HELOC Calculator
Calculate Home Equity Line of Credit (HELOC) interest-only draw payments, principal plus interest repayment phase, and lifetime interest.
HELOC Payment Phases
Understanding HELOC Draw & Repayment Cycles
A Home Equity Line of Credit (HELOC) is a revolving credit line secured by your home's equity. Unlike a standard lump-sum mortgage or personal loan, a HELOC operates in two distinct phases: the Draw Period and the Repayment Period.
The Draw Phase (Typically 10 Years): During this window, you can borrow, repay, and re-borrow funds up to your approved credit limit. Most lenders require only interest-only minimum monthly payments on the borrowed balance, keeping monthly cash outflows modest.
The Repayment Phase (Typically 15 to 20 Years): Once the draw period closes, your borrowing capability terminates. The remaining outstanding balance converts into a fully amortizing loan with mandatory monthly payments of both principal and interest. This transition often causes significant payment increases (payment shock). In addition, because most HELOCs carry variable interest rates tied to the Prime rate, budget for potential rate spikes or consider a fixed-rate Home Equity Loan.
Frequently asked questions
How does a HELOC draw period work?
During the initial draw period (usually 10 years), borrowers can draw funds as needed and pay interest-only payments.
How does a HELOC differ from a home equity loan?
A HELOC is a revolving line you draw on as needed, usually at a variable rate, with a draw period followed by a repayment period. A home equity loan is a lump sum at a fixed rate repaid on a set schedule. HELOCs suit uncertain, staged costs; home equity loans suit a known one-off expense.
What is the payment shock at the end of the draw period?
During the draw period - typically ten years - many HELOCs allow interest-only payments. When the repayment period begins, the payment jumps to cover principal and interest over the remaining term, often doubling or more. Planning for that transition from the outset is the single most important thing about a HELOC.
How much can I borrow against my home?
Lenders typically allow a combined loan-to-value of 80-85%, including the first mortgage. On a $400,000 home with a $250,000 mortgage at 85% CLTV, that is about $90,000. Remember the debt is secured by your home, so a fall in value or income turns a flexible line into a serious risk.