HELOC Draw Period Payment Calculator
See exactly what your HELOC payment will be during the interest-only draw period and during the repayment phase. Calculate payment shock so it doesn't surprise you.
Payment Schedule
How HELOC Draw Periods Work
A Home Equity Line of Credit (HELOC) has two phases: a draw period and a repayment period. During the draw period (typically 10 years), you can borrow against your credit limit and most lenders only require interest-only minimum payments. When the draw period ends, you can no longer borrow, and the loan converts to a fully amortizing repayment phase — usually 15 or 20 years — where you pay both principal and interest on the outstanding balance (source: Consumer Financial Protection Bureau, cfpb.gov).
Payment Shock — The Hidden Cost
The transition from interest-only to fully amortizing payments often causes "payment shock" — a sudden 50% to 200% increase in monthly payment. Example: $50,000 balance at 9% interest-only equals $375 per month during draw. After conversion to a 20-year amortization at 9%, the same balance requires roughly $450 per month, or $675 per month if amortized over 10 years instead. Many borrowers don't realize this jump is coming until they get the first repayment-phase statement. Federal regulations require lenders to disclose this in initial HELOC paperwork, but the language is dense.
How to Avoid HELOC Payment Shock
Three strategies protect you. First, pay extra principal during the draw period — even $100 per month over 10 years can cut your starting repayment balance by $15,000+. Second, plan to refinance the HELOC into a fixed-rate home equity loan before the draw ends if rates have dropped. Third, treat the HELOC's interest-only period as if it were a 20-year amortizing loan from day one — calculate that payment, set it as your minimum, and you'll never face shock. The CFPB recommends Strategy 3 (source: cfpb.gov consumer guide).
HELOC Variable Rate Risk in 2026
Most HELOCs are tied to the Prime Rate plus a margin (typically Prime + 0% to 2%). When the Federal Reserve raises rates, your HELOC payment rises within 1-2 billing cycles. In 2022-2023, Prime jumped from 3.25% to 8.50% — HELOC borrowers saw payments more than double. As of June 2026, Prime sits at roughly 8.00%, and HELOC rates run 8.0% to 9.75%. Build a 2-percentage-point cushion into your budget for rate increases.
What Happens at the End of the HELOC Draw Period
About 60–90 days before your draw period ends, your lender will send a written notice — required under Regulation Z of the federal Truth-in-Lending Act 12 CFR §1026.40 — confirming the conversion date, the outstanding balance, the new amortization term, and the first fully amortizing payment amount. On the conversion date, three things happen at once: (1) you can no longer draw new funds; (2) the loan freezes the principal balance at the closing-day amount; (3) monthly payments switch from interest-only to principal-and-interest based on the remaining 10-, 15-, or 20-year repayment schedule. At that point your options are: keep the new amortizing payment, refinance the HELOC into a fixed-rate home equity loan, do a cash-out refinance on the first mortgage to pay off the HELOC, or sell the home and settle the balance at closing. Run the calculator above with your real conversion date and current rate to see exactly what the new payment will be.
Last updated: June 2026. Sources: consumerfinance.gov (CFPB), 12 CFR §1026.40 (Reg Z / TILA), federalreserve.gov (Prime Rate H.15).
Frequently Asked Questions
What is the HELOC draw period?
The draw period is the first 5-15 years (typically 10) of a HELOC during which you can borrow against the credit line and only pay interest on what you've drawn. After the draw period ends, the loan converts to fully amortizing payments (source: cfpb.gov).
How much can my HELOC payment increase after the draw period?
Payment shock typically ranges from 50% to 200% increase. Example: $50,000 balance at 9% interest-only is $375/month. The same balance amortized over 20 years at 9% is roughly $450/month, or $635/month over 10 years.
What happens if I can't afford the HELOC repayment payment?
Options include refinancing into a fixed-rate home equity loan, modifying the loan with the lender, selling the home, or in worst cases, foreclosure. The HELOC is secured by your home, so missed payments can lead to foreclosure proceedings.
Can I extend the HELOC draw period?
Some lenders offer extensions, but they're not guaranteed. Most extensions require requalifying — full credit check, income verification, and home appraisal. The terms may change, including a new rate. Plan for the original end date.
Is HELOC interest tax deductible?
Only if the HELOC funds are used to buy, build, or substantially improve the home securing the loan, and only if total mortgage debt is under $750,000. Using a HELOC for debt consolidation or other purposes makes the interest non-deductible (source: IRS Publication 936).
Should I pay extra principal during the HELOC draw period?
Yes, this is one of the best ways to avoid payment shock. Every dollar of extra principal reduces the balance that must be amortized in the repayment phase, lowering your future required payment proportionally.
How is HELOC interest calculated?
HELOC interest is calculated daily on your outstanding balance. The formula is: (Daily balance × annual rate / 365). This means your monthly interest depends on your average daily balance, not your statement balance.
How much notice will my lender give before my HELOC draw period ends?
Under federal Regulation Z (12 CFR §1026.40) of the Truth-in-Lending Act, lenders must send a written notice typically 60-90 days before the draw period ends. The notice confirms the conversion date, your outstanding balance, the new amortization term, and the first fully amortizing payment amount. If you have not received notice within 60 days of your scheduled draw-end date, contact your lender — the disclosure is a legal requirement.
Can I do a cash-out refinance to pay off my HELOC at the end of the draw period?
Yes. A cash-out refinance on your first mortgage rolls the HELOC balance into a new, fixed-rate first mortgage at a single payment. This eliminates HELOC variable-rate risk and the payment-shock jump, but resets your mortgage clock and adds closing costs (typically 2-5% of the new loan amount). Run the math against keeping the HELOC's new amortizing payment — if the new first mortgage rate is at least 1% lower than your HELOC rate, the refinance often wins.