How a HELOC payment is calculated
A home equity line of credit has two phases, and the payment is figured differently in each. During the draw period you can borrow, repay and borrow again, and many plans ask only for interest, so you pay nothing toward principal; in the repayment period you can no longer draw, and the balance is paid off.[3] The OCC's examiner handbook describes the usual shape: a draw period of five or 10 years with interest-only payments, then an amortization period of five to 25 years.[6]
| Draw period | Repayment period | |
|---|---|---|
| Typical length | 5 or 10 years | 5 to 25 years |
| Can you borrow? | Yes, up to the limit | No |
| Usual minimum payment | Interest only | Principal + interest |
| Payment in this example | $312.50 | $402.80 |
| Balance at the end | $50,000 | $0 |
Interest-only payment = balance × annual rate ÷ 12$50,000 × 7.50% ÷ 12 = $312.50
Repayment payment = B × r ÷ (1 − (1 + r)−n)B = $50,000 · r = 7.50% ÷ 12 · n = 240 → $402.80
Some lenders set the draw-period minimum differently, for example as a percentage of the balance, or require some principal. Federal rules make the lender show, before you open the plan, how the minimum payment is figured and an example of what it would be on a $10,000 balance.[8] Use those numbers from your own disclosure when they differ from the defaults here.
Your HELOC rate: prime plus a margin
Most HELOCs carry a variable rate with two parts: an index, commonly the U.S. prime rate, plus a margin the lender adds.[3] The prime rate was 7.00% on November 12, 2026, where it has been since September 17, 2026, when the Federal Reserve raised its federal funds target range to 3.75%–4.00%.[1][2] A margin of 0.5 point gives 7.50%. When prime moves, your rate and payment move with it.
| Date | Prime rate | Interest-only payment on $50,000 at prime + 0.5 |
|---|---|---|
| Jan 1, 2022 | 3.25% | $156.25 |
| Jan 1, 2023 | 7.50% | $333.33 |
| Jan 1, 2024 | 8.50% | $375.00 |
| Jan 1, 2025 | 7.50% | $333.33 |
| Jan 1, 2026 | 6.75% | $302.08 |
| Nov 12, 2026 | 7.00% | $312.50 |
Every variable-rate plan secured by a home must state a maximum interest rate it can reach over the life of the plan.[9] Find the lifetime cap in your agreement and put it in the stress-test field to see the worst case.
The payment jump when the draw period ends
When an interest-only draw period ends, the same balance has to be repaid in fewer years, so the payment rises even if the rate does not change. Federal bank regulators warned that borrowers "could face substantial payment shock" when they start repaying principal.[7] The CFPB likewise notes that payments are often significantly higher once repayment begins.[5] At 7.50% with a 20-year repayment period:
| Balance | Draw period (interest only) | Repayment (20 years) | Increase |
|---|---|---|---|
| $10,000 | $62.50 | $80.56 | 29% |
| $25,000 | $156.25 | $201.40 | 29% |
| $50,000 | $312.50 | $402.80 | 29% |
| $75,000 | $468.75 | $604.19 | 29% |
| $100,000 | $625.00 | $805.59 | 29% |
| $150,000 | $937.50 | $1,208.39 | 29% |
Paying some principal during the draw softens the jump. Choose Principal + interest in the calculator to spread the balance over the whole term instead, or see how to pay back a HELOC with extra payments. The interest-only HELOC page shows what the interest-only years cost in total.
How much you can borrow
The line itself is usually capped by a combined loan-to-value (CLTV) limit: the home's value times the limit, minus what you already owe. With a $450,000 home, a $250,000 mortgage and an 85% limit, the maximum line is $132,500. Lenders' limits differ; the HELOC LTV calculator shows the line at 80% to 100% CLTV, and the high LTV HELOC page covers lines above 90%.
Your home secures the lineA HELOC is a loan against your house. If you cannot make the payments, you could lose the home, and the lender can freeze or reduce the line in some cases, such as a significant drop in the home's value.
What a HELOC costs besides interest
Interest is the main cost, but not the only one. Setting up a line can carry many of the same charges as a mortgage: an appraisal fee, an application fee that may not be refunded if you are turned down, up-front points (one point is 1% of the credit limit) and closing costs such as title, filing and attorney fees. During the plan you may also owe an annual membership or maintenance fee and a fee each time you draw.[4]
| Cost | When you pay it | Where to find it |
|---|---|---|
| Appraisal, application fee, points, closing costs | Opening the line | Itemized list of the lender's fees, plus an estimate of third-party fees |
| Annual, maintenance or transaction fees | While the line is open | Same fee list |
| Interest | Every month on what you have drawn | Index, margin and rate limits in the variable-rate disclosures |
| Payment at the maximum rate | If rates rise to the cap | Example on a $10,000 balance at the maximum rate |
Federal rules require each of these in the disclosures you receive before you open the plan: an itemized list of the lender's fees, a good-faith estimate of third-party fees, the index, margin and rate limits, and examples of the minimum payment on a $10,000 balance, including at the maximum rate.[8] If you draw only a little, up-front charges raise the true cost of the money a lot, so ask whether the lender waives any closing costs.[4]
HELOC or cash-out refinance?
A HELOC adds a second loan and leaves your first mortgage alone; a cash-out refinance replaces the first mortgage with a bigger one. Which costs less depends mostly on the rate on your current mortgage:
| HELOC | Cash-out refinance | |
|---|---|---|
| Your current mortgage | Stays, at its rate | Paid off and replaced |
| Rate | Usually variable (index + margin) | Fixed or adjustable on the whole balance |
| How you get the money | Draw as needed during the draw period | Lump sum at closing |
| Typical limit | Lender's CLTV limit on all liens | Fannie Mae: 80% LTV for a one-unit primary home |
| Closing costs | Lender's fee list; sometimes waived | About the same as on a purchase loan |
Fannie Mae's eligibility matrix caps a cash-out refinance of a one-unit principal residence at 80% loan-to-value,[11] and the CFPB notes refinancing costs can be about the same as the original purchase loan.[12] If your current rate is lower than today's, a HELOC keeps it. Compare both with the cash-out refinance calculator, which prices the two side by side, or the refi calculator and see can you refinance a HELOC for the ways out of a line later.
Checked against the CFPB's example
The CFPB's HELOC booklet works an interest-only example: on a $10,000 balance, the monthly payment is $83 at a 10% rate and $125 at 15%.[4] Enter a $10,000 draw with prime 10 and margin 0 in the calculator above and the draw-period payment is $83.33; at 15% it is $125.00. The repayment formula is the standard amortization formula, the same one behind every mortgage payment calculation, and the year-by-year table in the results adds up to the total interest shown.
Worked example
A homeowner draws $50,000 for a kitchen at prime (7.00%) plus 0.5:
- Rate: 7.00% + 0.5 = 7.50%; monthly rate 0.006250.
- Draw period: $50,000 × 0.006250 = $312.50 a month for 10 years, $37,500 of interest and no principal repaid.
- Repayment: $50,000 over 240 months at 7.50% = $402.80 a month, $46,671 of interest.
- Total interest over 30 years: $84,171. If prime rises 2 points, the repayment payment becomes $466.07.
Americans owed $481 billion on home equity lines of credit at the end of September 2026.[10] Before you add to that, compare a home equity loan vs. a HELOC, and check whether HELOC interest is tax deductible for the way you will use the money.
All calculators
HELOC and home equity
- HELOC LTV: how much can I borrowYour maximum line at 80–100% combined loan-to-value
- High LTV HELOC90–100% CLTV lines: what they cost and how little cushion they leave
- Interest-only HELOCWhat interest-only costs and the payment when it ends
- How do you pay back a HELOCPayoff calculator with extra payments
- What is a HELOCHow a home equity line of credit works, step by step
- HELOC pros and consWhen a HELOC is a good idea, and when it is not
- Home equity loan vs HELOCFixed loan or variable line: payments and lifetime interest
- Can you refinance a HELOCFour ways out of a HELOC and the payment each one gives
- Is HELOC interest tax deductibleIRS rules on use of proceeds and the $750,000 limit
- HELOC on investment propertyRental-property lines: limits, rates and the math
- First lien HELOCA HELOC that replaces your mortgage, and when that saves interest
- Home improvement loan calculatorHELOC vs home equity loan vs personal loan for a project
Mortgages
- Mortgage payment calculatorPrincipal, interest, taxes, insurance and PMI with a schedule
- How to calculate a mortgage paymentThe formula worked step by step
- Home mortgage calculatorThe full cost of owning, and when PMI ends
- VA mortgage loan calculatorVA funding fee and the monthly payment
- Mortgage extra payment calculatorTime and interest saved by paying more
- Mortgage early payoff calculatorThe payment that clears the loan by your target date
- Mortgage recast calculatorLower the payment with a lump sum
- Refi calculatorNew payment, break-even month and total cost
- Closing cost calculatorYour fees grouped like the Loan Estimate
- LTV calculatorLoan-to-value, CLTV and the pay-down to drop PMI
- Interest-only mortgage calculatorI/O payment, the jump after and the extra interest
- Reverse mortgage calculatorHECM estimate from HUD principal limit factors
- Rent vs buy calculatorBreak-even year and net worth, renting or buying
- PMI calculatorMonthly PMI and the month it can be cancelled
- Cash-out refinance calculatorCash available, new payment, and a HELOC for the same cash
- Title insurance costOwner's and lender's policy premiums
Home project costs
- Roof replacement cost calculatorRoof area, squares and cost from pitch and footprint
- Reroof cost calculatorOverlay vs tear-off and the code limit on layers
- Metal roof cost calculatorMetal vs shingles, up front and per year of service
- Bathroom remodel cost calculatorTile areas and a line-item budget
- Kitchen remodel cost calculatorCabinets, counters, appliances and contingency
- Window replacement cost calculatorPer-window cost and energy payback
- Vinyl siding cost calculatorNet wall area, squares and cost
- Gutter installation cost calculatorLinear feet, downspouts and cost
- Foundation repair cost calculatorPiers, crack repair and engineering
- Mold remediation cost calculatorEPA size categories and the cleanup budget
- Asphalt driveway cost calculatorTons of asphalt, base and cost
- Cost to build a house calculatorCost per square foot and where it goes
- Home replacement cost calculatorRebuild cost vs your dwelling coverage
- Water heater replacement costSize by your peak hour, then price the swap
- HVAC replacement costPrice, SEER2 savings and payback
- Plumber costHours, rate, trip fee and parts
- Electrician costHours, rate, permit and parts
- Home inspection costThe base inspection and add-ons
- Home addition cost calculatorSquare feet, price per sq ft and the extras
- Basement finishing costArea, trades and contingency
- Deck cost calculatorDeck, railing and stairs from your quote
- Fence cost calculatorPosts, gates and cost per foot
- Pole barn cost calculatorPole barns and detached garages by the square foot
- Septic tank size calculatorTank gallons by bedrooms under state rules
Solar
- Solar panel cost calculatorSystem price from size and cost per watt
- Average cost of solar panelsInstalled prices from LBNL's Tracking the Sun
- Solar calculatorSavings and payback with your rate and location
- How many solar panels do I needPanels from your usage and local sun
- Solar battery backupBattery size for an outage
- Solar roof tilesSolar shingles vs. panels: price per watt and the roof they replace
Measure
- Square footage calculatorRooms, triangles and circles in sq ft, sq yd and m²
- Tile calculatorTiles, boxes and cost with grout joints and waste
- Grout calculatorPounds and bags from tile size and joint
Frequently asked questions
How is a HELOC payment calculated?
During an interest-only draw period: balance × rate ÷ 12. After the draw: the level payment that repays the balance over the repayment period, P × r ÷ (1 − (1 + r)−n). Your rate is usually prime plus a margin.
What is the payment on a $50,000 HELOC?
At 7.50%, interest-only is $312.50 a month. Repaid over 20 years at the same rate it is $402.80 a month.
What is the monthly payment on a $100,000 HELOC?
At 7.50%: $625.00 a month interest-only, then $805.59 a month over a 20-year repayment period.
Does my HELOC payment change when the prime rate changes?
Yes, on a variable-rate line. The rate is the index plus your margin, so a 0.25-point cut in prime lowers the interest-only payment on $50,000 by $10.42 a month. The plan must state a maximum rate.[9]
What fees does a HELOC have?
Can I pay principal during the draw period?
Usually yes. Paying principal lowers the balance, the interest and the payment you face when repayment starts. Check your agreement for prepayment or early-closure fees.
Sources
- H.15 Selected Interest Rates (bank prime loan rate)
- Federal Reserve issues FOMC statement
- What You Should Know About Home Equity Lines of Credit (HELOC)
- What you should know about home equity lines of credit (booklet)
- What is a home equity line of credit (HELOC)?
- Comptroller's Handbook: Residential Real Estate Lending (home equity lines and loans)
- Risk Management of Home Equity Lines of Credit Approaching the End-of-Draw Periods (OCC Bulletin 2014-29)
- Regulation Z § 1026.40, Requirements for home equity plans
- Regulation Z § 1026.30, Limitation on rates
- Quarterly Report on Household Debt and Credit, 2026:Q3
- Eligibility Matrix (Selling Guide)
- Your home loan toolkit: A step-by-step guide