Mortgages
HELOC Payment Calculator
A HELOC is two loans wearing one name. For the first decade you pay interest only, which is why the payment looks manageable. Then the draw period closes, the balance amortises over a shorter term, and the payment roughly doubles.
Tested against worked examplesHow we verify
HELOCs are usually variable — tied to the prime rate plus a margin.
Variable rates move. This is what the payment becomes if yours does.
Payment during the draw period: $425
Payment during the draw period
$425
Interest only — none of this touches the balance you owe.
Interest-only payments during the draw period never reduce the balance. Paying even a little principal each month shrinks both the total interest and the size of the jump when repayment begins.
- Payment once repayment starts
- $521
- The jump
- $96
- Repayment payment if rates rise
- $599
- Interest paid during the draw period
- $51,000
- Total interest
- $115,966
- Total paid
- $175,966
- Combined loan-to-value
- 66.67%
- Credit left available
- $40,000
This arrives on a scheduled date you can put in a calendar today.
Paid without reducing the balance by a cent.
First mortgage plus the full line, against the home's value.
Compare scenariosTry three values of one input
| Credit line approved | |||
|---|---|---|---|
| Payment during the draw period | $425 | $425 | $425 |
| Combined loan-to-value | 65% | 66.67%+1.67% | 68.33%+3.33% |
| Credit left available | $30,000 | $40,000+$10,000 | $50,000+$20,000 |
Every other input stays at the value you set above — currently $100,000 for credit line approved. Differences are measured against the first column.
Saved scenariosSave this calculation
Saved in this browser only — no account, and nothing is sent to us. Clearing your browser data deletes them.
How this calculator works
The draw-period payment is the drawn balance × rate ÷ 12, since nothing amortises. The repayment payment is the standard amortisation of the same balance over the repayment term. Interest during the draw is the interest-only payment × the number of months, all of it pure cost. The stressed payment re-amortises at the higher rate. Combined loan-to-value counts the entire credit line, not the drawn amount, because that is how lenders assess it.
The full line is assumed drawn on day one and held level through the draw period — real HELOCs are drawn and repaid unevenly, which changes the interest. Rates are treated as constant despite being variable in practice, which is why the stress figure is there. Annual fees, draw minimums and closing costs are not included.
What this assumes
- Interest-only payments during the draw period, then full amortisation afterwards — the transition is where payments jump.
- A variable rate that tracks prime. The rate you enter is today's, not a lock.
- Lenders cap combined borrowing as a share of the home's value, so the limit depends on the appraisal as well as your equity.
What changes this number
- The draw-to-repayment transition
- Interest-only ends and the balance must amortise over the remaining term, which can raise the payment sharply.
- Prime rate
- Moves with the Federal Reserve within a billing cycle or two, with no notice required.
- How much you actually draw
- A line is not a loan until you use it, and unused capacity costs nothing but tempts.
A worked example
Take the $60k drawn at 8.5% scenario. These figures are produced by the calculator above, not written alongside it, so they always match what the tool returns.
What you enter
- Credit line approved
- $100,000
- Amount you draw
- $60,000
- Interest rate
- 8.5%
What it returns
- Payment during the draw period
- $425
- Payment once repayment starts
- $521
- The jump
- $96
- Repayment payment if rates rise
- $599
- Interest paid during the draw period
- $51,000
Interest-only payments during the draw period never reduce the balance. Paying even a little principal each month shrinks both the total interest and the size of the jump when repayment begins.
Try an example
Frequently asked questions
How does a HELOC payment work?
During the draw period — usually ten years — you pay interest only on what you have borrowed, so the balance never falls. When the draw period ends you can no longer borrow, and the balance amortises over the repayment period, typically twenty years. The payment often doubles overnight.
What is the HELOC payment shock?
The step from interest-only to fully amortising. On $60,000 at 8.5%, the interest-only payment is $425; amortising over twenty years it becomes roughly $520 — and larger on shorter repayment terms. The date it happens is in your loan documents, so it is entirely predictable.
Is a HELOC better than a home equity loan?
A HELOC is a revolving line at a variable rate, drawn as needed — good for staged costs like a renovation. A home equity loan is a lump sum at a fixed rate with level payments — better when you know the amount and want certainty. The HELOC's flexibility comes with rate risk.
Is HELOC interest tax deductible?
Only when the proceeds buy, build or substantially improve the home securing the loan, and only if you itemise. Using a HELOC to consolidate credit cards or buy a car does not qualify. Since 2018 that has narrowed the deduction sharply.
How much can I borrow?
Most lenders allow a combined loan-to-value of 80–85%, counting the first mortgage plus the full line. On a $600,000 home with a $300,000 mortgage, 80% leaves about $180,000 of line. Your income and credit then determine how much of that you actually qualify for.
What happens if my home value falls?
Lenders can freeze or reduce an unused line, and many did during the 2008 downturn. A HELOC held as an emergency backstop can vanish at the moment the emergency arrives — which is an argument for cash reserves rather than available credit.
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Disclaimer: DayCents provides this calculator for educational purposes only. Results are estimates based on your inputs and the stated assumptions — they are not financial advice, a quote, or an offer of credit. Consult a qualified financial professional before making major money decisions.