HELOC Calculator
A home equity line has two lives: the draw phase, when you pay interest only, and the repayment phase, when the balance amortizes. Price both before you draw a dollar.
A credit line with two distinct lives
During the draw period (often 10 years) a HELOC behaves like a credit card secured by your house: you borrow and repay flexibly and owe interest only on what is drawn. Then the door locks: whatever balance remains converts into an amortizing loan over the repayment period (often 20 years), and the payment jumps — on a balance that may have felt painless for a decade.
Draw payment = drawn balance × rate ÷ 12 (interest only) · Repayment payment = that balance amortized over the repayment years
Example: $40,000 drawn at 8%: the draw-phase payment is $266.67. When repayment begins it becomes about $334.58 — and that assumes you draw nothing more and the variable rate never rises, two generous assumptions.
The variable-rate warning, with numbers
HELOC rates float with the prime rate. The result panel shows what a 2-point rise does to your draw payment — on a large drawn balance, a tightening cycle can add hundreds a month with no action of yours. A fixed-rate home equity loan is the boring sibling; compare them before choosing the exciting one.
How this is calculated
Draw phase: interest-only on the drawn amount at the rate entered (balance × rate ÷ 12). Repayment phase: the drawn balance amortized level over the repayment years at the same rate. No further draws are assumed during repayment, and the rate is held constant — the result panel separately stresses the payment at rate + 2 points so the floating risk is visible rather than buried.
Frequently asked questions
HELOC or home equity loan?
A HELOC is a revolving line — flexible, variable-rate, interest-only at first. A home equity loan is a fixed lump sum with a fixed payment from day one. Flexibility versus certainty; the rate risk is the deciding difference for most people.
Can the bank freeze my HELOC?
Yes — lenders may freeze or reduce a line if the home's value falls significantly or your circumstances change, a power many borrowers discover in a downturn, exactly when the line felt essential.
What happens if I still owe at the end of the draw period?
The balance converts to the repayment phase as modeled here. A few older products demand a balloon instead — your agreement's repayment section is the document that matters.
Is HELOC interest tax-deductible?
In the US, only when the funds buy, build or substantially improve the home securing the loan, within limits. General information only — your tax situation governs.
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