment loan with fully amortizing payments that include both principal and interest. Monthly payments can increase substantially because you are now paying off the entire balance over a shorter period. For example, interest-only payments of $417 per month on a $100,000 balance could jump to $965 per month during the 15-year repayment period at 7% interest.
Can I pay off a HELOC early?
Yes, most HELOCs allow early repayment without a prepayment penalty, though some lenders may charge a penalty if you close the line within the first three to five years. Paying off your HELOC early saves you significant interest and eliminates the risk of payment increases if rates rise. You can make extra payments toward principal during the draw period to reduce the balance before repayment begins.
What interest rate do HELOCs charge?
HELOC rates are typically variable, tied to the prime rate plus a margin based on your creditworthiness. As of 2026, HELOC rates generally range from 7% to 10% depending on your credit score, loan-to-value ratio, and lender. The rate adjusts periodically (usually monthly or quarterly) based on changes in the prime rate, which means your payments can increase over time.
How much can I borrow with a HELOC?
Most lenders allow you to borrow up to 80% to 85% of your home's value minus your outstanding mortgage balance. On a $400,000 home with a $250,000 mortgage and an 80% LTV limit, you could qualify for up to $70,000. Your credit score, income, and debt-to-income ratio also affect the maximum amount you can borrow.
Is HELOC interest tax deductible?
HELOC interest may be tax deductible if you use the funds to buy, build, or substantially improve the home that secures the loan. Under current tax law, the deduction is limited to interest on up to $750,000 of combined mortgage and HELOC debt. If you use HELOC proceeds for other purposes, such as debt consolidation or a vacation, the interest is generally not deductible.
What are the risks of a HELOC?
The primary risks of a HELOC are: your home serves as collateral, so failure to repay can result in foreclosure; variable rates mean your payments can increase if interest rates rise; the payment shock when the draw period ends and repayment begins; and the temptation to over-borrow against your equity for non-essential expenses. Only borrow what you need and can comfortably repay.