HELOC payment calculator

How this HELOC calculator works

A home equity line of credit has two distinct phases, and confusing them is the most expensive mistake borrowers make. During the draw period — typically 10 years — you can borrow against the line, and most lenders require only interest payments on whatever you've drawn. The math is simple: balance × annual rate ÷ 12. Draw $60,000 at 7.25% and the required payment is $362.50 a month, none of which touches the principal.

Then the draw period ends, the line closes to new borrowing, and the loan converts to the repayment period — typically 20 years of fully amortizing principal-and-interest payments, calculated with the standard mortgage amortization formula on whatever balance remains. This calculator models both phases: it assumes the balance is drawn on day one, applies any extra principal payments you choose to make during the draw, then amortizes the remaining balance over the repayment period. On the chart, the solid yellow line is your remaining balance, the dashed blue line is cumulative interest paid, and the vertical orange marker is where the draw period converts to repayment.

One honest simplification: nearly all HELOCs carry variable rates tied to prime, and this calculator holds the rate constant. Treat the output as a snapshot at today's rate — and stress-test your budget by re-running the numbers a point or two higher, because over a 30-year total term, rates will not sit still.

How the revolving part actually works — a worked example

A HELOC is a revolving line, like a credit card secured by your house: during the draw period you can borrow, repay, and borrow again, and you only pay interest on what's outstanding — never on the unused limit. Your required payment floats with the balance. Here's what a realistic decade looks like on a $100,000 line at 7.25%:

Notice two things. The payment tracks the balance up and down during the draw — that flexibility is the product's whole appeal for staged projects and uncertain costs. And whatever is outstanding when the draw ends is what converts to principal-and-interest, regardless of when you borrowed it. This calculator simplifies by assuming your balance is drawn on day one, which slightly overstates draw-period interest for staged borrowers — for the payment-shock math that matters, just enter the balance you expect to carry into conversion.

The payment shock nobody budgets for

The bar above the chart is the point of this page. Interest-only payments feel comfortable — that's the product design. But at the default numbers, the required payment jumps roughly 31% the month the draw period ends, and the borrower gets no vote. On larger balances or shorter repayment periods, the jump is bigger. Regulators have flagged this "payment shock" for years because it reliably surprises people who set their budget around the draw-period payment a decade earlier.

There's a second, quieter shock in the totals: interest-only payments mean a decade of paying without owing a dollar less. At the defaults, the draw period alone costs $43,500 in interest while the balance stays at $60,000 — and total interest over the full life approaches the original balance itself. The fix for both shocks is the same and it's the extra-principal field above: even modest voluntary principal payments during the draw shrink the converted balance, the payment jump, and the lifetime interest simultaneously.

Is your HELOC interest actually tax-deductible?

Probably not — and it's worth knowing why before a lender's marketing implies otherwise. Under rules the One Big Beautiful Bill Act made permanent, HELOC interest is deductible only if the funds are used to buy, build, or substantially improve the home securing the loan. A kitchen remodel or room addition qualifies. Debt consolidation, a car, tuition, or a vacation does not — the IRS applies a use-of-funds test, and the loan being secured by your house is irrelevant.

Even qualifying borrowers face two more gates. First, the deduction is capped at $750,000 of combined acquisition debt — your first mortgage plus the HELOC together ($375,000 married filing separately; mortgages from before December 16, 2017 keep the old $1 million cap, but a new HELOC doesn't inherit it). Second, you must itemize, and with 2026 standard deductions at $16,100 single and $32,200 married filing jointly, roughly nine in ten households don't. If you do qualify on all three counts, enter your marginal tax rate above and the calculator shows your effective after-tax interest cost. If you don't, leave it at zero — that's the honest default. Keep contractor invoices and receipts either way; the burden of proof is yours.

HELOC vs. home equity loan vs. cash-out refinance

The decisive question in a high-rate environment: what's your current mortgage rate? If you're sitting on a low fixed rate from years past, a cash-out refinance reprices your entire balance at today's rates to extract some equity — usually a terrible trade. A HELOC or home equity loan leaves the cheap mortgage untouched and prices only the new borrowing. To see what the money you're borrowing could earn instead — or model the payoff alongside the rest of your finances — the multi-phase compound interest calculator handles the other side of the ledger.

Frequently asked questions

This calculator is for education, not financial or tax advice. HELOC terms vary by lender — confirm your draw period, repayment term, rate structure, and fees against your actual agreement, and talk to a CPA about deductibility for your situation.