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.
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.
Usable HELOC Limit = min(Entered Credit Limit, Home Value × 85% − Mortgage Balance). Interest-Only Payment = Amount Drawn × (Annual Rate / 12). Repayment Payment = Balance × [r(1+r)^n] / [(1+r)^n − 1].
Result: Interest-only: $344/mo — Repayment: $426/mo — Usable line: $80,000
With a $450,000 home and $280,000 first mortgage, the typical 85% CLTV screen allows about $102,500 of combined home-equity borrowing. The entered HELOC line is smaller at $80,000, so the worksheet uses that as the usable limit. A $50,000 draw at 8.25% costs about $344/month during the 10-year draw period and about $426/month over the 20-year repayment period. Total interest across both phases is about $93,498, and the modeled CLTV is about 73.3%.
The draw period keeps payments deceptively low because you can often pay interest only on what you have borrowed. Once the repayment phase begins, the same balance must be amortized over a shorter remaining term, which is why HELOC payment shock can be severe.
Most HELOCs float with Prime plus a margin, so the cost of carrying the balance can move materially over time. Even if the initial draw payment feels manageable, a rate increase can raise both the interest-only payment now and the eventual repayment payment later.
Lenders may approve up to 80–85% combined loan-to-value, but a higher line does not automatically mean it is wise to draw that amount. Looking at CLTV, payment shock, and rate sensitivity together gives a more realistic picture of whether the line still fits your budget if conditions worsen.
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This worksheet first applies a typical 85% combined-loan-to-value screen against the entered home value and first-mortgage balance, then compares that result with the entered HELOC credit limit to determine the usable line in the model. It calculates the draw-period payment as interest only on the modeled amount drawn, then computes the repayment-period payment by fully amortizing that same balance over the selected repayment term. Rate-sensitivity and draw-size tables rerun the same math on alternate assumptions.
It is a planning worksheet rather than a lender disclosure. Real HELOCs can use different CLTV limits, rate floors, annual fees, promotional periods, fixed-rate conversion options, and changing balances during the draw period.
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.