Interest-Only HELOC Calculator

This interest-only HELOC calculator shows both halves of the HELOC story: the low interest-only payment during your draw period, and the sharply higher principal-and-interest payment that arrives when the draw period ends. Most bank calculators only show you the first number. The second one is where borrowers get in trouble.

A typical HELOC has a 10-year draw period during which you can borrow against your line and are only required to pay interest, followed by a 20-year repayment period during which the balance amortizes with mandatory principal-and-interest payments. The CFPB's HELOC guidance specifically warns borrowers to plan for this transition, because the required payment can rise substantially overnight even if the interest rate doesn't move.

Enter your drawn balance, rate, and remaining draw period to see your current interest-only payment, the balance you'll carry into repayment, the new required payment, and the total interest across both phases. Add a voluntary monthly principal amount to see how much it blunts the payment shock. If you're deciding how much to borrow in the first place, start with our HELOC Calculator; if you want out of the interest-only treadmill entirely, the HELOC Payoff Calculator builds the exit plan.

HELOC interest is calculated on your drawn balance only — not your total credit line — using a simple formula:

In practice most lenders compute it daily (balance × rate ÷ 365, summed over the billing cycle), which lands within pennies of the monthly formula when your balance is stable. Three things make HELOC interest different from mortgage interest:

• The rate is variable. Nearly all HELOCs price at the prime rate plus a margin, so your payment moves every time the Federal Reserve moves. A 1-point rate increase on a $50,000 balance adds about $42/month instantly.
• You're charged only on what you draw. A $100,000 line with $20,000 drawn accrues interest on $20,000. This is the core advantage over a lump-sum home equity loan.
• Interest-only payments make zero progress. During the draw period your required payment equals exactly the interest accrued — so the balance never shrinks unless you voluntarily pay principal.

Worked example — $50,000 drawn at 8.50%: monthly interest = $50,000 × (0.085 ÷ 12) = $354.17. Pay that every month for a full 10-year draw period and you'll have paid roughly $42,500 in interest while still owing the entire $50,000.

When the draw period ends, your remaining balance converts to a fully amortizing loan over the repayment term. The required payment jumps for two reasons at once: you must now pay principal, and that principal is spread over a shorter horizon than a fresh 30-year mortgage.

Continuing the example — $50,000 at 8.50% entering a 20-year repayment period:

• Interest-only payment during the draw period: ~$354/month
• Required payment in the repayment period: ~$434/month — a jump of roughly 23%
• Interest during the 10-year draw period: ~$42,500
• Interest during the 20-year repayment period: ~$54,100
• Total interest across both phases: ~$96,600 — nearly double the $50,000 borrowed

The jump is steeper at higher rates and larger balances, and it lands regardless of your financial situation at the time. This is why the calculator includes a voluntary extra-principal input: paying even $200/month of principal during the draw period in this example cuts the balance entering repayment to $26,000, drops the repayment-phase payment to ~$226, and saves tens of thousands in phase-two interest. The CFPB notes that borrowers who can't absorb the reset payment generally must refinance, request a modification, or sell — all easier to avoid than to execute.

To calculate your interest-only HELOC payment by hand: multiply your drawn balance by your annual rate, then divide by 12.

Because the rate is variable, redo this whenever prime moves. And remember the number tells you the cost of standing still: an interest-only payment is rent on borrowed money, not progress toward owning it. To see interest-only math on non-HELOC loans, our Interest-Only Loan Payoff Calculator covers the general case.