HELOC Calculator
Calculate your Home Equity Line of Credit payments for both the draw period (interest-only) and repayment period (principal + interest). Includes payment shock analysis and variable rate scenarios.
How a HELOC Works — Draw Period vs Repayment Period
A HELOC (Home Equity Line of Credit) is a revolving credit line secured by your home's equity. Unlike a home equity loan that gives you a lump sum, a HELOC lets you borrow as needed, up to your credit limit, during the draw period. The HELOC has two distinct phases with fundamentally different payment structures — understanding both is critical to avoiding payment shock. For a fixed-rate lump-sum alternative, see our Home Equity Loan Calculator.
The Two Phases Explained
🌊 Draw Period (5–10 years typical)
During the draw period, you can borrow from the credit line as needed. Most HELOCs require interest-only payments during this phase — you pay only the interest accruing on the outstanding balance, not the principal. This keeps payments low but means you're not reducing what you owe.
Payment formula: Monthly Draw Payment = Balance × (Rate / 12)
Example: $75,000 drawn at 9% → $75,000 × 0.0075 = $562.50/mo
⚡ Repayment Period (10–20 years typical)
Once the draw period ends, the credit line closes and the outstanding balance converts to a fully amortizing loan. You can no longer draw and must repay principal plus interest over the remaining term — at the same or different (variable) rate.
Payment formula: Monthly Repay = P × r(1+r)ⁿ / [(1+r)ⁿ-1]
Example: $75,000 at 9% for 20 years → ~$674.92/mo — a 20% jump from draw period.
Understanding Payment Shock
Payment shock is the sudden, significant increase in monthly payment when your HELOC transitions from the draw period (interest-only) to the repayment period (principal + interest). Even without a rate change, your payment can jump 50–200% because you now have to repay the principal you deferred during the draw period, over a shorter remaining term. For example: $100,000 at 9% — draw payment $750/mo → repayment over 20 years = $899/mo (20% jump). But if repayment is only 10 years, payment jumps to $1,267/mo (69% jump). The shorter the repayment period relative to the draw period, the larger the shock. Use this calculator's shock analysis to plan ahead. Also see our Mortgage Calculator to compare your total housing cost.
HELOC Variable Rates — How Rate Changes Affect You
Most HELOCs have variable interest rates tied to a benchmark rate (typically the US Prime Rate or SOFR) plus a margin. When the Federal Reserve raises rates, your HELOC rate increases — increasing both your draw period payments and repayment period payments. There is usually a lifetime cap (often 18–21%) and periodic caps (often 2% per year). The variable rate scenarios in this calculator show how a 1% or 2% rate increase affects your repayment payment — important for stress-testing your budget. For a fixed-rate alternative, consider a home equity loan. For personal loan alternatives, see our Loan Calculator.
Best Uses for a HELOC
Phased Renovations
Draw funds as each phase of a multi-stage renovation completes — kitchen first, then bathrooms. Only pay interest on what you've drawn so far.
Tuition Payments
Draw each semester as needed rather than borrowing the full 4-year cost upfront. Interest-only during college years, repay after graduation.
Emergency Reserve
Keep a HELOC open as a backup emergency fund. You pay nothing while unused (with no inactivity fees), and draw only if needed.
Business Cash Flow
Self-employed or small business owners can use a HELOC as a flexible revolving credit facility for irregular income months. Use our Salary Calculator to assess affordability.
Frequently Asked Questions
Common questions about HELOCs, draw periods, repayment, and payment shock
Max HELOC = (Home Value × 0.80) − First Mortgage Balance. For example, on a $400,000 home with a $220,000 mortgage: ($400,000 × 0.80) − $220,000 = $100,000 maximum HELOC. This 80% Combined Loan-to-Value (CLTV) limit applies to most lenders; some allow 85–90% with higher rates. Additional qualification factors include: credit score (usually 680+ for competitive rates, 620+ minimum), debt-to-income ratio (below 43–50%), income verification, and property appraisal. HELOCs typically range from $10,000 to $500,000, though exact limits vary by lender and state. Use our Home Equity Loan Calculator to see your available equity and CLTV ratio.