$
Amount currently drawn from HELOC
Enter drawn balance%
HELOC rates are typically variable
Enter interest rate$
Optional — shows your CLTV ratio
$
Optional — for CLTV calculation
Monthly Interest-Only Payment (Draw Period)
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⚠️ For informational purposes only. HELOC rates are variable and may change monthly. Actual payments depend on your lender's terms. Consult your lender or a financial advisor before borrowing against your home.
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How HELOC Payments Work
A HELOC has two phases: the draw period (typically 10 years) where you can borrow and repay as needed, paying only interest on what you've drawn; and the repayment period (typically 20 years) where the line closes and you repay principal plus interest on the full balance.
HELOC Payment Formulas
Draw Period: Monthly Payment = Balance × (Annual Rate ÷ 12)
Repayment Period: Full amortized payment on remaining balance
Monthly = Balance × [r(1+r)^n] / [(1+r)^n - 1] where r = monthly rate, n = months
Example: $50,000 drawn at 8.5% annual rate:
Draw period: $50,000 × (0.085/12) = $354/month
Repayment (20yr): amortized = $434/month (same balance, full P+I)
Monthly = Balance × [r(1+r)^n] / [(1+r)^n - 1] where r = monthly rate, n = months
Example: $50,000 drawn at 8.5% annual rate:
Draw period: $50,000 × (0.085/12) = $354/month
Repayment (20yr): amortized = $434/month (same balance, full P+I)
HELOC vs Home Equity Loan
- HELOC: Revolving credit line, variable rate, interest-only during draw, flexible borrowing
- Home Equity Loan: Lump sum, fixed rate, immediate P+I payments, predictable schedule
- Best for HELOC: Ongoing projects, uncertain costs, home renovation in stages
- Best for HE Loan: One-time large purchase, debt consolidation, fixed budget needs
🏠 Payment shock warning: When the draw period ends, your monthly payment often jumps significantly — from interest-only to full principal + interest on the entire balance. Budget ahead for this transition to avoid financial strain.
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Frequently Asked Questions
How is a HELOC interest-only payment calculated?
Interest-only HELOC payment = Balance drawn × (Annual rate ÷ 12). For $50,000 at 8.5%: $50,000 × (0.085 ÷ 12) = $354.17 per month. During the draw period you pay only interest and the principal does not decrease.
What happens after the HELOC draw period ends?
After the draw period (typically 10 years), the HELOC enters repayment (usually 20 years). You can no longer borrow, and must repay principal plus interest. Monthly payments increase significantly — plan ahead for this payment shock transition.
What are current HELOC interest rates?
HELOC rates are variable and tied to the prime rate. As of early 2025, HELOC rates typically range from 7.5% to 10% for borrowers with good credit. Rates vary by credit score, loan-to-value ratio, and lender. Most HELOCs have a rate that adjusts monthly.
What is the maximum HELOC amount I can borrow?
Most lenders allow a combined loan-to-value (CLTV) of up to 80–85% of your home's appraised value, minus your existing mortgage. For a $400,000 home with a $200,000 mortgage: 85% × $400,000 = $340,000 − $200,000 = $140,000 maximum HELOC.
Is HELOC interest tax deductible?
HELOC interest may be deductible if funds are used to buy, build, or substantially improve the home securing the line. Interest used for other purposes is generally not deductible. Consult a tax professional for your specific situation under current IRS rules.