HELOC draw and repayment payments
How to enter your assumptions
A home equity line of credit works in two phases. During the draw period you can borrow against your equity and usually pay only interest. When it ends, the repayment period begins and you pay back principal as well. This calculator models that sequence with one deliberate simplification: you borrow the whole amount at the start and the rate stays the same. Enter the amount drawn, a rate, the number of draw years and the number of repayment years. Closing costs and an annual fee are optional.
The three tabs answer three questions. Payments shows both monthly payments, the schedule and the cost. Capacity estimates how much more equity could be borrowed against under a loan-to-value limit you choose. Compare rates reruns the same line at a second rate. Nothing is calculated until you press Calculate.
Read the results in order. The payment tiles come first, then a cash-flow table that shows what you receive, what you pay and what the line costs in total, then a balance chart and the full schedule. If you want one lump sum at a fixed rate, a home equity loan is the better comparison. This page is for a line you draw on and then repay.
Interest-only payments and payment shock
Take 50,000 at 8% with a 5-year draw period and 15 years of repayment. Interest is charged on the balance each month, so the interest-only payment is 50,000 × 8% ÷ 12, or 333.33. Nothing reduces the balance during those 60 months, so after five years you still owe the full 50,000.
When repayment starts, the same balance has to be paid off over 180 months, and the payment becomes 477.83. That is 144.49 more each month, a rise of 43.3%. This jump is often called payment shock. It happens even though the rate never changed, because the payment now includes principal. Over the whole line you pay 106,008.69, of which 56,008.69 is interest.
Interest-only payments feel cheap because they leave the debt untouched. A shorter draw period brings repayment sooner: with no draw period the payment starts at 477.83 and total interest is 36,009, compared with 56,009 for the five-year draw, because the balance falls from the first month instead of staying flat. Check what you would do if the higher payment arrived before your income rose.
Payment shock is a cash-flow question as much as an interest question. Before opening a line, ask what your budget looks like in the first month of repayment, not just during the draw. Some borrowers repay principal voluntarily during the draw period so that the jump is smaller; the schedule here shows the contractual minimum, so any extra principal is a step you control. If your income depends on something that may change in five years, such as a contract or a promotion, stress the plan with the compare tab and a higher rate.
The repayment formula and schedule
Repayment uses the standard level-payment formula: M = P × i ÷ (1 − (1 + i)−n), where P is the balance when repayment begins, i is the annual rate divided by 1,200 and n is the number of monthly payments. At a 0% rate the formula reduces to P ÷ n, which is 277.78 for 50,000 over 180 months, and the draw-phase payment is 0.00. The last payment is capped at what is still owed.
The schedule labels every row as draw or repayment. In the draw rows the interest equals the payment and the principal is zero. In the repayment rows interest shrinks and principal grows each month because interest is charged on a falling balance. View it by year or by month, read the same numbers in the chart summary, or export the ledger as a CSV with fixed column headings.
Two details of the schedule are worth knowing. First, the repayment payment is recalculated from the balance when repayment begins, so it depends only on that balance, the rate and the number of repayment months. Second, the last payment can be a little smaller than the others because it is capped at what is still owed, which makes the balance end at exactly zero instead of drifting by a few cents of rounding. The CSV export carries the same rows and labels in a fixed layout you can open in a spreadsheet.
Closing costs, annual fees and cash received
Now add 2,000 of closing costs and a 50 annual fee charged at the end of each of the five draw years. The annual fees add up to 250. Closing costs can be paid in two ways. If they are deducted from the draw, you receive 48,000 of the 50,000; if you pay them separately, you receive the full 50,000 and hand over 2,000 yourself. Both paths leave the same net funding of 48,000 and the same payments, because fees are never added to the balance in this model. Count each fee once.
Total borrowing cost is interest plus closing costs plus annual fees: 56,008.69 + 2,000.00 + 250.00 = 58,258.69. The annualized cash-flow cost estimate finds the rate that makes all payments and annual fees, discounted back to day one, equal the net funding. For this example it is 8.56% nominal (8.90% effective) against the 8% rate. It is a useful comparison of cost, but it is not the APR a lender discloses for a HELOC, which follows its own rules, and it will differ from calculators that time the fees differently.
Ask any lender to show closing costs, annual fees, inactivity or early-closure fees and any minimum draw in writing, since each can change the true cost of a line that you use only lightly. Also ask whether the line must stay open for a minimum period and what it costs to close it early.
How much equity could support a HELOC?
Lenders commonly look at combined loan-to-value, which is all loans secured by the home divided by its value. Capacity is the value times your chosen limit, minus what you already owe. For a 600,000 home with a 250,000 first mortgage and an 80% limit, the most total debt is 480,000 and the additional capacity is 230,000. At 85% it is 260,000 and at 75% it is 200,000. Add a 40,000 second lien and the 80% capacity falls to 190,000.
If the liens already exceed the limit, the answer is zero, not a negative number: with 340,000 owed on a 400,000 home, the 80% limit is 320,000, so the shortfall is 20,000. The result is an arithmetic estimate on your own value and limit. A lender looks at appraisal, credit, income and other conditions, and this page makes no statement about whether you would qualify.
Combined loan-to-value limits differ by lender, property type and whether you live in the home, and some lenders cap the total below the 80% used in the example. Treat the capacity table as a way to see how sensitive the answer is to the limit, then ask what limit applies to you.
Rate sensitivity and fixed-loan alternatives
Most HELOCs have variable rates, so the payment can change after you borrow. The Consumer Financial Protection Bureau explains the draw and repayment phases and the risks of a variable rate. The compare tab shows one what-if. At 10% instead of 8%, the same 50,000 line has a draw payment of 416.67and a repayment payment of 537.30, which is 59.48 more each month than at 8%, and total interest rises to 71,714. It is not a forecast and does not follow a path of resets.
If you prefer a payment that never changes, compare a fixed home equity loan, which pays a lump sum on a fixed schedule. To see whether replacing your first mortgage is better, compare cash-out refinancing, and before you add any new payment, check your debt-to-income budget. The real estate calculators page lists the other housing tools.
Before you rely on a comparison rate, find out how your own line adjusts: which index it follows, what margin is added, how often the rate can change, and whether there is a periodic or lifetime cap. A line that starts at a low introductory rate can behave very differently from the flat rate assumed here. The compare tab shows how much each percentage point matters; it does not predict where your rate will go.
HELOC questions
Why does the repayment payment rise?
Principal starts being repaid after the interest-only draw phase. A higher rate can increase it further.
Does this model future withdrawals?
No. It assumes the whole entered amount is drawn at the start and no new withdrawals occur.
How much can I borrow?
Capacity mode applies your CLTV assumption to value and subtracts existing liens. A lender considers additional factors.
Are annual fees charged for the whole term?
This model charges them at each completed draw year only. Check your agreement for different timing.
Is the annualized cost the lender's HELOC APR?
No. It includes the selected cash fees under a stated scenario and must not replace the lender's disclosure.
Can I use a lower future rate?
Enter it as a separate scenario. The comparison is conditional and does not predict rate changes.
Your home secures a HELOC, so missed payments put it at risk. Ask a lender about the index and margin behind the rate, any rate cap, the length of the draw and repayment periods, the annual fee, the closing costs, early-closure charges and what happens if you sell. This page does not give tax advice.