This HELOC calculator models a home equity line of credit’s two lives: interest-only payments during the draw period, and the fully amortized payment when repayment begins.
| Draw-period payment (interest only) | – |
| Interest paid over draw period (if balance constant) | – |
| Repayment-period payment (amortized) | – |
| Payment shock at conversion | – |
HELOC rates are usually variable (prime + margin): the rate you model today is a photograph, not a promise. This model holds balance and rate constant to make the two phases legible — your statement will improvise around them.
Two Loans in One Trench Coat: the Draw, Then the Bill
How much line you qualify for starts with equity and combined LTV — see our LTV Calculator. Part of our Finance Calculators collection.
Worked Example (Verified)
- $20,000 drawn at 8.5% APR (defaults): draw-period payment = $141.67/mo interest-only; ten years of that pays $17,000 of interest and retires zero principal; repayment at 20 years amortizes to $173.56/mo — a modest +$31.89 shock here, but it scales brutally with balance ($100k drawn → $708 → $868, on a balance five times larger still owed in full)
- The balloon cousin: some older HELOCs demand the entire principal at draw-end — read your note for “balloon” before the draw period reads it to you
- Intro-rate mirage: 12 months at 3.99% then prime+1 for a decade — model the go-to rate, not the honeymoon
HELOC Discipline
- It’s secured by your house: the rate is low because the collateral is your roof — default stakes are categorically different from credit-card debt.
- Interest may be deductible only when funds buy/build/substantially improve the home (US post-2017 rules) — renovations qualify, vacations don’t.
- Lenders can freeze or cut lines when home values fall (2008’s mass freezes) — never let a HELOC be your only emergency liquidity.
- Pay principal during draw voluntarily when you can: every $1,000 prepaid at 8.5% saves $7.08/mo of interest immediately and shrinks the repayment-phase payment.
Related Tools
- LTV Calculator — equity & borrowing room
- Refinance Calculator — HELOC alternative comparison
- Finance Calculators — the full collection
Frequently Asked Questions
How is a HELOC payment calculated?
During the draw period (typically 10 years), payments are interest-only: balance × APR ÷ 12 — $20,000 at 8.5% = $141.67/mo. In repayment (typically 15–20 years), the balance amortizes like a mortgage: the same balance over 20 years = $173.56/mo. This calculator shows both phases and the jump between them.
What is the payment shock?
The increase when interest-only ends and principal repayment begins. It’s mild for small balances (+$31.89/mo in the defaults) but the full balance is still owed at conversion — borrowers who spent a decade at the minimum are often surprised the principal never moved.
HELOC vs home equity loan — which is better?
HELOC: variable rate, draw-as-needed, interest-only phase — flexible, rate-risky. Home equity loan: fixed rate, lump sum, amortizing from day one — predictable, inflexible. Match the tool to the spending pattern: staged renovation draws favor the line; a single known expense favors the loan.
How much can I borrow on a HELOC?
Lenders typically cap combined LTV (first mortgage + line) at 80–85% of appraised value: a $500k home with a $300k mortgage supports roughly a $100–125k line. Credit score and income qualify you; the LTV sizes you — see the LTV Calculator.
Is HELOC interest tax deductible?
In the US, only when the borrowed funds buy, build or substantially improve the home securing the loan (and within the $750k combined mortgage-debt cap). Debt consolidation and tuition draws don’t qualify under current rules — confirm with a tax professional for your situation.
Is this HELOC calculator free?
Yes — free, instant, no sign-up.