Two phases, two very different payments
A HELOC isn’t one loan with one payment — it’s two phases stitched together. For the first decade or so you pay only interest, so the monthly cost is low and the balance never moves. Then the line flips into repayment: the same balance now has to be paid off in full, principal and all, over the years that remain. That switch is where borrowers get burned, because the payment can more than double the month it happens.
How the line is sized
line = home value × max LTV − mortgage balance
Lenders cap your total borrowing at a combined loan-to-value (LTV), counting your first mortgage and the HELOC together. The repayment payment then uses the amortization formula M = P · r(1 + r)n÷ ((1 + r)n − 1) over the repayment months, while the draw-period payment is simply the balance × the monthly rate.
What makes this calculator different
- Your real available credit. It works out the line you can actually open from your home value, the lender’s max combined LTV, and the balance left on your first mortgage — not just a number you type in.
- Both phases, modeled. The interest-only draw period and the amortizing repayment period are computed separately, so you see what each one costs.
- The payment shock, dramatized. Most HELOC calculators show a single payment and ignore the phase change. We spell out the exact jump — often more than double — when interest-only ends.
- Combined LTV after drawing. See how much equity cushion you’d have left, and a warning if you’d push past 80%.
Frequently asked questions
How does a HELOC work?+
A home equity line of credit (HELOC) lets you borrow against the equity in your home — the gap between what it’s worth and what you still owe. The lender approves a credit line based on your home value, your existing mortgage, and a maximum combined loan-to-value (often 80–90%). You can draw on the line, repay, and draw again, much like a credit card secured by your house. Because the home is collateral, rates are far lower than unsecured credit, but the lender can foreclose if you don’t pay.
What’s the difference between the draw period and the repayment period?+
A HELOC has two phases. During the draw period — typically 10 years — you can borrow freely and usually make interest-only payments, so the balance never shrinks. When the draw period ends, the line enters the repayment period — typically 20 years — where you can no longer borrow and your payments fully amortize the balance, covering principal and interest. This calculator models both phases so you see exactly what each one costs.
Why does my payment jump so much when the draw period ends?+
During the draw period you’re only paying interest, so the payment is small. When repayment begins, that same balance has to be paid off in full over the remaining years, so every payment now includes principal too. The result is a payment shock — the monthly payment often more than doubles overnight. Many borrowers are caught off guard. The warm callout above shows your exact jump so you can plan for it before you draw.
HELOC vs. a home equity loan — which should I choose?+
A home equity loan hands you a lump sum up front at a fixed rate, with equal payments from day one — predictable, good for a one-time expense. A HELOC is a revolving line you draw on as needed, usually at a variable rate, with the interest-only draw period and later payment jump modeled here. A HELOC offers flexibility and lower early payments; a home equity loan offers rate certainty and no payment surprise. Match the product to whether your need is one-time or ongoing.
Are HELOC rates fixed or variable?+
Most HELOCs carry a variable rate, usually the prime rate plus a margin, so your payment moves as rates change — and the interest-only payment during the draw period rises and falls with it. Some lenders offer the option to lock a portion of the balance at a fixed rate. This calculator assumes a single constant rate to keep scenarios comparable; in reality, build in headroom for rate increases on top of the payment jump.
Disclaimer: This calculator is for educational purposes only. HELOC rates are typically variable and tied to an index, so real payments will change over time; this tool assumes a single constant rate to keep scenarios comparable. Actual credit lines, LTV limits, fees, and terms vary by lender and credit profile. It is not financial or lending advice.