How to Calculate HELOC Payment: Complete Guide with Examples

Understanding HELOC Payment Structure

A Home Equity Line of Credit (HELOC) has two distinct phases that affect how payments are calculated:

• Draw Period (5-10 years): Interest-only payments on the amount borrowed
• Repayment Period (10-20 years): Principal + interest payments

How to Calculate Interest-Only HELOC Payments

During the draw period, you typically only pay interest on the outstanding balance. Here's the formula:

Example: Interest-Only Payment Calculation

Let's say you have:

• Outstanding balance: $50,000
• Annual interest rate: 5.5%

How to Calculate Principal + Interest HELOC Payments

During the repayment period, you pay both principal and interest. The calculation is more complex and uses amortization formulas.

Example: Principal + Interest Payment Calculation

Let's say you have:

• Outstanding balance: $50,000
• Annual interest rate: 5.5%
• Repayment term: 15 years (180 months)

Factors That Affect HELOC Payments

Several factors influence your HELOC payment calculations:

1. Interest Rate Type

• Variable Rate: Most common, tied to prime rate + margin
• Fixed Rate: Less common, rate locked for specific period

2. Outstanding Balance

Your payment is based on the amount you've actually borrowed, not your total credit limit.

3. Payment Structure

• Interest-Only: During draw period
• Principal + Interest: During repayment period
• Minimum Payment: Some lenders require minimum payments

Using Our Free HELOC Payment Calculator

While manual calculations are useful for understanding the process, our free HELOC payment calculator provides instant, accurate results for any scenario.

Common HELOC Payment Scenarios

Scenario 1: $100,000 HELOC at 6% APR

• Interest-only (draw period): $500/month
• Principal + interest (15-year repayment): $843.86/month

Scenario 2: $75,000 HELOC at 4.5% APR

• Interest-only (draw period): $281.25/month
• Principal + interest (20-year repayment): $474.21/month

Tips for Managing HELOC Payments

1. Budget for Rate Changes: Variable rates can increase your payments
2. Make Extra Payments: Reduce principal during draw period
3. Plan for Repayment Period: Higher payments when principal + interest begins
4. Monitor Your Balance: Only borrow what you need

Frequently Asked Questions

How do you calculate HELOC payment?

HELOC payment calculation depends on the phase: Draw period payments are interest-only (Outstanding Balance × Monthly Interest Rate). Repayment period payments include both principal and interest, calculated using amortization formulas.

How are HELOC payments calculated?

HELOC payments are calculated in two phases: 1) Draw period (5-10 years): Interest-only payments based on outstanding balance and current interest rate. 2) Repayment period (10-20 years): Principal + interest payments using amortization.

Can I make extra payments on my HELOC?

Yes, most HELOCs allow extra payments without penalties. Making additional payments can help you pay off the principal faster and reduce total interest.