Equity Line of Credit Payments
A home equity line has two phases: low interest-only payments while you draw, then higher payments once principal repayment begins. See both.
A worked example
Running this tool on current national benchmarks (Federal Reserve / Freddie Mac via FRED (St. Louis Fed)) — swap in your own numbers to see how the result moves.
- Outstanding balance
- $40,000
- Interest rate
- 8.50%
- Repayment period (years)
- 10
then $495.94/mo once principal repayment starts
- Interest-only (draw)$283.33
- Repayment payment$495.94
- Interest in repayment$19,513
How the interest-only payment changes with outstanding balance
Holding the other inputs at the example above, here is how the result moves as outstanding balance changes.
| Outstanding balance | Interest-only payment | Interest-only (draw) |
|---|---|---|
| $20,000 | $141.67 | $141.67 |
| $40,000 | $283.33 | $283.33 |
| $80,000 | $566.67 | $566.67 |
| $150,000 | $1,062.50 | $1,062.50 |
The math behind it
A home equity line has two phases, and this calculator shows the payment in each. During the draw period you typically pay interest only, so the payment is simply the balance times the monthly rate and the balance does not fall. When the repayment period begins, the outstanding balance is amortized over the repayment term, producing a fully amortizing payment that covers principal and interest. The headline contrasts the low interest-only payment with the higher repayment payment and the jump between them.
Assumptions & limits
- The draw-period payment is interest-only: balance times the monthly rate, with no principal reduction.
- The repayment payment amortizes the full outstanding balance over the repayment term you enter.
- A single fixed rate is used for illustration, though most real HELOCs carry a variable rate tied to an index.
- It assumes the balance is fully drawn and unchanged when repayment starts.
Typical HELOC phase lengths
Common structures; your line's actual terms are set in your agreement.
| Phase | Typical length |
|---|---|
| Draw period (interest-only or minimal payments) | About 10 years |
| Repayment period (principal + interest) | About 10 to 20 years |
Common questions
What happens when the draw period ends?
You can no longer borrow against the line, and the payment converts from interest-only to a fully amortizing principal-and-interest payment. Because you now have to repay principal — often over a shorter window than a mortgage — the payment can jump sharply. This calculator shows exactly how much higher it becomes.
Why doesn't my balance fall during the draw period?
Interest-only payments cover just the interest that accrues each month, with nothing left over for principal. So the balance stays flat until you either pay more than the minimum or the repayment period forces principal payments. If you make only the interest-only minimum for the whole draw period, you owe the same amount at the end.
How can I avoid payment shock when repayment starts?
Pay more than the interest-only minimum during the draw period so principal falls before the switch, or plan to refinance the balance before repayment begins. Budgeting for the higher amount ahead of time — the figure shown here — is the simplest safeguard.