HELOC Payment Calculator
Understand your HELOC payments during draw and repayment periods. Avoid payment shock and plan ahead.
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HELOC Payment Calculator
Understand your HELOC payments during draw and repayment periods
Available credit: $25,000
Variable rate - can change over time
Interest-only payments during this period
Principal + interest payments
📊 HELOC Timeline
💳 Draw Period Payment
Years 1-10 (Interest-Only)
$531.25
per month
📈 Repayment Period Payment
Years 11-30 (P&I)
$650.867
per month
Payment Shock Alert!
Your payment will increase by $119.617/month (+23%) when the repayment period starts.
Plan ahead for this increase! Many homeowners are caught off guard when their HELOC enters the repayment period.
💰 Draw Period Total
$63,750
Interest-only payments
📊 Repayment Total
$156,208.182
Principal + interest
💸 Total Interest
$144,958.182
Over 30 years
📋 Payment Breakdown
✅ HELOC Advantages
- •Flexible borrowing - draw only what you need
- •Interest-only payments during draw period
- •Revolving credit - reuse as you pay down
- •Lower rates than credit cards or personal loans
- •Tax-deductible interest (if used for home improvements)
⚠️ HELOC Risks
- •Variable rate - payments can increase
- •Payment shock when repayment period starts
- •Your home is collateral - risk of foreclosure
- •Temptation to overspend (easy access to cash)
- •Lender can freeze or reduce credit line
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Understanding HELOC Payments
What is a HELOC?
A Home Equity Line of Credit (HELOC) is a revolving credit line secured by your home equity. It works like a credit card - you can borrow, repay, and borrow again up to your credit limit during the draw period.
Example: You have a $100,000 HELOC. You draw $50,000 for home improvements. You pay it down to $30,000. You can now draw up to $70,000 again ($100,000 limit - $30,000 balance).
HELOC Timeline Explained
📅 Draw Period (Typically 10 Years)
- •Borrow as needed: Draw funds up to your credit limit
- •Interest-only payments: Pay only interest on what you've drawn
- •Revolving credit: Repay and borrow again
- •Lower payments: Typically $200-$500/month on $75K drawn
⚠️ Repayment Period (Typically 20 Years)
- •No more borrowing: Line of credit closes
- •Principal + interest: Pay down the full balance
- •Payment shock: Payments can double or triple
- •Higher payments: Typically $600-$1,200/month on $75K balance
HELOC vs Home Equity Loan vs Cash-Out Refinance
| Feature | HELOC | Home Equity Loan | Cash-Out Refinance |
|---|---|---|---|
| Interest Rate | Variable (6-10%) | Fixed (7-11%) | Fixed (6-8%) |
| Payment Type | Interest-only, then P&I | Fixed P&I | Fixed P&I |
| Borrowing | Revolving (draw as needed) | Lump sum | Lump sum |
| Closing Costs | $0-$500 | $500-$2,000 | $3,000-$10,000 |
| Max LTV | 85% CLTV | 85% CLTV | 80% LTV |
| Best For | Ongoing projects, emergency fund | One-time expense, debt consolidation | Lower rate, large amount needed |
Frequently Asked Questions
What happens when my draw period ends?
When the draw period ends (typically after 10 years), you can no longer borrow from your HELOC. The line converts to a repayment period where you must pay principal + interest. This causes "payment shock" - your payment can increase 100-200%. Plan ahead by making principal payments during the draw period or refinancing before it ends.
Can HELOC rates change?
Yes! Most HELOCs have variable rates tied to the Prime Rate. When the Fed raises rates, your HELOC rate increases (and your payment goes up). When the Fed cuts rates, your rate decreases. Some lenders offer fixed-rate options or allow you to convert portions to fixed rates.
Should I make principal payments during the draw period?
Yes, if possible! Making principal payments during the draw period reduces your balance and future repayment period payments. Even an extra $100-$200/month can save thousands in interest and reduce payment shock. Plus, you free up credit to borrow again if needed.
Can my lender freeze or reduce my HELOC?
Yes. Lenders can freeze or reduce your HELOC if: (1) Your home value drops significantly, (2) Your credit score declines, (3) You miss payments, or (4) Economic conditions worsen. This happened to many homeowners during the 2008 financial crisis. Don't rely on your HELOC as your only emergency fund.
Is HELOC interest tax-deductible?
Only if you use the funds to "buy, build, or substantially improve" your home (per IRS rules). If you use HELOC funds for debt consolidation, vacations, or other purposes, the interest is NOT tax-deductible. Keep receipts and documentation of home improvements.
What credit score do I need for a HELOC?
Most lenders require a minimum 620 credit score, but you'll get the best rates with 740+. You also need: (1) At least 15-20% equity in your home, (2) DTI ratio below 43%, (3) Stable income, and (4) Good payment history. Some lenders are more flexible than others.