HELOC Payment Calculator Formula

Understand the math behind the heloc payment calculator. Each variable explained with a worked example.

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Formulas Used

Draw Period Payment (interest only)

interest_only_payment = draw_payment

Repayment Period Payment (P&I)

full_repayment = repay_payment

Total Interest During Draw

total_draw_interest = draw_payment * draw_period_years * 12

Total Interest During Repayment

total_repay_interest = repay_payment * repay_n - amount_drawn

Total Interest Cost (all periods)

total_cost = draw_payment * draw_period_years * 12 + repay_payment * repay_n - amount_drawn

Variables

VariableDescriptionDefault
credit_limitHELOC Credit Limit(USD)100000
amount_drawnAmount Drawn(USD)60000
interest_rateInterest Rate (APR)(%)8.5
draw_period_yearsDraw Period(years)10
repayment_period_yearsRepayment Period(years)20
monthly_rateDerived value= interest_rate / 100 / 12calculated
draw_paymentDerived value= amount_drawn * monthly_ratecalculated
repay_nDerived value= repayment_period_years * 12calculated
repay_paymentDerived value= monthly_rate > 0 ? amount_drawn * monthly_rate * pow(1 + monthly_rate, repay_n) / (pow(1 + monthly_rate, repay_n) - 1) : amount_drawn / repay_ncalculated

How It Works

How a HELOC Works

A HELOC has two phases: a draw period where you access funds and make interest-only payments, and a repayment period where you pay principal and interest.

Draw Period

Monthly Payment = Balance x (Annual Rate / 12)

During this phase, you only pay interest on what you have borrowed.

Repayment Period

Monthly Payment = P x r x (1+r)^n / ((1+r)^n - 1)

Once the draw period ends, the balance is amortized over the repayment period with fully amortizing payments.

Key Considerations

  • HELOC rates are usually variable, tied to the prime rate
  • Your payment can increase significantly when shifting from draw to repayment
  • You can reduce the balance during the draw period to lower future payments

    • Worked Example

    A $100,000 HELOC with $60,000 drawn at 8.5% APR. 10-year draw period, 20-year repayment period.

    credit_limit = 100000amount_drawn = 60000interest_rate = 8.5draw_period_years = 10repayment_period_years = 20
    1. 01Monthly rate: 8.5% / 12 = 0.7083%
    2. 02Draw period payment: $60,000 x 0.007083 = $425.00/month (interest only)
    3. 03Total draw period interest: $425.00 x 120 months = $51,000
    4. 04Repayment period: 20 years = 240 months
    5. 05Repayment payment: $60,000 amortized over 240 months at 8.5% = $520.53/month
    6. 06Total repayment interest: $520.53 x 240 - $60,000 = $64,927
    7. 07Total interest cost: $51,000 + $64,927 = $115,927

    Ready to run the numbers?

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