See both phases: interest-only draw payments and the full repayment payment
| Rate | Interest-Only (Draw) | 20-Year Repayment |
|---|---|---|
| 7% | $58.33 | $77.53 |
| 8% | $66.67 | $83.64 |
| 9% | $75.00 | $89.97 |
| 10% | $83.33 | $96.50 |
| Draw Period | Repayment Period | |
|---|---|---|
| Typical length | 5 – 10 years | 10 – 20 years |
| Can you borrow more? | Yes, up to your limit | No, the line is closed |
| Minimum payment | Usually interest-only | Principal + interest (amortized) |
| Payment on $50,000 at 8.5% | $354/mo | $434/mo |
A home equity line of credit has two very different lives. During the draw period you can borrow as needed and usually pay only interest. Once the draw ends, the line closes and whatever you owe converts into a regular amortized loan. Plenty of borrowers get caught off guard by that second phase, so this calculator shows both payments side by side, along with the total interest bill.
Draw-period payment (interest-only) = balance × annual rate ÷ 12. Repayment-period payment uses the standard amortization formula: M = P × (r/12) ÷ (1 − (1 + r/12)−n), where n is the repayment term in months. Draw-period interest assumes you hold the full balance for the whole draw period without paying it down, which is the worst-case (and surprisingly common) scenario.
Enter what you've borrowed (or plan to borrow), your rate, and the two phase lengths. Results update as you type. Remember that HELOC rates are variable and tied to the prime rate, so it's worth re-running the numbers a point or two higher to see whether the repayment payment would still fit your budget.
Borrow $50,000 at 8.5% on a line with a 10-year draw and a 20-year repayment period. During the draw, the interest-only payment is $354 a month ($50,000 × 8.5% ÷ 12). Hold the balance for the full ten years and you'll pay about $42,500 in interest without touching the principal.
When repayment starts, the $50,000 amortizes over 20 years and the payment rises to $434 a month, an $80 jump. Repayment-phase interest adds roughly $54,139, bringing total interest to about $96,639 and the all-in cost to $146,639. Paying principal during the draw period, even a little, cuts every one of those numbers.
During the draw period, most HELOCs require interest-only payments: balance × annual rate ÷ 12. On $50,000 at 8.5%, that's $354 a month. When the draw period ends, the balance converts to an amortized loan over the repayment term, and the payment jumps because you're now paying principal too.
You can no longer borrow against the line, and your payment converts from interest-only to principal plus interest over the repayment term, often 10 to 20 years. The jump can be steep: $50,000 at 8.5% goes from $354 to $434 a month, and the gap widens at higher balances or shorter repayment terms.
At 8.5%, expect about $354 a month interest-only during the draw period, then about $434 a month during a 20-year repayment period. Because HELOC rates are variable, both numbers move when the prime rate moves, so build some cushion into your budget before you borrow.
Usually not, and that's the trap. Minimum payments during the draw are typically interest-only, so ten years of on-time payments can leave you owing exactly what you borrowed. Paying extra principal during the draw shrinks both your interest costs and the payment shock when repayment begins.
Only if you use the money to buy, build, or substantially improve the home securing the line, and only if you itemize deductions. Using a HELOC to pay off credit cards or buy a car doesn't qualify under current rules. Keep records of how you spent the funds and confirm with a tax professional.