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

    Frequently Asked Questions

    What happens at the end of the draw period?

    When the draw period ends, you can no longer borrow against the line. The outstanding balance converts to a fully amortizing loan repaid over the repayment period. Your payment typically increases because you now pay principal and interest.

    Can I pay down a HELOC during the draw period?

    Yes. Any principal payments during the draw period reduce your balance and future interest charges. You can also re-borrow paid amounts during the draw period, giving you flexibility.

    How is a HELOC different from a home equity loan?

    A HELOC is a revolving line of credit with variable rates and flexible draws. A home equity loan is a lump-sum with a fixed rate and fixed payments. HELOCs offer more flexibility; home equity loans offer more predictability.

    Ready to run the numbers?

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