What happens when a HELOC draw period ends?

Three things at once. The line closes, so you can no longer borrow against it. The interest-only minimum ends, so the payment now has to repay principal as well. And the whole outstanding balance has to clear inside the repayment period. On $50,000 with a 10-year draw and a 20-year repayment at 8.50%, the payment steps from $354.17 to $433.91 — $79.74 more every month, arriving in month 121 with no transition period. Lenders write to tell you, but the letter is easy to miss and the reset is not negotiable once it lands.

What is HELOC payment shock?

Payment shock is the step up at the conversion from the interest-only draw payment to the fully amortizing repayment payment. Its size depends almost entirely on the two term lengths. The gentlest common structure, a 5-year draw with a 20-year repayment, multiplies the payment by 1.23. The harshest, a 5-year draw with a 10-year repayment, multiplies it by 1.75. On a $100,000 balance with a ten-year draw and a ten-year repayment, the payment goes from $708.33 to $1,239.86. Nothing about the loan has gone wrong — that is the contract working as written.

Can you pay principal during the HELOC draw period?

Yes, and it is the single most useful thing you can do with a HELOC. The interest-only figure is a minimum, not a fixed payment, and anything above it goes straight to principal. Paying $250 a month of principal on the $50,000 example cuts the balance carried into repayment to $20,000.00, drops the repayment payment from $433.91 to $173.56, and removes $45,127.02 of interest over the life of the line. It is the only lever that fixes the payment shock and the total cost at the same time.

How much can I borrow with a HELOC?

Lenders size a line on combined loan-to-value, not on your equity: home value × the CLTV cap, minus everything already secured by the house. On a $450,000 home with $250,000 left on the first mortgage, an 85% cap supports a line of $132,500. Drop the cap to 80% and the same house supports $110,000; raise it to 90% and it supports $155,000. Income, debt-to-income ratio and credit score then decide whether you get the full amount the equity allows.

Is a HELOC rate fixed or variable?

Almost always variable. The rate is a published index — usually the prime rate — plus a margin your lender sets from your credit file, and it reprices when the index moves. A margin of 1.00% on an index of 7.50% gives an effective rate of 8.50%. That means the payment quoted at closing is a forecast, not a promise: if the index is two points higher by the time the line converts, the repayment payment on $50,000 over 20 years rises from $433.91 to $499.19. Check the lifetime cap and any periodic cap in the agreement, and ask whether the lender offers a fixed-rate lock on part of the balance.

What is the difference between a HELOC and a home equity loan?

A home equity loan hands you the whole amount at closing at a fixed rate, and the amortizing payment starts in month one. A HELOC is a revolving line you draw on as you need it, at a variable rate, with an interest-only minimum during the draw period and a much larger payment afterwards. Interest on a HELOC is charged only on what you have actually drawn, which makes it far cheaper as a standby facility and far more dangerous as a source of spending money. If the amount is known and you want the payment to be certain, take the fixed lump sum.

Can a lender freeze or reduce a HELOC?

Yes. The agreement almost always allows the lender to suspend further draws or cut the credit limit if the property value falls materially, if your financial circumstances deteriorate, or if you default on any term. It happened at scale in 2008 and 2009, and it happens quietly in individual cases all the time. The practical consequence is that a HELOC held as an emergency fund can disappear in exactly the conditions that would make you want to use it, which is an argument for cash reserves rather than a credit line as the first layer of a safety net.

Is HELOC interest tax deductible?

In the United States, interest on home equity debt is deductible only when the money is used to buy, build or substantially improve the home that secures the line, and only within the overall limits on mortgage interest, and only if you itemize rather than take the standard deduction. Drawing on the line to consolidate credit cards, pay tuition or fund a holiday does not qualify, even though the debt is secured by the property. Keep records that tie draws to improvement work if you intend to claim it. This is general information, not tax advice.

Should I pay off a HELOC before the repayment period starts?

If you can, yes — and if you cannot, shrinking the balance still helps in direct proportion. Every dollar of principal repaid during the draw is a dollar that does not have to be amortized afterwards, so it lowers the reset payment and removes interest on both sides of the conversion. On the $50,000 example, clearing the whole balance before the reset avoids $54,138.79 of repayment-period interest outright, and even $100 a month of voluntary principal cuts the reset payment to $329.77. Refinancing the line into a fixed-rate home equity loan is the other route when the balance is too large to clear.

Finance

HELOC Calculator

A HELOC has two payments: balance × rate ÷ 12 while the draw period runs, then M = P·i/(1−(1+i)^−n) once it converts. Enter your balance, the two term lengths and the rate to see both figures, the balance you carry into repayment, and the size of the step you have to absorb the month the line closes.

Your line of credit

Amount drawn

The balance you are carrying on the line

Home value

What the house appraises for

First mortgage balance

Still owed on the mortgage

Draw period

How long you may keep borrowing and pay interest only

Repayment period

How long you then have to clear the balance in full

Rates

Index (prime)

The published rate your line follows

Lender margin

Added to the index

Draw rate = 7.50% + 1.00% = 8.50%

Repayment-period rate

Raise it to stress-test a higher index at the reset

Extra principal, monthly

Paid during the draw, above the interest

Further draws, monthly

More you take from the line each month

Lender CLTV cap

The share of the home value all your liens may total

Draw · interest only

$354.17

per month for 10y

Then repayment

$433.91

per month for 20y

Payment shock $79.74 a month · 1.23× the interest-only payment

Hits at month 121, when the line closes to new borrowing.

Combined loan-to-value

CLTV 66.7%cap 85%max line $132,500$82,500 still available

Interest during draw

$42,500

Interest in repayment

$54,139

Total interest

$96,639

Total repaid

$146,639

Balance at reset

$50,000

Paid off in

30y

Payment, month by month

Draw · 10yRepayment · 20y

Interest only $354.17Principal + interest $433.91

Try a scenario

No sign-up · Free

The basics

A HELOC is two loans in a row

A home equity line of credit is not one loan with one payment. It is a revolving line followed by an instalment loan, bolted together at a date fixed on the day you sign. Almost everything people find surprising about a HELOC comes from that seam.

balance × rate ÷ 12

Phase one — the draw period

For the first five or ten years the line revolves: you borrow what you need, repay what you like, and the minimum payment is the interest that accrued. Interest is charged only on what you have actually drawn, which is what makes a HELOC so cheap to hold unused — and the balance does not fall on its own.

$50,000 at 8.50% → $354.17 a month for 10y

M = P·i ÷ (1 − (1 + i)^−n)

Phase two — the repayment period

When the draw ends the line closes to new borrowing and whatever is outstanding has to clear inside the repayment period. The payment becomes an ordinary amortizing one, so it now contains principal and interest — and it steps up in a single month.

The same $50,000 over 20 years → $433.91 a month

Payment shock

The step at the end of the draw period

This is the number people come looking for. Paying only the interest-only minimum means the balance arriving at the reset is the balance you started with, so the entire principal has to be repaid in whatever time the repayment period allows. The shorter that period, the harder the step.

Structure on $50,000	Draw payment	Reset arrives	Repayment payment	The step	Multiple	Total interest
5-year draw + 10-year repayment	$354.17	month 61	$619.93	+$265.76	1.75×	$45,641
5-year draw + 15-year repayment	$354.17	month 61	$492.37	+$138.20	1.39×	$59,877
5-year draw + 20-year repayment	$354.17	month 61	$433.91	+$79.74	1.23×	$75,389
10-year draw + 10-year repayment	$354.17	month 121	$619.93	+$265.76	1.75×	$66,891
10-year draw + 15-year repayment	$354.17	month 121	$492.37	+$138.20	1.39×	$81,127
10-year draw + 20-year repayment	$354.17	month 121	$433.91	+$79.74	1.23×	$96,639

All six at 8.50% with no voluntary principal paid during the draw. The gentlest structure multiplies the payment by 1.23; the harshest by 1.75. Note that the structure with the smallest step also carries the largest lifetime interest bill — a longer runway is not the same as a cheaper line.

ten years, nothing repaid

The interest-only trap

A decade of comfortable payments buys no progress on the balance at all, and then the same balance has to clear in half the time you have been holding it. The borrower did nothing wrong and nothing changed — the contract simply moved to its second half.

$100,000 on a ten-and-ten line: $708.33 becomes $1,239.86, a jump of $531.52 a month

the letter arrives, the date does not move

It is not negotiable once it lands

Lenders write to warn you, but the conversion date was fixed at closing and there is no step-up period. Everything you can do about it — voluntary principal, a refinance, a fixed-rate conversion — has to be done before the date, not after it.

On the reference line the reset hits in month 121 with no ramp and no transition period

Method

How to work out both payments by hand

Six steps take you from an index and a margin to the two payments and the step between them.

1
Build the rate from the index and the margin
A HELOC rate is not quoted as one number by the lender's choice — it is a published index, usually prime, plus a margin m set from your credit file. The margin is fixed for the life of the line; the index is not.
7.50% index + 1.00% margin = 8.50%
2
The draw payment is interest only on the balance
During the draw period the minimum payment is simply the interest that accrued: the balance outstanding times the annual rate, divided by twelve. Note what is missing — there is no principal in it at all, so the balance does not move.
$50,000 × 8.50% ÷ 12 = $354.17 a month
3
Carry the balance forward to the conversion
Whatever is outstanding on the last day of the draw is what has to amortize. Paying only the minimum means the balance arriving at the reset is the balance you started with — a decade of payments having bought no progress whatsoever.
$50,000 after 10y of interest-only payments = $50,000.00
4
Convert the repayment rate and count the payments
The repayment period is an ordinary amortizing loan. Divide the annual rate by twelve for the periodic rate i, and multiply the repayment term in years by twelve for n.
i = 8.50% ÷ 12 = 0.00708333 · n = 20 × 12 = 240
5
Apply the level-payment formula to what is left
The repayment payment M is the figure that drives the balance to exactly zero on the last payment of the repayment period. It is calculated on the balance at the conversion, not on the original credit limit.
M = P·i ÷ (1 − (1 + i)^−n) = $433.91
6
Subtract to find the step you have to absorb
The difference between the two payments is the payment shock, and it arrives in a single month with no ramp. Expressing it as a multiple as well as a dollar figure is the honest way to look at it, because the multiple is what breaks budgets.
$433.91 − $354.17 = $79.74 more (1.23×)

Worked examples

The same line under four structures

Four real HELOC shapes, each computed end to end from the balance and the two term lengths. Switch tabs to see how the draw payment, the balance at the reset, and the repayment payment move against each other.

Given balance = $50,000, draw = 10 yr at 8.50%, repayment = 20 yr at 8.50%

Draw payment: $50,000 × 8.50% ÷ 12 = $354.17

Balance after 10y: $50,000.00 — interest-only payments repaid none of it

Repayment rate per month: 8.50% ÷ 12 = 0.0071, n = 20 × 12 = 240

Apply formula: M = $50,000 × 0.0071 ÷ (1 − (1 + 0.0071)⁻²⁴⁰)

Total interest: $42,500 in the draw + $54,139 in repayment = $96,639

$354.17 → M = $433.91

a jump of $79.74 (1.23×)

The gentlest structure a lender offers. Twenty years to amortize keeps the step modest, but a full decade of interest-only payments bought no progress at all on the balance.

The one real fix

What paying principal during the draw is worth

The interest-only figure is a minimum, not a fixed payment. Anything you send above it reduces the balance immediately, and because interest is charged on the balance outstanding, the saving compounds on both sides of the conversion: less interest during the draw, a smaller balance to amortize, and a smaller reset payment.

Voluntary principal each month	Paid during the draw	Balance at the reset	Repayment payment	The step	Total interest	Interest saved
Minimum only	$354.17	$50,000.00	$433.91	+$79.74	$96,639	—
+$100	$454.17	$38,000.00	$329.77	+$60.61	$78,588	$18,051
+$250	$604.17	$20,000.00	$173.56	+$31.90	$51,512	$45,127
+$500	$854.17	$0.00	$0.00	+$0.00	$17,885	$78,753

$50,000 at 8.50%, 10-year draw and 20-year repayment. $250 a month during the draw cuts the reset payment from $433.91 to $173.56 and removes $45,127 of interest — the only lever that improves the payment shock and the lifetime cost at the same time.

The rate floats

Why the payment you were quoted is a forecast

A HELOC rate is an index plus a margin. The margin is fixed for the life of the line and set from your credit file; the index is a published rate, usually prime, and it moves whenever the market does. That means a repayment payment quoted at closing is an estimate of a number that will not be known for another five or ten years.

rate = index + margin

Only half the rate is about you

Shopping lenders is really shopping the margin, because every lender is quoting off the same index. A margin quoted as a discount below the index exists too, usually as an introductory rate that reverts on a date buried in the disclosure.

7.50% index + 1.00% margin = 8.50% effective rate

lifetime and periodic caps

The ceiling in the agreement matters

A lifetime cap sets the highest rate the line can ever reach; a periodic cap limits how much it can move at once. Federal rules require a lifetime cap on a HELOC, but the level is the lender's choice and is often high enough to be theoretical.

Ask for the lifetime cap, the periodic cap, and whether any floor applies

If the index has moved by the reset	Effective rate	Repayment payment	Extra each month	Interest over 20 years
No change	8.50%	$433.91	—	$54,139
+1 point	9.50%	$466.07	+$32.15	$61,856
+2 points	10.50%	$499.19	+$65.28	$69,806
+3 points	11.50%	$533.21	+$99.30	$77,972
+4 points	12.50%	$568.07	+$134.16	$86,337

$50,000 amortizing over 20 years. Raise the repayment-period rate in the calculator above to stress-test your own line against the same move.

Combined loan-to-value

How large a line your equity supports

Lenders underwrite a second lien on combined loan-to-value rather than on your equity, because in a foreclosure the first mortgage is repaid before they see a cent. The arithmetic is one line: home value times the cap, less everything already secured by the house.

max line = value × cap − liens

The cap decides the cheque, not your equity

Two borrowers with identical equity get different answers purely from the caps their lenders write to. Shopping the cap is worth as much as shopping the margin when the amount you need is close to the limit.

$450,000 × 85% − $250,000 mortgage = $132,500 available

CLTV counts every lien

Drawing on the line moves the ratio

The ratio is calculated on the whole line in some underwriting and on the drawn balance in others, so ask which applies before you take a limit larger than you need. It also matters to any lender you approach afterwards.

Drawing $50,000 on that house takes the combined ratio to 66.7%

Lender CLTV cap

The largest credit line a lender capping combined loan-to-value at 85% would extend, by home value and what is still owed on the first mortgage. A dash means the liens already exceed the cap.

Home value	Owned outright	owes $50,000	owes $100,000	owes $150,000	owes $200,000	owes $300,000	owes $400,000
$200,000	$170,000	$120,000	$70,000	$20,000	—	—	—
$300,000	$255,000	$205,000	$155,000	$105,000	$55,000	—	—
$400,000	$340,000	$290,000	$240,000	$190,000	$140,000	$40,000	—
$500,000	$425,000	$375,000	$325,000	$275,000	$225,000	$125,000	$25,000
$650,000	$552,500	$502,500	$452,500	$402,500	$352,500	$252,500	$152,500
$800,000	$680,000	$630,000	$580,000	$530,000	$480,000	$380,000	$280,000
$1,000,000	$850,000	$800,000	$750,000	$700,000	$650,000	$550,000	$450,000

max line = home value × 85% − first mortgage balance

Schedule

The balance, month by month, across both phases

The clearest possible picture of what an interest-only period actually does. Through the draw the payment is all interest and the balance column never moves; from the conversion onward the payment jumps, principal appears for the first time, and the balance finally falls to zero on the last scheduled payment.

360 payments · 30y

Month	Payment	Principal	Interest	Balance
1	$354.17	$0.00	$354.17	$50,000.00
2	$354.17	$0.00	$354.17	$50,000.00
3	$354.17	$0.00	$354.17	$50,000.00
4	$354.17	$0.00	$354.17	$50,000.00
5	$354.17	$0.00	$354.17	$50,000.00
6	$354.17	$0.00	$354.17	$50,000.00
7	$354.17	$0.00	$354.17	$50,000.00
8	$354.17	$0.00	$354.17	$50,000.00
9	$354.17	$0.00	$354.17	$50,000.00
10	$354.17	$0.00	$354.17	$50,000.00
11	$354.17	$0.00	$354.17	$50,000.00
12	$354.17	$0.00	$354.17	$50,000.00

Month	Payment	Principal	Interest	Balance
349	$433.91	$398.67	$35.24	$4,576.25
350	$433.91	$401.50	$32.42	$4,174.75
351	$433.91	$404.34	$29.57	$3,770.41
352	$433.91	$407.20	$26.71	$3,363.21
353	$433.91	$410.09	$23.82	$2,953.12
354	$433.91	$412.99	$20.92	$2,540.13
355	$433.91	$415.92	$17.99	$2,124.21
356	$433.91	$418.87	$15.05	$1,705.34
357	$433.91	$421.83	$12.08	$1,283.51
358	$433.91	$424.82	$9.09	$858.69
359	$433.91	$427.83	$6.08	$430.86
360	$433.91	$430.86	$3.05	$0.00

Year	Payment	Principal	Interest	Balance
1	$4,250.00	$0.00	$4,250.00	$50,000.00
2	$4,250.00	$0.00	$4,250.00	$50,000.00
3	$4,250.00	$0.00	$4,250.00	$50,000.00
4	$4,250.00	$0.00	$4,250.00	$50,000.00
5	$4,250.00	$0.00	$4,250.00	$50,000.00
6	$4,250.00	$0.00	$4,250.00	$50,000.00
7	$4,250.00	$0.00	$4,250.00	$50,000.00
8	$4,250.00	$0.00	$4,250.00	$50,000.00
9	$4,250.00	$0.00	$4,250.00	$50,000.00
10	$4,250.00	$0.00	$4,250.00	$50,000.00
11	$5,206.94	$995.11	$4,211.82	$49,004.89
12	$5,206.94	$1,083.07	$4,123.87	$47,921.81
13	$5,206.94	$1,178.81	$4,028.13	$46,743.00
14	$5,206.94	$1,283.00	$3,923.94	$45,460.00
15	$5,206.94	$1,396.41	$3,810.53	$44,063.59
16	$5,206.94	$1,519.84	$3,687.10	$42,543.75
17	$5,206.94	$1,654.18	$3,552.76	$40,889.57
18	$5,206.94	$1,800.39	$3,406.55	$39,089.18
19	$5,206.94	$1,959.53	$3,247.41	$37,129.65
20	$5,206.94	$2,132.74	$3,074.20	$34,996.91
21	$5,206.94	$2,321.25	$2,885.69	$32,675.66
22	$5,206.94	$2,526.43	$2,680.51	$30,149.23
23	$5,206.94	$2,749.74	$2,457.20	$27,399.49
24	$5,206.94	$2,992.79	$2,214.15	$24,406.70
25	$5,206.94	$3,257.33	$1,949.61	$21,149.37
26	$5,206.94	$3,545.25	$1,661.69	$17,604.12
27	$5,206.94	$3,858.62	$1,348.32	$13,745.50
28	$5,206.94	$4,199.68	$1,007.26	$9,545.82
29	$5,206.94	$4,570.90	$636.04	$4,974.92
30	$5,206.94	$4,974.92	$232.02	$0.00

336 payments sit between the two windows.

$50,000 at 8.50% — a 10-year draw then a 20-year repayment. Month 120 is the last interest-only payment at $354.17; month 121 is $433.91, of which only $79.74 is principal. Total interest $96,639 — $42,500 of it paid during the draw for no reduction in the balance at all.

Quick chart

Repayment payments by balance, rate and term

What the balance you carry into the repayment period will cost each month, at every rate from 5% to 14% across the three repayment terms lenders write. Compare any row against $354.17 — the interest-only payment on $50,000 at 8.50% — to see the step in advance.

Balance at the reset

Show

Monthly payment on $50,000, by rate and term.

Rate	10 years	15 years	20 years
5.00%	$530	$395	$330
6.00%	$555	$422	$358
7.00%	$581	$449	$388
7.50%	$594	$464	$403
8.00%	$607	$478	$418
8.50%	$620	$492	$434
9.00%	$633	$507	$450
9.50%	$647	$522	$466
10.00%	$661	$537	$483
11.00%	$689	$568	$516
12.00%	$717	$600	$551
13.00%	$747	$633	$586
14.00%	$776	$666	$622

These are repayment-period figures: the fully amortizing payment on whatever is outstanding when the draw ends. During the draw the minimum is interest only, which is balance × rate ÷ 12 and repays none of the balance.

Before the reset

Six ways to handle the conversion

Every one of these has to be arranged before the draw period ends. Once the line has converted, the options narrow to paying the new payment or refinancing under whatever terms your credit and equity then support.

voluntary principal, starting now

Shrink the balance before it has to amortize

The simplest and the most effective. It requires no application, no closing costs and no lender's permission, and every dollar counts twice — once against the interest during the draw and once against the balance that has to be repaid afterwards.

$500 a month for the whole draw takes the reset payment to $0.00

fixed-rate conversion option

Lock part of the balance

Many lenders let you carve a portion of the drawn balance into a fixed-rate, fixed-term instalment sub-account, sometimes several times over the life of the line. It converts an unknown future payment into a known one, which is usually worth a small premium in rate.

refinance into a fixed second

Replace the line with a home equity loan

A fixed-rate home equity loan repays the HELOC and gives you one level payment for a known term. You take on closing costs and lose the revolving facility, and in exchange the payment stops being a forecast.

a new HELOC over the top

Reset the clock, with eyes open

Some borrowers open a fresh line, repay the old one, and start another draw period. It works, it is usually available while equity and credit hold up, and it postpones rather than solves the problem — the balance still has to be repaid eventually.

cash-out refinance

Fold it into the first mortgage

Worth considering only when today's mortgage rate is close to or below the one you already hold, because you are repricing the entire first mortgage to move a second-lien balance. When the rates do line up, it produces the lowest payment of any option here.

sell, or downsize

The option nobody lists but everyone has

The line is repaid at closing out of the sale proceeds like any other lien. It is worth stating plainly because it is the reason keeping a margin of equity matters: if the first mortgage and the line together approach the sale price, commission and closing costs can leave you writing a cheque.

Compare

HELOC, home equity loan, or cash-out refinance

All three turn equity into money, and they answer different questions. The HELOC column is the only one where the payment changes shape partway through, which is exactly why it suits an uncertain total and punishes an unplanned one.

	HELOC	Home equity loan	Cash-out refinance
Rate type	Variable — an index plus a margin, usually resetting monthly	Fixed for the whole term	Fixed or adjustable, on the entire mortgage
How the money arrives	A revolving line you draw from as you need it	One lump sum at closing	One lump sum, plus a brand-new first mortgage
Payment shape	Interest-only during the draw, then a fully amortizing payment	The same amortizing payment from month one	One amortizing payment covering the whole balance
Interest is charged on	Only the part of the line actually drawn	The full amount, from day one	The whole new mortgage balance
Closing costs	Low or none, sometimes an annual fee instead	Moderate — a second-mortgage closing	Highest — full costs on the entire refinanced balance
Effect on your first mortgage	None; it sits in second position behind it	None; it sits in second position behind it	Replaces it, rate and all
Best for	Staged spending, an uncertain total, or a standby line	A known one-off cost you want at a fixed payment	Large borrowing when today's mortgage rate beats the one you hold

Worth knowing

Six things that are not in the headline rate

A HELOC is cheap to open and cheap to hold, which is precisely what makes the terms worth reading. Each of these is ordinary, disclosed, and routinely missed.

introductory rates revert

The teaser is not the margin

A promotional rate for the first six or twelve months is common, and the number that matters is what it reverts to: index plus margin. Compare lines on the margin, not on the introductory rate, or you are comparing a marketing decision instead of a price.

annual and inactivity fees

Small charges on a line you do not use

Some lenders charge an annual fee for keeping the line open, and a few charge an inactivity fee if you never draw. Neither is large, but both undercut the case for a HELOC held purely as a standby facility.

early closure fee

Closing costs can claw back

Lines advertised with no closing costs frequently carry a clause recovering them if you close the account inside two or three years. It is fair enough, and it is worth knowing before you open a line you intend to replace shortly afterwards.

draw minimums

Some lines require an opening draw

A number of lenders require a minimum initial draw at closing, and some require a minimum on each subsequent draw. That turns a standby line into an interest-bearing balance from day one, which changes the calculation entirely.

it is a mortgage on your house

The collateral is the reason it is cheap

A HELOC is a second lien, recorded against the property, and the lender can foreclose. The low rate relative to unsecured credit is not generosity — it is the price of that security, and converting unsecured debt into secured debt is the trade people most often make without noticing.

draws are not free money

A revolving line invites revolving use

The feature that makes a HELOC useful — borrow what you need, when you need it — is the same feature that makes balances creep. The interest-only minimum masks the creep for years, and the reset is where the whole decade arrives at once.

How we calculate this

The formula and our assumptions

A HELOC has two payments — an interest-only draw payment and a fully amortizing repayment payment. We compute both and show the working so you can check it.

draw payment = balance × rate ÷ 12

The interest-only draw payment

During the draw the minimum is just the interest on whatever is outstanding, so the balance does not move on its own. Any principal you add is voluntary and lowers the reset.

M = P·i ÷ (1 − (1 + i)^−n)

The repayment payment

When the draw ends, the balance P amortizes over the repayment period at rate i across n months — the step up that people feel as payment shock.

The rate is variable in reality (an index plus a margin); we hold the rate you enter constant for the projection.
The draw-period minimum is interest-only; voluntary principal reduces the reset payment.
The line size is capped by combined loan-to-value (CLTV) — all liens on the home, over its value.
Annual or inactivity fees are not modelled.

Where to get a heloc

Where to shop for the line

Rows are ordered by borrower fit, not by any payout — the type that suits your situation comes first for you. Rates are shown as ranges only; get an exact quote from the lender, because pricing depends on your credit, your equity and the day.

Where	Examples	Best for	Typical pricing
Online marketplace	LendingTree	Comparing several equity lenders at once	Market range
Credit union	Member-owned lenders	Lower fees and member pricing	Often below market
Bank	Your mortgage holder	An existing mortgage relationship	Market range
Home equity loan (fixed)	Same lenders, lump-sum product	Locking a fixed rate instead of a floating line	Market range

CalculateThis.io is not a lender and does not make credit decisions. When we add lender links they will be marked as sponsored, and we may earn a commission if you apply through one — it does not change the rate you are offered.

Sources

Where the method comes from

Consumer Financial Protection Bureau — home equity lines of credit (HELOCs).
Federal Reserve — “What You Should Know About Home Equity Lines of Credit.”
Standard amortization formula for the repayment period.

FAQ

Common questions

A HELOC has two payments, not one. During the draw period the minimum is interest only on whatever is outstanding: balance × rate ÷ 12. On $50,000 at 8.50% that is $354.17 a month, and it repays nothing. When the draw ends, the line closes and the balance amortizes over the repayment period at M = P·i ÷ (1 − (1 + i)^−n), which on the same balance over 20 years is $433.91 a month. The rate floats, so both figures move with the index your line follows.

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