CalcPro

HELOC Calculator

Interest-only draw payment and the repayment-phase payment for a home equity line of credit.

What a HELOC payment calculator does

A home equity line of credit (HELOC) has two distinct phases, each with different payment obligations. This calculator shows you both: the interest-only payment you make while drawing funds, and the fixed monthly payment during the repayment period that follows. Understanding both figures helps you plan your cash flow and know what to expect when the draw phase ends.

How it works

During the draw phase (typically 5–10 years), you pay interest only on the amount you've actually borrowed. This keeps payments low and flexible. Once the draw phase ends, you enter the repayment phase, where you begin paying down the principal alongside interest in equal monthly instalments over a fixed term (usually 10–20 years).

The calculator takes your outstanding balance, annual interest rate, and repayment period to compute:

  1. Interest-only monthly payment – what you owe each month if you're only covering interest
  2. Repayment-phase monthly payment – the fixed amount you'll pay once principal repayment begins

The formula

Interest-only payment = (Outstanding balance × Annual rate) ÷ 12

Repayment payment = (Outstanding balance × [r(1+r)^n]) ÷ [(1+r)^n − 1] where r = monthly rate, n = total months

Worked example

Suppose you have a $150,000 HELOC balance, a 7.5% annual interest rate, and a 15-year repayment period.

Interest-only phase:

  • Monthly rate = 7.5% ÷ 12 = 0.625% (0.00625)
  • Interest-only payment = ($150,000 × 0.075) ÷ 12 = $937.50

During the draw phase, you pay $937.50 each month in interest alone.

Repayment phase:

  • Monthly rate r = 0.00625
  • Total months n = 15 × 12 = 180
  • (1 + r)^n = 1.00625^180 ≈ 2.4514
  • Numerator = $150,000 × 0.00625 × 2.4514 ≈ $2,294.06
  • Denominator = 2.4514 − 1 = 1.4514
  • Repayment payment = $2,294.06 ÷ 1.4514 ≈ $1,580.73

When repayment begins, your payment jumps to $1,580.73 monthly. Over 15 years, you'll repay the full $150,000 plus interest.

Common mistakes to watch

Confusing the draw phase with the full term: Many borrowers assume their interest-only payment will continue indefinitely. In reality, the draw phase is temporary—usually 5–10 years. Plan ahead for when your payment will increase significantly.

Forgetting variable rates: Most HELOCs carry variable interest rates tied to an index (like the prime rate). Your payments can change if rates rise. This calculator uses a fixed rate for simplicity; confirm your lender's terms to understand rate adjustment frequency.

Underestimating the repayment shock: The jump from $937.50 to $1,580.73 in the example above catches many borrowers off guard. Budget for this increase well before the draw phase ends, especially if you've grown accustomed to lower payments.

Borrowing only what you need: It's tempting to max out your credit line, but remember that every dollar borrowed will eventually be repaid with interest. Borrow strategically and avoid unnecessary draws.

This calculator provides an estimate based on the inputs you supply. It does not account for variable rate changes, fees, or lender-specific terms. Consult your lender or a financial advisor for precise figures tailored to your agreement.

Frequently asked questions

What's the difference between the draw phase and repayment phase?

The draw phase (typically 5–10 years) lets you borrow and pay interest only on what you use. The repayment phase follows, during which you pay fixed monthly instalments that cover both principal and interest until the balance is cleared.

Why does my payment increase so much when repayment starts?

During the draw phase, you're only paying interest. In repayment, you're paying interest plus principal each month, which is why the payment jumps. The longer your repayment term, the lower the monthly payment—but you'll pay more interest overall.

Can my HELOC interest rate change?

Most HELOCs have variable rates that adjust periodically (monthly, quarterly, or annually) based on a market index. This calculator uses a fixed rate for estimation; check your agreement to see how often your rate adjusts and what triggers changes.

What if I want to pay down my balance early?

Many HELOCs allow early repayment without penalty. Paying extra during either phase reduces your outstanding balance and total interest paid. Use this calculator to see how different balances affect your payments.

Is a HELOC the same as a home equity loan?

No. A HELOC is a revolving credit line (like a credit card) with a draw phase and repayment phase. A home equity loan is a lump sum with fixed payments from day one. HELOCs offer flexibility; home equity loans offer payment predictability.

How is the repayment-phase payment calculated?

It uses an amortization formula that divides your balance into equal monthly payments over the repayment term, accounting for compound interest at your monthly rate. The longer the term, the lower each payment—but total interest increases.

Related calculators

Home Equity Loan CalculatorHow much you can borrow against your home equity, and the monthly payment.Mortgage CalculatorEstimate your full monthly mortgage payment including principal, interest, property tax and insurance.Credit Card CalculatorHow long it takes to clear a credit-card balance at a fixed monthly payment, and the interest cost.Loan CalculatorMonthly payment, total interest and amortization for any fixed-rate loan.