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HELOC Calculator

Calculate HELOC payments for draw and repayment periods. See total interest, amortization schedule, and compare costs.

HELOC Worksheet
$
%
Repayment period payment(P&I) $355.67/mo
$271.88/mo during the draw period (interest only)
Total payments$117,986.40
Total interest$72,986.40
Draw period interest$32,625.60
Repayment interest$40,360.80
Principal (38%)
Interest (62%)

Amortization Schedule

YearInterestPrincipalBalance
1$3,262.56$0.00$45,000.00
2$3,262.56$0.00$45,000.00
3$3,262.56$0.00$45,000.00
4$3,262.56$0.00$45,000.00
5$3,262.56$0.00$45,000.00
6$3,262.56$0.00$45,000.00
7$3,262.56$0.00$45,000.00
8$3,262.56$0.00$45,000.00
9$3,262.56$0.00$45,000.00
10$3,262.56$0.00$45,000.00
11$3,228.41$1,039.63$43,960.37
12$3,150.47$1,117.57$42,842.80
13$3,066.71$1,201.33$41,641.47
14$2,976.66$1,291.38$40,350.09
15$2,879.86$1,388.18$38,961.91
16$2,775.81$1,492.23$37,469.68
17$2,663.95$1,604.09$35,865.59
18$2,543.71$1,724.33$34,141.26
19$2,414.46$1,853.58$32,287.68
20$2,275.48$1,992.56$30,295.12
21$2,126.15$2,141.89$28,153.23
22$1,965.59$2,302.45$25,850.78
23$1,793.01$2,475.03$23,375.75
24$1,607.48$2,660.56$20,715.19
25$1,408.04$2,860.00$17,855.19
26$1,193.68$3,074.36$14,780.83
27$963.21$3,304.83$11,476.00
28$715.49$3,552.55$7,923.45
29$449.21$3,818.83$4,104.62
30$162.96$4,105.08$0.00

Highlighted rows indicate the draw period (interest-only).

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How a HELOC Works

A HELOC has two distinct phases that affect your monthly payment:

Draw Period (Interest-Only Phase)

During the draw period — typically 5 to 10 years — you can borrow funds up to your approved credit limit. Monthly payments cover only the interest on your outstanding balance. This makes payments low, but you're not reducing the principal.

Monthly payment formula: Loan Balance × (Annual Rate ÷ 12)

Repayment Period (Amortization Phase)

Once the draw period ends, you enter the repayment phase — typically 10 to 20 years. You can no longer borrow, and the full outstanding balance is amortized with monthly payments of principal plus interest. Payments increase significantly compared to the draw period.

Monthly payment formula: Standard amortization: P × [r(1+r)n] ÷ [(1+r)n - 1]

HELOC vs Home Equity Loan

FeatureHELOCHome Equity Loan
Interest rateUsually variableFixed
DisbursementDraw as neededLump sum
PaymentsInterest-only during drawFixed P&I from start
FlexibilityRevolving credit lineOne-time borrowing
Best forOngoing expenses, renovationsOne-time large expense

Typical HELOC Costs

  • Interest rate: Variable, typically prime rate + 0% to 2%. Currently 7-9% range
  • Closing costs: $0 to $5,000+ depending on lender (appraisal, title search, origination fees)
  • Annual fee: Some lenders charge $25-$75/year
  • Early closure fee: Some lenders charge a fee if you close the HELOC within 2-3 years

Tips for Using a HELOC

  • Pay more than interest-only during the draw period to reduce payment shock when repayment begins
  • Budget for rate increases — variable rates can rise significantly over the loan term
  • Don't use your full credit limit — keep a buffer for emergencies and rate changes
  • Consider a fixed-rate lock — some lenders let you lock portions at a fixed rate
  • Use for appreciating assets — home improvements that add value are better uses than depreciating purchases

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Frequently Asked Questions

How much can you borrow with a HELOC?

Lenders typically allow 80 to 85 percent of the home value minus the mortgage balance. A home worth $350,000 with $220,000 owed supports a HELOC of up to ($350,000 x 0.85) - $220,000 = $77,500. The exact percentage depends on the lender, credit score and debt-to-income ratio.

What happens when the HELOC draw period ends?

Borrowing stops and the balance is repaid over a repayment period, typically 10 to 20 years, with principal plus interest. The payment jumps: a $60,000 balance at 8 percent costs $400 a month interest-only in the draw period and about $728 a month over a 10-year repayment term.

Are HELOC interest rates fixed or variable?

Most HELOC rates are variable and tied to the prime rate, so the payment changes when prime moves. Some lenders offer a fixed-rate option or let borrowers lock part of the balance at a fixed rate. A fixed-rate lock usually costs a slightly higher rate than the variable rate.

Is HELOC interest tax deductible?

Only when the money is used to buy, build or substantially improve the home that secures the HELOC. Interest on HELOC funds spent on other things, such as paying off credit cards or tuition, is generally not deductible. The borrower must also itemize deductions to claim it.

Can a bank freeze or reduce a HELOC?

Yes. A lender can freeze or reduce the credit line if the home value drops significantly or the financial situation of the borrower deteriorates, and the loan agreement usually allows this without prior notice. Not relying on the full credit limit and keeping a cash buffer reduces the risk.