Calculate HELOC interest-only and repayment payments, maximum borrowing capacity, CLTV, total interest cost, and rate sensitivity analysis.
A Home Equity Line of Credit (HELOC) is a revolving credit line secured by your home, typically with a draw period (5–10 years) for interest-only payments followed by a repayment period (10–20 years) with fully amortizing payments. The flexible draw period makes HELOCs popular for home improvements, education, and debt consolidation.
Understanding HELOC costs requires planning for both phases. During the draw period, you pay only interest — keeping payments low but not reducing principal. When the repayment period begins, payments jump significantly because you must now repay the full balance with interest. This "payment shock" catches many borrowers off guard.
This calculator models both HELOC phases with current draw amounts. See interest-only payments during the draw period, fully amortizing payments during repayment, maximum borrowing capacity based on your home equity, and a rate sensitivity analysis — crucial since most HELOCs have variable rates tied to the Prime Rate. Check the example with realistic values before reporting.
HELOCs have two distinct payment phases that standard loan calculators don't model. This calculator shows both the low interest-only draw payments AND the higher repayment payments, rate sensitivity for variable APR, and maximum borrowing capacity based on your equity position. That makes it much easier to plan for payment shock before the draw period ends.
Interest-Only Payment = Draw Amount × (Annual Rate / 12). Repayment Payment = Balance × [r(1+r)^n] / [(1+r)^n − 1]. Max HELOC ≈ Home Value × 85% − Mortgage Balance.
Result: Interest-only: $344/mo — Repayment: $427/mo — Total interest: $64,500
Drawing $50,000 at 8.25% costs $344/mo during the 10-year draw period (interest only). When repayment begins, the fully amortizing payment rises to $427/mo over 20 years. Total interest over both phases is approximately $64,500. CLTV of 73% is within typical limits.
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A HELOC is a revolving line of credit with variable rates and flexible draw/repayment periods. A home equity loan is a fixed-rate, lump-sum loan with fixed monthly payments. HELOCs are better for ongoing or uncertain expenses; home equity loans for one-time needs.
Most lenders allow borrowing up to 80-85% of your home value minus your mortgage balance. For example, a $450K home with a $280K mortgage allows up to $102,500 (at 85% CLTV). Credit score, income, and DTI affect the actual approved amount.
You can no longer borrow and must begin repaying the outstanding balance with principal and interest payments. This typically doubles or more your monthly payment. Some lenders offer a conversion to fixed-rate at this point.
Most HELOCs have variable rates tied to the Prime Rate plus a margin. Some offer fixed-rate conversion options. The variable rate means your payments fluctuate with Fed rate changes — a 1% rate increase on a $50K balance adds about $42/month.
Yes. A HELOC is secured by your home. If you default on payments, the lender can foreclose. This is one of the key risks — you are converting unsecured debt into debt backed by your home. Only borrow what you can reliably repay.
Under current tax law (TCJA), HELOC interest is deductible only if the funds are used to buy, build, or substantially improve the home securing the loan. Interest on HELOC funds used for other purposes (debt consolidation, education, etc.) is not deductible.