About the HELOC Calculator
A HELOC calculator estimates the interest-only payment during a home equity line of credit's draw period, based on how much of your line you have actually drawn. Because a HELOC is revolving and variable-rate, the payment changes with both your balance and the prevailing rate.
The formula
Interest-only payment = drawn balance · (annual rate / 12)The drawn balance is what you have actually borrowed, not the size of your approved line. HELOC rates are usually quoted as prime plus a margin, so they move when the prime rate moves.
How to use this calculator
- 1Enter your Home Value ($). The field starts at
500000, which you can overwrite. - 2Enter your Mortgage Balance ($). The field starts at
200000, which you can overwrite. - 3Enter your Amount Drawn ($). The field starts at
50000, which you can overwrite. - 4Enter your HELOC Rate (%). The field starts at
9, which you can overwrite. - 5Read the result straight away — it recalculates as you type, so there is no button to press. Use Share to copy a link that reopens the page with your exact numbers filled in.
Worked example
| Input | Value |
|---|---|
| Home Value ($) | 500000 |
| Mortgage Balance ($) | 200000 |
| Amount Drawn ($) | 50000 |
| HELOC Rate (%) | 9 |
Result
Available Line: $255,000
Interest-Only Payment: $375.00/mo
Annual Interest Cost: $4500.00
Those are the values the page loads with, so you can reproduce this result yourself and then change one field at a time to see what drives the outcome.
Understanding your result
A HELOC has two phases, and the difference between them catches borrowers out. During the draw period, typically ten years, you can borrow and repay freely and may pay interest only. When it ends, the line closes and the balance amortises over the remaining term — often ten to twenty years. Payments can double or more at that transition.
The variable rate is the other moving part. A HELOC taken out when prime was low can become considerably more expensive after a tightening cycle, and unlike a fixed second mortgage there is no protection from that. Check the lifetime rate cap in your agreement, because it defines your worst case.
Things worth knowing
- Model the payment after the draw period ends, not just the interest-only figure, before deciding how much to draw.
- Paying interest only means the balance never falls. Voluntary principal payments during the draw period are what keep the repayment phase manageable.
- Many HELOCs charge annual fees, and some add early closure fees if you cancel within the first few years.
- Lenders can reduce or freeze an unused line if property values fall or your credit deteriorates.
- Some lenders let you fix a portion of the balance at a set rate — useful if you expect rates to rise.
Frequently asked questions
How does a HELOC differ from a home equity loan?+
A HELOC is a revolving credit line with a variable rate that you draw from as needed. A home equity loan is a single lump sum at a fixed rate with fixed payments. The HELOC offers flexibility; the loan offers predictability.
What happens when the draw period ends?+
You can no longer borrow, and the outstanding balance begins amortising over the repayment period. If you have been paying interest only, the payment jumps significantly because it now includes principal.
Are HELOC rates fixed?+
Almost always variable, tied to the prime rate plus a margin, so your payment changes as rates move. Some lenders offer a fixed-rate conversion option on part of the balance.
Can I use a HELOC as an emergency fund?+
Some people do, but it is not a substitute for cash savings. Lenders can freeze or reduce lines precisely when conditions worsen — which is exactly when you would be relying on it.