Payment Calculator Home Equity Line

A payment calculator for home equity line of credit helps you understand the costs and structure of HELOC borrowing. This HELOC payment calculator shows both the draw period and repayment period, which are the two distinct phases of a home equity line of credit. Use this payment calculator to budget for the significant payment increase that occurs when your HELOC transitions from draw to repayment phase.

How a HELOC Works

Draw Period:

• Typically 10 years where you can borrow up to your credit limit as needed
• Make interest-only monthly payments on the amount you've borrowed
• Can re-borrow funds as you pay them back (revolving credit)
• Payments are usually lower but don't reduce principal balance
• You can choose to pay more than interest to reduce balance early

Repayment Period:

• Typically 10-20 years where you can no longer borrow
• Must repay both principal and interest each month
• Payments are significantly higher than draw period
• Balance decreases to $0 by end of repayment period
• Cannot re-borrow once repayment period begins

Credit Line Calculation

Most lenders allow 80-85% combined loan-to-value (CLTV). The formula is: (Home Value × Credit Line %) - Existing Mortgage = Available HELOC. For example: ($400,000 × 85%) - $250,000 = $90,000 available. Lenders verify home value through appraisal, which typically costs $300-$500.

Variable Rates

HELOC rates are typically variable and tied to the Prime Rate. The Prime Rate as of 2025 is approximately 7.5% (varies). HELOC rate = Prime + Margin (typically 0-3%). Rates can change monthly, affecting your payment amount. Some lenders offer rate caps or conversion to fixed rate for an additional fee.

Using This HELOC Payment Calculator

Enter your home value and mortgage balance to see your available credit. The payment calculator shows lower payments during the draw period (interest-only) and higher payments during the repayment period (principal + interest). This HELOC payment calculator helps you budget for the payment increase when the repayment period begins. Compare different borrow amounts and terms to find the HELOC structure that fits your budget and financial goals.

HELOC vs Home Equity Loan

Key differences between these two products:

• HELOC: Revolving credit line, variable rate, interest-only draw period
• Home Equity Loan: One-time lump sum, often fixed rate, immediate principal+interest payments
• HELOC provides flexibility but payment uncertainty
• Home Equity Loan provides payment certainty but less flexibility

Best Uses for a HELOC

• Home improvements and renovations (may be tax deductible)
• Emergency fund backup for unexpected expenses
• Debt consolidation (if rate is lower than existing debts)
• Education expenses or starting a business
• Avoid using for discretionary spending or depreciating assets

Risks to Consider

• Variable rates can increase payments unexpectedly
• Using your home as collateral risks foreclosure if you can't pay
• Payment shock when repayment period begins
• Market downturns can reduce available credit or trigger margin calls
• Closing costs and fees (often $500-$1,500)