How the HELOC calculator works
Most people open a home equity line of credit for something with a date on it: a roof before winter, a tuition bill, a kitchen that has been "next year" for five years. It is a good tool for that, and it has one feature worth understanding before the first draw: the payment is designed to change. It changes once when the draw period ends, and it changes every time the prime rate does.
Enter your home's value, what you owe on the mortgage, and how much you plan to draw. The page works out the line a lender would likely open, then prices the draw both ways a HELOC can run: interest only while you draw (the usual minimum), and principal and interest from the first month. It shows the payment after the draw ends, the jump between the two, what each path costs in total interest, and the same line at higher and lower rates, because a HELOC's rate is never fixed for long.
The formula
payment while drawing (interest only) = balance × rate ÷ 12
payment after the draw = P × r × (1 + r)n ÷ ((1 + r)n − 1)
P is the balance when the draw period ends, r is the monthly rate (the yearly rate divided by 12, as a decimal), and n is the number of monthly payments in the repayment period. An interest-only payment never touches the balance, which is why P at the end of a ten-year draw is still every dollar you drew.
Worked example
A $400,000 home with $220,000 left on the mortgage holds $180,000 of equity. At an 85% limit a lender allows $340,000 of total debt, so the line could be as large as $120,000. You draw $50,000 at 7.29%, Bankrate's national average HELOC rate for the week of September 30, 2026.
For the first ten years the interest-only minimum is $50,000 × 7.29% ÷ 12 = $303.75 a month. That is $36,450 of payments, and at the end of it you still owe the full $50,000. Then the balance is repaid over 20 years at $396.40 a month, a jump of $92.65, or 30.5%. Over all 30 years the line costs $81,586 in interest.
Paying principal from the first month instead costs $342.45 a month for the whole 30 years, with no jump, and $73,280 of interest: $8,306 less. After ten years you would owe $43,194 rather than $50,000.
The month the draw period ends
The jump is not a penalty and it is not hidden; it is how the product is built. During the draw you are renting the money. When the draw closes, the lender starts collecting the money itself, and how hard that lands depends mostly on one line in your agreement: the length of the repayment period. The same $50,000 at the same 7.29%, after ten years of $303.75 payments:
| Repayment | New payment | Jump |
|---|---|---|
| 10 years | $588.04 | $284.29 (93.6%) |
| 15 years | $457.56 | $153.81 (50.6%) |
| 20 years | $396.40 | $92.65 (30.5%) |
On a ten-year repayment period the payment very nearly doubles. The Consumer Financial Protection Bureau's HELOC guide says repayment often runs ten or 15 years, and that some plans instead ask for the whole balance at once, a balloon payment. Federal rules make lenders tell you which kind you have before you sign: the disclosure must say how the minimum payment is figured and whether a balloon can result. That page is the one to find.
Three ways people plan around the jump: pay some principal during the draw even when the minimum does not ask for it, set aside the difference between the two payments each month so the later one is already in your budget, or move the balance to a fixed-rate loan before the draw period ends. Our home equity loan calculator prices that last option.
Why the payment moves with the Fed
A HELOC rate is an index plus a margin, and the index is almost always the prime rate. Prime follows the Federal Reserve: when the Fed raised its target range by a quarter point on September 16, 2026, prime moved from 6.75% to 7.00% the next day, and so did the rate on every line tied to it. On a $50,000 balance, each quarter point is $10.42 a month on the interest-only payment.
A quarter point is easy to absorb. The history is the reason for the rate table in the results. Prime sat at 3.25% from March 2020 until March 2022, then climbed to 8.50% by July 27, 2023: 5.25 points in 16 months. At today's average margin, the same $50,000 line would have gone from $147.50 a month to $366.25, interest only, with no new borrowing at all. Federal rules require every HELOC to state a lifetime maximum rate; published caps commonly run from 18% to 24%.
The average rate itself carries a useful clue. Bankrate's 7.29% sits just 0.29 points above prime, which tells you the surveyed lines are priced for strong credit and a comfortable share of equity. Your margin depends on your credit score and on how much of the home's value you borrow against, so use the rate on your own offer.
How much a HELOC costs per month
At 7.29%, paying interest only for years 1 to 10, then repaying over years 11 to 30, or paying principal from the first month:
| Drawn | Interest only | Repayment | Day one |
|---|---|---|---|
| $25,000 | $151.88 | $198.20 | $171.22 |
| $50,000 | $303.75 | $396.40 | $342.45 |
| $100,000 | $607.50 | $792.80 | $684.89 |
| $150,000 | $911.25 | $1,189.20 | $1,027.34 |
Interest on a HELOC is charged only on what you have drawn, not on the whole line, so an open line with nothing drawn costs nothing but any annual fee.
How much you can borrow
Lenders cap the combined loan-to-value: all the debt on the home, mortgage plus line, as a share of its appraised value. Published limits run from 80% (Chase) and 85% (Bank of America) up to about 90% at a few lenders. Subtract what you owe from the capped figure and the rest is the most you could open; the results table shows it at 80, 85, and 90 percent. The appraisal decides the value, not the estimate you type here.
Many HELOCs have no closing costs, but the lender usually asks for them back if you close the line within about 30 to 36 months, and some charge an annual fee of around $75. Because the line is secured by your home, federal law gives you three business days after closing to cancel it for any reason.
Is HELOC interest tax deductible?
Only when the money buys, builds, or substantially improves the home that secures the line, and only if you itemize. Interest on HELOC money spent on anything else (paying off cards, tuition, a car) is not deductible. That rule began in 2018 and was due to expire after 2025; the One Big Beautiful Bill Act, signed July 4, 2025, made it permanent, along with the $750,000 limit on the mortgage debt whose interest can count ($375,000 if married filing separately).
Itemizing is the real hurdle. The 2026 standard deduction is $16,100 for a single filer and $32,200 for a married couple filing jointly, so a household's mortgage interest, the qualifying part of the HELOC interest, state and local taxes, and charitable gifts together have to beat that before the deduction is worth anything. If you use the line for a renovation, keep the receipts.
HELOC or home equity loan?
They answer different questions. A HELOC fits money you will spend over time, in amounts you do not know yet, like a renovation paid contractor by contractor. A home equity loan fits one known amount you want paid off on a fixed schedule at a rate that never moves. This week the HELOC is cheaper: Bankrate's averages are 7.29% for a line and 8.56% for a ten-year loan. Paid off over the same ten years, the HELOC would cost $588.04 a month against $621.53, if its rate never changed. The 1.27-point gap is about five quarter-point Fed hikes of cushion, and the fixed loan is what you are paying for: a payment that will be the same in year ten as in month one.
For a single payment on any fixed loan, the loan calculator works; to see what the whole house carries, start with the mortgage calculator.