HELOC Payment Calculator

How HELOC Payments Work

A Home Equity Line of Credit (HELOC) is a revolving credit line secured by your home equity. Unlike a traditional mortgage with fixed payments from day one, a HELOC has two distinct phases that determine your monthly payment amount. During the draw period, typically 5 to 10 years, you make interest-only payments on the balance you have borrowed. Once the draw period ends, the repayment period begins, usually lasting 10 to 20 years, where you pay both principal and interest on the remaining balance through fully amortized payments.

This calculator estimates payments for both phases so you can plan ahead. The draw period payment uses the formula: Balance multiplied by the monthly interest rate. The repayment period uses the standard amortization formula used for fixed-rate loans.

Understanding Available Home Equity

Your available equity depends on your home value, existing mortgage balance, and the maximum loan-to-value (LTV) ratio your lender allows. Most lenders cap the combined LTV at 80%, meaning the total of your mortgage plus HELOC cannot exceed 80% of your home value. Some lenders offer up to 85% or 90% LTV for borrowers with excellent credit. This calculator shows the maximum HELOC amount based on your inputs, helping you determine whether you qualify for the amount you need.

For example, if your home is worth $400,000 and you owe $200,000 on your mortgage with an 80% LTV limit, your maximum HELOC would be $120,000 ($400,000 times 0.80 minus $200,000).

Draw Period vs Repayment Period Payments

The payment difference between these two phases can be significant. During the draw period, a $100,000 HELOC at 8% interest costs about $667 per month in interest only. When the repayment period begins on that same balance over 20 years, the payment jumps to approximately $836 per month. Many homeowners are caught off guard by this increase, so it is essential to plan for the higher repayment phase payment from the start.

Variable interest rates add another layer of complexity. Most HELOCs have variable rates tied to the prime rate, which means your payments can increase if rates rise. Budget conservatively by testing higher rate scenarios in this calculator.

When a HELOC Makes Sense

HELOCs are well suited for home improvements, debt consolidation, or large expenses where you need flexible access to funds over time. The interest may be tax-deductible when used for home improvements, based on IRS guidelines effective through 2025. However, because your home serves as collateral, failing to make payments puts your property at risk. Compare HELOC costs against personal loans, cash-out refinancing, and home equity loans to find the most affordable option for your situation.