HELOC Payment Calculator
Model a home equity line of credit through both phases: interest-only payments during the draw period and the payment jump when principal repayment begins.
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Two loans in one product
A home equity line of credit has two phases that behave completely differently. During the draw period, commonly ten years, you can borrow up to a limit and typically pay interest only. When the draw period ends, the balance converts to an amortising loan over the remaining term, usually another ten to twenty years, and the payment jumps sharply. A borrower paying 400 a month in interest can find themselves owing 900 the following month with nothing having changed except the calendar.
The rate is variable and the payment follows it
Most lines are tied to a published prime rate plus a margin, so the payment moves with central bank policy. During the 2022 to 2023 tightening cycle, prime rose more than five percentage points, and interest-only payments on existing lines roughly doubled within eighteen months. Modelling a rate rise is not pessimism, it is the base case for a product whose defining feature is a floating rate over a twenty year life.
The collateral is your house
A home equity line is secured debt in second position behind the first mortgage. That is why the rate is far below a personal loan or a card, and it is also why the consequence of not paying is different in kind. Lenders can also reduce or freeze an unused line if property values fall or your credit changes, which happened widely in 2008 and again in 2020, so an undrawn line is not a guaranteed reserve.
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Frequently Asked Questions
How much can I borrow on a HELOC?
Lenders typically allow a combined loan to value of 80 to 90 percent, meaning the first mortgage plus the line cannot exceed that share of the appraised value. The calculator shows the available line at several thresholds.
What is payment shock?
The jump when the interest-only draw period ends and principal repayment begins. It commonly doubles the payment or more, and it is the single most common surprise with this product. The calculator shows both payments side by side.
Is the interest tax deductible?
In the United States, only if the funds were used to buy, build or substantially improve the home securing the loan, under rules that changed in 2017. Using a line to consolidate other debt or fund spending makes the interest non deductible. Confirm with a tax adviser.
Can the lender reduce my line?
Yes. Most agreements permit a lender to reduce or freeze an undrawn line if property values fall, your credit deteriorates or the loan is in default. This happened widely in 2008 and again in 2020, so an unused line is not a guaranteed emergency reserve.
Is a HELOC better than a home equity loan?
A line is flexible and floating rate; a loan is a fixed lump sum at a fixed rate. Choose the line where the need is uncertain or staged and the loan where the amount is known and rate certainty matters.
Privacy & Security
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How to Use
Enter your home value, first mortgage balance and draw amount to see both payment phases.
Disclaimer: This tool is provided "as is" without warranty of any kind. Results are for educational and utility purposes.
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