How to Calculate a HELOC Payment (Formula + Free Calculator)

A Home Equity Line of Credit (HELOC) functions in two distinct phases, each requiring a different payment formula: the Draw Period (typically years 1–10) and the Repayment Period (years 11–30).

1. Draw Period Payment Formula (Interest-Only)

During the draw period, most lenders only require you to pay monthly accrued interest on the amount currently drawn from your line of credit:

Real Example: If you draw $50,000 against your HELOC at an interest rate of 8.5%:

Note: Paying only interest keeps your balance at $50,000. Any extra principal payments directly replenish your borrowing room.

2. Repayment Period Payment Formula (Principal + Interest)

Once the draw period ends, the credit line freezes. You can no longer borrow, and your full remaining balance must be paid off over the repayment term (typically 10 to 20 years) via standard monthly amortization:

For a $50,000 balance at 8.5% over a 20-year repayment period (240 months), your payment jumps from $354.17/mo to $433.91/mo. Planning for this "payment reset" prevents unexpected budget shock.

3. Current HELOC Rates & Borrowing Limits

In 2025, HELOC interest rates remain variable and tied to the US Prime Rate (typically Prime + 0.5% to 2.0%) or the Bank of Canada Prime Rate for Canadian homeowners. Average rates currently sit between 7.5% and 9.5% for prime borrowers.

Lenders calculate maximum borrowing limits based on your Combined Loan-to-Value (CLTV) ratio, typically capping total home borrowing at 80% to 85% of market value: