HELOC Payment Calculator
Calculate your Home Equity Line of Credit monthly payments during the draw period (interest-only) and repayment period (principal + interest). See your available equity and compare payment phases side by side. Free and private.
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.
Frequently Asked Questions
What is a HELOC and how does it differ from a home equity loan?
A HELOC is a revolving line of credit secured by your home equity with variable rates and two payment phases. A home equity loan is a lump-sum fixed-rate loan with consistent payments from day one. HELOCs offer more flexibility but have payment uncertainty.
Why does my HELOC payment increase after the draw period?
During the draw period you pay interest only on your balance. When the repayment period begins, you must pay both principal and interest, which significantly increases the monthly amount. This jump can be 25-50% or more depending on terms.
What is LTV and why does it matter for a HELOC?
Loan-to-Value (LTV) ratio is the total of all loans on your home divided by its appraised value. Most lenders cap combined LTV at 80%, meaning your mortgage plus HELOC cannot exceed 80% of your home value. Higher LTV may be available with excellent credit.
Are HELOC interest payments tax deductible?
HELOC interest may be tax deductible if the funds are used to buy, build, or substantially improve the home securing the loan, per IRS rules. Interest on HELOC funds used for other purposes like debt consolidation is generally not deductible. Consult a tax advisor.
Can I make principal payments during the draw period?
Yes, most HELOCs allow voluntary principal payments during the draw period. Paying down principal early reduces your balance before the repayment period starts, which lowers your future amortized payments and total interest cost.
What happens if interest rates rise on my HELOC?
Most HELOCs have variable rates tied to the prime rate. If rates rise, both your draw period and repayment period payments increase. Some HELOCs offer rate caps or fixed-rate conversion options to limit exposure to rising rates.