HELOC Calculator

Calculate payments for a Home Equity Line of Credit. See interest-only payments during the draw period and fully amortized payments during repayment.

HELOC Details

$

Current appraised or estimated market value

$
$

Amount you plan to borrow

%

Variable rate, typically prime + margin

yrs

Years you can borrow (typically 5-10)

yrs

Years to repay after draw period (typically 10-20)

Ready to Calculate

Enter your home and HELOC details to see your payments and total cost.

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Pro Tip

HELOC rates are variable and tied to the prime rate. Consider locking a portion of your balance at a fixed rate if your lender offers that option, especially if rates are expected to rise.

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How a HELOC Works

A Home Equity Line of Credit (HELOC) is one of the most flexible ways to borrow against your home equity. Unlike a traditional home equity loan that provides a lump sum at a fixed rate, a HELOC works as a revolving line of credit with two distinct phases: the draw period and the repayment period.

During the draw period, which typically lasts 5 to 10 years, you can borrow up to your approved credit limit whenever you need funds. Minimum payments during this phase are usually interest-only, keeping your monthly obligation low. However, you can voluntarily make principal payments to reduce your balance and free up credit for future draws.

When the draw period ends, the HELOC enters the repayment period (typically 10 to 20 years). You can no longer draw funds, and your outstanding balance is converted to a fully amortizing loan. Monthly payments increase significantly because you are now paying both principal and interest.

The transition from interest-only to fully amortized payments is often called "payment shock." It is essential to plan for this increase. Some borrowers refinance their HELOC before the repayment period begins, while others prepare by gradually increasing their payments during the draw period.

HELOC Payment Formulas

Interest-Only Payment = Balance × (Annual Rate / 12)

Where:

Interest-Only Payment = Minimum monthly payment during the draw period

Balance = Current outstanding HELOC balance

Amortized Payment = M = P[r(1+r)^n] / [(1+r)^n - 1] during repayment period

Credit Limit = (Home Value x 0.85) - Existing Mortgage Balance

Frequently Asked Questions

What is a HELOC?
A Home Equity Line of Credit (HELOC) is a revolving credit line secured by your home equity. Unlike a home equity loan that gives you a lump sum, a HELOC works like a credit card -- you can draw funds as needed up to your credit limit during the draw period, then repay during the repayment period.
How does a HELOC draw period work?
During the draw period (typically 5-10 years), you can borrow up to your credit limit and make interest-only minimum payments. You can draw, repay, and draw again. At the end of the draw period, you can no longer borrow, and the balance enters the repayment period.
Are HELOC rates fixed or variable?
Most HELOCs have variable interest rates tied to the prime rate. This means your payments can increase or decrease as market rates change. Some lenders offer a fixed-rate option for a portion of your balance, usually at a slightly higher rate.
What is the maximum I can borrow with a HELOC?
Most lenders allow a combined loan-to-value (CLTV) ratio of up to 85%, meaning your existing mortgage plus HELOC cannot exceed 85% of your home's value. Some lenders may go up to 90% for borrowers with excellent credit.
Can I lose my home with a HELOC?
Yes. A HELOC is secured by your home, which means the lender can foreclose if you fail to make payments. Always borrow responsibly and ensure you can afford the payments even during the repayment period when payments increase.