A home equity line of credit (HELOC) does not have one monthly payment. It has two, and the second one is usually much higher than the first. If you only look at the low payment you start with, the later payment can catch you by surprise. This guide shows both calculations with real numbers, so you can see exactly what you would pay in each phase.
HELOC payments in 30 seconds
A HELOC has two phases:
| Phase | How long it usually lasts | What you pay each month |
|---|---|---|
| Draw period | 5 to 10 years | Interest only on the balance you have drawn |
| Repayment period | 10 to 20 years | Principal plus interest, amortized over the remaining term |
During the draw period you can borrow, repay, and borrow again up to your credit limit. During the repayment period you can no longer draw, and the balance must be paid off. The Consumer Financial Protection Bureau explains the same structure in its HELOC vs home equity loan explainer: a HELOC is a revolving line secured by your home, and HELOCs usually have adjustable rates, so the payment varies with the outstanding balance.
How to calculate the draw period payment
The draw period payment is interest only. The formula is:
Monthly draw payment = drawn balance x annual interest rate / 12
Note that the calculation uses the balance you have actually drawn, not your full credit limit. If your limit is $100,000 but you have only drawn $50,000, you pay interest on $50,000.
Example: $50,000 drawn at 8.5 percent annual interest.
$50,000 x 0.085 / 12 = $354.17 per month
Because the payment covers interest only, the balance stays at $50,000 at the end of the draw period unless you voluntarily pay extra principal.
How to calculate the repayment period payment
Once the draw period ends, the balance is amortized — spread into equal monthly payments of principal plus interest over the repayment term. The formula is:
Monthly repayment payment = P x r / (1 – (1 + r)^-n)
Where P is the balance at the start of repayment, r is the monthly interest rate (annual rate / 12), and n is the number of monthly payments in the repayment period.
Example: the same $50,000 balance at 8.5 percent, repaid over 20 years (240 payments).
Monthly rate = 0.085 / 12 = 0.007083. Payment = $50,000 x 0.007083 / (1 – (1.007083)^-240) = $433.91 per month
So the same loan costs $354.17 a month during the draw period and $433.91 a month during repayment — a jump of about 22.5 percent, before any rate changes.
Worked example: $50,000 at 8.5 percent, 10-year draw, 20-year repayment
| Figure | Amount |
|---|---|
| Draw period payment | $354.17 per month (interest only) |
| Interest paid during the 10-year draw period | $42,500.00 |
| Repayment period payment | $433.91 per month (principal + interest) |
| Interest paid during the 20-year repayment period | $54,138.79 |
| Total interest over both periods | $96,638.79 |
| Total paid over both periods | $146,638.79 |
Two things stand out. First, the 10 interest-only years cost $42,500 without reducing the balance by a single dollar. Second, total interest ($96,638.79) is nearly double the amount borrowed — which is why paying principal during the draw period matters so much.
Payment shock: why the jump is bigger than people expect
Payment shock is the jump from the interest-only payment to the amortized payment. It has two causes: you start paying principal, and the balance never shrank during the draw period.
A larger example shows how serious it gets. Take $350,000 drawn at 7 percent, with a 10-year draw period and a 20-year repayment period:
- Draw period payment: $350,000 x 0.07 / 12 = $2,041.67 per month
- Repayment period payment: $2,713.55 per month
- The jump: about 32.9 percent, or roughly $672 more every month
Across these examples, the repayment payment runs roughly a quarter to a third higher than the draw payment at the same rate. And that assumes the rate never moves. With a variable-rate HELOC, it usually does.
Step-by-step: calculate your own HELOC payments
- Find your drawn balance. Check your lender statement or online dashboard for the amount you actually owe, not your credit limit.
- Find your current annual rate. HELOC rates are usually variable, quoted as prime plus a margin. The Federal Reserve publishes the bank prime loan rate in its H.15 Selected Interest Rates release — it stood at 7.00 percent in the October 28, 2026 release.
- Find your draw and repayment lengths. Both are in your loan agreement — commonly 10 years to draw and 15 to 20 years to repay.
- Run the numbers. Enter the balance, rate, and both periods into the free HELOC payment calculator to see both monthly payments, the interest for each period, and the total cost. No signup, and everything runs in your browser.
Troubleshooting tip: if your calculated draw payment does not match your statement, the usual causes are a rate change since your last statement, a balance change from a recent draw or payment, or a minimum-payment rule at your lender. Check the rate and balance dates on the statement first.
What changes your HELOC payment
Rate changes. Most HELOC rates move with prime. A 1 percentage point rate rise adds $83.33 a month for every $100,000 drawn (1 percent of $100,000, divided by 12). On a $350,000 balance, that same 1 point adds about $292 a month to the interest-only payment alone.
Drawing more. Every new draw raises the balance the interest is charged on, so the draw payment rises immediately. Run the numbers again after any large draw.
Paying principal during the draw period. Extra principal payments are the single best lever you have: they shrink the balance that the repayment period must amortize, which lowers the later payment and the total interest. A loan payoff calculator can show how extra payments change a payoff timeline.
The draw period ending. This is the one people miss. Your lender rarely sends a loud warning, so find the draw-end date in your agreement now and put it on your calendar.
Before your draw period ends: a short checklist
- Find your draw-end date in your loan agreement or lender dashboard today.
- Model the repayment payment now, at your current balance and rate — not in the month it starts.
- Pay principal early if you can, even small amounts, to cut the balance the repayment period amortizes.
- Compare your exit options: keep paying the amortized amount, refinance into a fixed loan, or pay the balance off. A mortgage refinance calculator can model the refinance side of that decision.
- Talk to your lender before the transition, not after — some lenders offer a new draw period, a fixed-rate option, or a modified repayment plan.
HELOC vs home equity loan: which payment is lower?
A home equity loan gives you one lump sum and one fixed amortized payment from the first month — no phases, no payment shock, but no flexibility to draw again. A HELOC starts cheaper (interest only) and ends more expensive per month, with the freedom to draw as needed. The CFPB explainer linked above covers the structural differences; the payment math in this guide covers the cost difference. For a known one-time cost, the fixed loan payment is easier to plan around. For staged costs like a renovation spread over months, the HELOC draw structure fits better — as long as you plan for the repayment payment from day one.
Frequently asked questions
What is the draw period payment on a HELOC?
Interest only on the drawn balance: drawn balance x annual rate / 12. On $50,000 at 8.5 percent, that is $354.17 a month, and the balance does not fall.
How is the repayment period payment calculated?
With the standard amortization formula on the balance at the start of repayment, over the repayment term. On the same $50,000 at 8.5 percent over 20 years, it is $433.91 a month.
When does my HELOC draw period expire?
It is in your loan agreement — typically 5 to 10 years after opening — and also visible in most lender dashboards. Find it now; lenders rarely issue prominent reminders, and the payment jump arrives whether you planned for it or not.
How big is HELOC payment shock?
Roughly a quarter to a third higher than the draw payment at the same rate: 22.5 percent in the $50,000 example above, 32.9 percent in the $350,000 example. Rate rises on top of that make it larger.
Is HELOC interest tax deductible?
Only when the borrowed money is used to buy, build, or substantially improve the home securing the loan, per IRS Publication 936 — and only if you itemize, within the $750,000 debt limit. Interest on draws used for credit card payoff, vacations, or other personal spending is not deductible. Keep records showing how each draw was spent.
Can I pay principal during the draw period?
Yes, with most HELOCs, and it is usually the smartest move available: every dollar of principal you repay early is a dollar the repayment period never has to amortize.
What happens if I draw more money later?
Your draw payment rises with the new balance, and the repayment payment is recalculated on the higher balance. Re-run the calculation after any large draw.
Are HELOC rates fixed or variable?
Usually variable, tied to prime plus a lender margin, so payments move when prime moves. Some lenders offer a fixed-rate option on part or all of the balance — check your agreement for that clause.
Sources
- Consumer Financial Protection Bureau, What is the difference between a Home Equity Loan and a Home Equity Line of Credit (HELOC)?
- Internal Revenue Service, Publication 936 (2025), Home Mortgage Interest Deduction
- Board of Governors of the Federal Reserve System, H.15 Selected Interest Rates
Estimates only, not financial or tax advice. Your lender’s agreement controls your actual payments, rates, and dates; tax rules change, so check current IRS guidance or a tax professional for your situation.
