How to use this calculator
- Enter the amount you plan to borrow — not your full credit limit, unless you expect to use all of it.
- Enter the interest rate. HELOC rates are usually quoted as the Prime Rate plus a margin, for example “Prime + 1%”.
- Choose the draw and repayment periods from your loan offer. Ten years of draw and twenty years of repayment is the most common structure.
- Pick the payment type. Interest-only is standard; choose principal & interest if you plan to pay the balance down from the start.
- Stress-test. Add 1–3 percentage points to see what happens if rates rise.
How HELOC payments work
A HELOC is a revolving line of credit secured by your home (the CFPB’s home equity consumer tools explain the basics). It has two phases:
- Draw period (typically 5–10 years): you can borrow, repay and borrow again up to your limit. Most lenders only require interest on what you’ve borrowed.
- Repayment period (typically 10–20 years): borrowing stops and the balance is repaid in equal monthly installments of principal and interest.
Because you only pay interest on the amount you actually draw, a HELOC can be cheaper than a lump-sum home equity loan for projects with uncertain or staged costs, such as renovations. Compare the two with the HELOC vs home equity loan calculator.
Wondering whether you’ll qualify? See HELOC requirements for typical credit score, equity and DTI limits.
The repayment “payment shock”
The biggest surprise with HELOCs is the jump in payment when the draw period ends. During the draw period, an interest-only payment doesn’t reduce the balance at all, so the full amount must then be repaid over a shorter window. Many borrowers plan to refinance or sell before that happens — but if rates are higher or your home is worth less at that time, those options may not be available. Budget for the repayment payment from the start. If yours is close, see your options when the HELOC draw period ends.
Worked example
Pat borrows $50,000 on a HELOC at 8.5% with a 10-year draw period and a 20-year repayment period.
| Scenario | Draw payment | Repayment payment | Total interest |
|---|---|---|---|
| Interest-only draw, 8.5% | $354.17 | $433.91 (+22.5%) | $96,639 |
| Interest-only draw, rate rises to 10.5% | $437.50 | $499.19 | — |
| Principal & interest from day one, 8.5% | $384.46 | $384.46 | $88,404 |
Paying about $30 a month more from the beginning keeps the payment level for 30 years, avoids the jump at year 10 and saves about $8,200 in interest. Paying the balance off even faster saves far more.
HELOC payments by balance and rate
The interest-only payment during the draw period, and the payment once the same balance is repaid over 20 years. If you pay only interest, the balance doesn’t fall at all, so the full amount is still owed when repayment starts.
| Balance | At 7% | At 8% | At 9% |
|---|---|---|---|
| $25,000 | $146 interest-only
$194 repaying | $167 interest-only
$209 repaying | $188 interest-only
$225 repaying |
| $50,000 | $292 interest-only
$388 repaying | $333 interest-only
$418 repaying | $375 interest-only
$450 repaying |
| $75,000 | $438 interest-only
$581 repaying | $500 interest-only
$627 repaying | $563 interest-only
$675 repaying |
| $100,000 | $583 interest-only
$775 repaying | $667 interest-only
$836 repaying | $750 interest-only
$900 repaying |
| $150,000 | $875 interest-only
$1,163 repaying | $1,000 interest-only
$1,255 repaying | $1,125 interest-only
$1,350 repaying |
Borrowing a fixed lump sum instead? A home equity loan has one fixed payment from the start; compare it with a HELOC in the HELOC vs home equity loan calculator.
HELOC payment per $10,000 borrowed
A quick rule of thumb: multiply these by the number of $10,000s you borrow.
| Rate | Interest-only | Repaid over 10 years | Repaid over 20 years |
|---|---|---|---|
| 7% | $58.33 | $116.11 | $77.53 |
| 8% | $66.67 | $121.33 | $83.64 |
| 9% | $75.00 | $126.68 | $89.97 |
| 10% | $83.33 | $132.15 | $96.50 |
Each 1-point rise in the rate adds about $8.33 a month per $10,000 while you’re paying interest only.
Variable rates: stress-test your payment
Most HELOC rates are variable, tied to the Prime Rate (published by the Federal Reserve in its H.15 release), which moves with the Federal Reserve’s federal funds target. A 2-point increase on a $50,000 interest-only balance adds about $83 a month. Before borrowing, ask your lender about:
- Lifetime and periodic rate caps — the maximum the rate can reach or rise at once.
- Fixed-rate lock options that convert part of your balance to a fixed-rate installment loan.
- Introductory “teaser” rates and what the rate becomes afterward.
Fees, closing costs and taxes
- Closing costs can include an appraisal, title search and recording fees. Many lenders waive them, but may charge them back if you close the line within the first few years.
- Annual or inactivity fees are charged by some lenders — check the fee schedule.
- Tax deductibility: HELOC interest is deductible only when the funds buy, build or substantially improve the home securing the line, you itemize, and total mortgage debt stays within the $750,000 limit. See IRS Publication 936.
- Line freezes: federal rules (Regulation Z §1026.40) allow lenders to freeze or reduce your line if your home’s value drops significantly or your finances change materially.
Formulas used
The calculator assumes the full amount is drawn at the start and the rate stays constant (plus any stress-test increase). Real HELOCs accrue interest daily on the actual balance, and draws, repayments and rate changes will alter your payments.
HELOC vs home equity loan
Compare a variable-rate home equity line of credit (HELOC) with a fixed-rate home equity loan for the same amount. See each monthly payment, the jump when HELOC repayment starts, total interest and fees, and what happens to the HELOC if rates rise.
How to use this calculator
- Enter the amount you need. For a HELOC, enter what you expect to draw, not the full credit limit.
- Enter the home equity loan offer: its fixed rate, term and closing costs.
- Enter the HELOC offer: its current rate, draw and repayment periods, fees and whether draw-period payments are interest-only.
- Stress-test the HELOC by adding 1 to 3 percentage points, since its rate can change.
- Compare the table. It shows both offers, plus the HELOC paid off over the same term as the loan.
HELOC vs home equity loan: the key differences
| Item | HELOC | Home equity loan |
|---|---|---|
| Interest rate | Variable, usually the prime rate plus a margin | Fixed for the life of the loan |
| How you get the money | Draw what you need, when you need it, up to a limit | One lump sum at closing |
| Payments | Often interest-only during the draw period, then principal and interest | The same payment every month from the start |
| Interest charged on | Only the amount you’ve drawn | The full loan amount |
| Costs | Often low closing costs; some charge annual or inactivity fees | Closing costs that vary by lender |
| Best for | Ongoing or uncertain costs, such as a phased renovation | A one-time expense with a known cost |
Both are secured by your home, so both put it at risk if you can’t repay, and both usually allow a combined loan-to-value ratio of 80% to 90%.
What happens if rates rise
A HELOC’s rate is usually tied to the prime rate, which moves with the Federal Reserve’s rate decisions. When prime rises, so does your HELOC rate and your payment, typically starting with the next billing cycle.
For a $60,000 balance at 7.75%, the interest-only payment is $387.50 a month. If the rate rose 2 points to 9.75%, it would be $487.50, and the repayment-period payment would rise from $492.57 to $569.11. Rates can also fall, which is the HELOC’s upside. Check your HELOC agreement for a rate cap: the highest rate it can ever charge. Lenders must disclose the index, margin and any caps under Regulation Z §1026.40.
Worked example
You need $60,000. The home equity loan offer is 8.5% fixed for 15 years with $1,000 of closing costs. The HELOC offer is 7.75% variable with a 10-year interest-only draw period, 20 years of repayment and $250 of fees.
- Home equity loan: $590.84 a month for 15 years; $46,352 of interest, or $47,352 with closing costs.
- HELOC on its own schedule: $387.50 a month for 10 years, then $492.57 for 20 years; $104,717 of interest over 30 years.
- The same HELOC paid off in 15 years: $564.77 a month and $41,658 of interest, if the rate never changes.
The lower HELOC rate only wins if you pay it down as fast as the loan and rates don’t rise much. Making interest-only payments for a decade more than doubles the interest, and the payment jumps when the draw period ends; see what to do when your HELOC draw period ends.
Which one should you choose?
- Choose a home equity loan if you know the amount, want a payment that never changes, or are consolidating high-rate debt and want a fixed payoff date.
- Choose a HELOC if you’ll borrow in stages, want a safety net you may not use, or plan to repay quickly and can handle a rising payment.
- Consider a cash-out refinance only if you can also lower the rate on your first mortgage. Compare it with the cash-out refinance vs HELOC calculator.
Before you apply, check how much lenders may let you borrow with the home equity calculator, and read our guide to HELOC requirements.
Is the interest tax-deductible?
Only in limited cases. Interest on a HELOC or home equity loan is deductible if you itemize and use the money to buy, build or substantially improve the home that secures it, within the overall limit on mortgage debt. Interest on money used for anything else, such as paying off credit cards or buying a car, isn’t deductible. See IRS Publication 936.
When the HELOC draw period ends
When the interest-only draw period ends, you can’t borrow more and the payment switches to principal and interest, often a jump of 20% to 60% or more. Use the calculator above to see your repayment-period payment, then compare your options before the date arrives.
Read the full guide: Your HELOC draw period is ending: 6 options before the payment jumps.
Frequently asked questions
How is a HELOC payment calculated during the draw period?
What happens when the HELOC draw period ends?
Is HELOC interest tax-deductible?
Can a HELOC rate go up?
How much can I borrow with a HELOC?
Can you pay off a HELOC early?
HELOC or cash-out refinance — which is cheaper?
Is a HELOC or a home equity loan better?
Which has lower interest rates?
Why does the HELOC cost more in total when its rate is lower?
Can I lock in a fixed rate on a HELOC?
How much can I borrow with either one?
Sources
- What you should know about home equity lines of credit (HELOC brochure) — Consumer Financial Protection Bureau
- Regulation Z §1026.40 — requirements for home equity plans — Consumer Financial Protection Bureau
- Publication 936, Home Mortgage Interest Deduction — Internal Revenue Service
- Selected Interest Rates (H.15) — bank prime loan rate — Board of Governors of the Federal Reserve System