How to use this calculator
- Home value and mortgage balance: your best estimate of what the home would sell for, and what you still owe on all existing loans against it.
- Maximum combined LTV: the share of your home’s value a lender will let all your loans add up to. Ask lenders what they offer; 80%, 85% and 90% are the options here.
- Amount you draw: what you expect to borrow. The calculator assumes you draw it all at the start, which shows the highest cost.
- Rate, draw period and repayment period: from the lender’s terms. A common structure is a 10-year draw period with interest-only payments, followed by 20 years of repayment.
How a HELOC payment works
Your credit limit comes from the combined loan-to-value cap:
During the draw period, the minimum payment is often interest only:
In the repayment period, the balance is paid off like a regular loan, with the standard amortization formula M = P × r(1+r)ⁿ ÷ ((1+r)ⁿ − 1), where r is the monthly rate and n the number of repayment months. Since the same balance now has to be repaid over fewer years, the payment jumps. That jump is called payment shock.
Worked example
Your home is worth $450,000 and you owe $250,000. A lender allows 85% CLTV.
- Credit limit: $450,000 × 0.85 − $250,000 = $132,500
- You draw $50,000 at 7.75%.
- Draw period (10 years): $50,000 × 0.0775 ÷ 12 = $322.92 a month. After ten years you still owe the full $50,000.
- Repayment period (20 years): $410.47 a month, $87.56 (27%) more, with no change in rate.
- Total interest over 30 years: $87,264, of which $38,750 is paid during the draw period.
Your combined LTV after the draw is 66.7%, and you keep $150,000 of equity.
How much you could borrow
Same $450,000 home and $250,000 mortgage:
| Maximum CLTV | Total debt allowed | Credit limit |
|---|---|---|
| 80% | $360,000 | $110,000 |
| 85% | $382,500 | $132,500 |
| 90% | $405,000 | $155,000 |
Payments at different rates
$50,000 drawn, 10-year draw period, 20-year repayment:
| Rate | Interest-only payment | Repayment payment | Total interest |
|---|---|---|---|
| 6.75% | $281.25 | $380.18 | $74,994 |
| 7.75% | $322.92 | $410.47 | $87,264 |
| 8.75% | $364.58 | $441.86 | $99,795 |
| 9.75% | $406.25 | $474.26 | $112,572 |
Because HELOC rates are usually variable, the real risk is a rate rise and the switch to repayment at the same time. If you borrow at 7.75% and the rate is 9.75% when repayment starts, your payment goes from $322.92 to $474.26, a 47% jump.
The repayment period matters
| Draw / repayment | Payment after the draw | Increase | Total interest |
|---|---|---|---|
| 10 / 20 years | $410.47 | +27% | $87,264 |
| 10 / 15 years | $470.64 | +46% | $73,465 |
| 10 / 10 years | $600.05 | +86% | $60,756 |
| 5 / 20 years | $410.47 | +27% | $67,889 |
A shorter repayment period means less interest but a bigger jump. A shorter draw period cuts the interest you pay while the balance isn’t shrinking.
Tips for using a HELOC
- Pay some principal early. Interest-only is the minimum, not a plan. Even modest principal payments shrink the jump later.
- Borrow for things that last. Your home secures the line, so falling behind can put it at risk.
- Ask about rate caps and whether you can convert part of the balance to a fixed rate.
- Check your budget at the repayment payment, not the interest-only one. Our debt-to-income ratio calculator shows how the higher payment fits with your other debts.
- Compare alternatives. A home equity loan gives a fixed rate and payment from day one; a cash-out refinance replaces your first mortgage.
Assumptions and limitations
The calculator assumes you draw the full amount on day one, make only interest payments during the draw period, keep the same rate throughout and then repay in equal monthly payments. Real HELOCs may require some principal during the draw, charge annual or inactivity fees, have minimum draw amounts, or end with a balloon payment. Your lender’s disclosures describe your plan’s exact terms.
Sources
- Consumer Financial Protection Bureau: What is a home equity line of credit (HELOC)?
- Consumer Financial Protection Bureau: What you should know about home equity lines of credit
This calculator gives estimates for planning only and isn’t financial advice.
Frequently asked questions
How much can I borrow with a HELOC?
Lenders usually cap all the loans on your home together, called combined loan-to-value (CLTV). Multiply your home's value by that cap and subtract your mortgage balance. With a $450,000 home, a $250,000 mortgage and an 85% cap, that's $382,500 minus $250,000, or a $132,500 line.
How is a HELOC interest-only payment calculated?
Multiply the balance by the annual rate and divide by 12. A $50,000 balance at 7.75% costs $50,000 × 0.0775 ÷ 12 = $322.92 a month. That payment covers interest only, so the balance doesn't go down at all.
What happens when the HELOC draw period ends?
You can no longer borrow, and the balance is repaid with principal and interest over the repayment period. Payments are often much higher at that point. In our example, the payment on $50,000 rises from $322.92 to $410.47 over 20 years, or to $470.64 over 15 years. Some plans instead require the whole balance as a balloon payment.
Are HELOC rates fixed or variable?
Usually variable. The rate follows a published index plus a fixed margin, so your payment can change from month to month. Some plans let you convert part of the balance to a fixed rate. If you want one fixed payment from the start, a home equity loan works that way.
Can I pay principal during the draw period?
Yes, on most HELOCs the interest-only payment is just the minimum. Any principal you pay lowers the balance and the interest, and makes the jump at the end of the draw period smaller. On many lines you can borrow it again while the draw period lasts.
Is a HELOC better than a cash-out refinance?
If your first mortgage has a low rate, a HELOC lets you borrow without replacing it, and you only pay interest on what you use. A cash-out refinance can make sense when current rates are lower than your mortgage rate or you want one fixed payment. Compare both with the refinance calculator.
Updated November 2026. Results are estimates for educational purposes and depend on the inputs you provide.