HELOC Amortization Calculator: Estimate Your Payment Changes

Understand your Home Equity Line of Credit payments during both draw and repayment periods. Calculate payment shock and total interest costs.

Home & Loan Information

Combined Loan-to-Value ratio limit

HELOC Terms

Understanding HELOCs: How They Work

What is a HELOC?

A Home Equity Line of Credit (HELOC) is a revolving credit line secured by your home's equity. Unlike a traditional loan, a HELOC works more like a credit card during the draw period, allowing you to borrow, repay, and borrow again up to your credit limit.

The Two Phases: Draw Period vs. Repayment Period

Draw Period

  • Typically lasts 5-10 years
  • Interest-only payments on borrowed amount
  • Can borrow, repay, and re-borrow
  • Lower monthly payments

Repayment Period

  • Typically lasts 10-20 years
  • Principal + interest payments
  • No more borrowing allowed
  • Higher monthly payments (payment shock)

What is Payment Shock?

Payment shock occurs when the draw period ends and the repayment period begins. Your monthly payment can increase significantly—often by 50% to 200% or more—because you're now paying both principal and interest instead of interest only. This calculator helps you prepare for this increase.

Understanding CLTV (Combined Loan-to-Value Ratio)

CLTV is the total of all loans secured by your property divided by your home's value. Most lenders limit CLTV to 80-85%. For example, if your home is worth $500,000 and you owe $300,000 on your mortgage, with an 85% CLTV limit, you could potentially access up to $125,000 in HELOC credit.

Max HELOC = (Home Value × CLTV Limit) - Current Mortgage Balance

HELOC Interest Rates: Variable vs. Fixed

Most HELOCs have variable interest rates that change with market conditions. This means your payment can fluctuate even during the same phase. Some lenders offer fixed-rate options or allow you to convert portions to fixed rates. Always consider rate caps and adjustment frequency.

HELOC vs. Home Equity Loan

FeatureHELOCHome Equity Loan
Access to FundsRevolving credit lineLump sum
Interest RateUsually variableUsually fixed
Payment StructureTwo phasesFixed monthly payments
Best ForOngoing expensesOne-time large expense

Frequently Asked Questions

Can I pay down principal during the draw period?
Yes, most HELOCs allow you to pay more than the minimum interest-only payment during the draw period. Any extra payment goes toward reducing your principal balance, which will lower your future interest charges.
What CLTV is considered high?
Most lenders prefer CLTV ratios below 85%. Ratios above 90% are considered high risk and may result in higher interest rates or denial. The lower your CLTV, the better terms you're likely to receive.
Is HELOC interest tax deductible?
HELOC interest may be tax deductible if the funds are used to buy, build, or substantially improve the home that secures the loan. The Tax Cuts and Jobs Act of 2017 placed limits on these deductions. Consult a tax professional for your specific situation.
What happens if I can't make payments when the repayment period starts?
Contact your lender immediately. Options may include refinancing to a new HELOC, converting to a fixed-rate loan, or extending the draw period. Since your home secures the HELOC, defaulting could lead to foreclosure, so proactive communication is crucial.
How often do HELOC rates change?
Variable-rate HELOCs typically adjust monthly or quarterly based on the prime rate plus a margin. Your loan documents will specify the adjustment frequency and any rate caps that limit how much the rate can change.