HELOC Calculator

Calculate HELOC payments across draw and repayment periods, estimate your maximum credit line, and compare costs with home equity loans and cash-out refinancing.

💳 CREDIT LIMIT ($)

💰 AMOUNT DRAWN ($)

📅 DRAW PERIOD (Interest-Only)

% Draw Period Rate

Draw Period (years)

📅 REPAYMENT PERIOD (Principal + Interest)

% Repayment Rate

Repayment Period (years)

💳 CLOSING COSTS ($)

📆 ANNUAL FEE ($/yr)

DRAW PERIOD (10 years)

$688/mo

Interest-only payments

REPAYMENT PERIOD (20 years)

$900/mo

Principal + Interest

TOTAL INTEREST

$198,434

TOTAL FEES

$3,000

TOTAL COST

$301,434

PERIOD BREAKDOWN

	Draw Period	Repayment Period	Total
Duration	10 years (120 mo)	20 years (240 mo)	30 years
Payment Type	Interest-only	Principal + Interest	—
Monthly Payment	$688	$900	—
Interest Rate	8.25% (variable)	9% (variable)	—
Total Interest	$82,500	$115,934	$198,434
Annual Fees	$500	$1,000	$1,500

📐 How HELOC is Calculated

Determine credit limit
$500,000 home × 85% LTV − $250,000 mortgage
= HELOC limit: $175,000
Draw period payment
$100,000 drawn × (8.25% / 12)
= $687/mo (interest-only)
Repayment period payment
PMT(9%/12, 240 months, $100,000)
= $900/mo (P&I)
Total cost over 30 years
$687×120 + $900×240 + $1,500 closing + $50×30 annual
= $300,940 total

Rate Comparison

HELOC

8.25% variable

Draw as needed | Interest-only initially | 10+20 yr

Home Equity Loan

8.5% fixed

Lump sum | Fixed P&I | 15 yr

Cash-Out Refinance

6.8% fixed

Replaces mortgage | Full closing costs

⚠️

Payment Shock Warning

The transition from interest-only payments (draw period) to full P&I payments (repayment period) can increase your monthly payment by 30-50% or more. If rates have also risen during the draw period, the shock is compounded. Always calculate your repayment period payment at a rate 2-3% higher than today's rate to stress-test affordability.

💡 What Is a HELOC (Home Equity Line of Credit)?

How a HELOC Works: Two Phases

A HELOC operates in two distinct phases, each with different rules and payment structures:

	Draw Period	Repayment Period
Duration	5-10 years (typically 10)	10-20 years (typically 20)
Borrowing	Draw up to limit, repay, reborrow	No new draws allowed
Payment	Interest-only (minimum)	Principal + Interest
Rate	Variable (Prime + margin)	Variable (Prime + margin)
Balance	Can stay flat or grow	Must reach $0 by end

HELOC Interest Rate Structure

HELOC rates are variable and typically calculated as: HELOC Rate = Prime Rate + Margin. The Prime Rate (currently ~8.5% as of 2024) is set by major banks and moves with the Federal Funds Rate. The margin (0.5-2%) is set by the lender based on your creditworthiness. If the Fed raises rates by 0.25%, your HELOC rate increases 0.25%.

Most HELOCs have rate caps: a lifetime cap (maximum rate ever, typically 18-21%), a periodic cap (max increase per period, typically 2% per year), and sometimes a floor (minimum rate, often the initial rate).

Costs of a HELOC

Upfront costs (1-5% of credit limit):

Appraisal fee: $300-$600
Application fee: $0-$500
Title search: $100-$250
Origination fee: 0-1% (many lenders waive this)

Ongoing costs:

Annual fee: $25-$100/year (some lenders waive)
Transaction fees: $0-$25 per draw (rare)
Early termination fee: $300-$500 if closed within 2-3 years
Inactivity fee: some lenders charge if you don't use the line

HELOC vs Home Equity Loan vs Cash-Out Refinance

	HELOC	Home Equity Loan	Cash-Out Refi
Disbursement	Draw as needed	One-time lump sum	One-time lump sum
Rate	Variable (7-9%)	Fixed (8-10%)	Fixed (6-8%)
Payment	Interest-only then P&I	Fixed P&I from start	Fixed P&I from start
Closing costs	0-2% (often waived)	2-5%	2-6%
Flexibility	High (draw/repay/redraw)	None (fixed amount)	None (fixed amount)
Risk	Variable rate + payment shock	Predictable payments	Replaces existing mortgage
Best for	Ongoing/uncertain expenses	One-time known expenses	Low rates + need cash

5 Smart Uses for a HELOC

Phased home renovations — Draw funds as each phase of renovation starts, pay interest only on amount used
Education costs — Draw tuition payments semester by semester instead of borrowing full amount upfront
Emergency fund backup — Open a HELOC as standby credit (no cost if unused) for unexpected large expenses
Bridge financing — Use HELOC to fund down payment on new home before selling current home
Business startup costs — Draw operating capital as needed during early business phase (high risk — your home is collateral)

Example: $100,000 HELOC at 8.25%. During draw period: $687/mo (interest-only). When repayment starts at 9% for 20 years: $900/mo (P&I). That's a 31% payment increase — plan for it.