🏠 HELOC Amortization Calculator 2026
Calculate Draw & Repayment Phase Schedules
📊 Understanding HELOC Amortization
The HELOC amortization calculator helps homeowners understand their Home Equity Line of Credit payment structure. Unlike standard mortgages, HELOCs have two distinct phases: a "draw period" (interest-only) and a "repayment period" (principal + interest). This creates a "payment shock" when the draw period ends.
Who needs this? Anyone with a current HELOC or considering one. Benefit: Visualize your payment changes in 2026 and beyond to plan your budget and avoid surprises when principal repayment begins!
📋 Amortization Schedule (Annual Summary)
| Year | Phase | Payment (Annual) | Interest | Principal | Balance |
|---|
📝 How to Use the HELOC Amortization Calculator
- Enter current balance — Input your current outstanding HELOC balance (or the amount you plan to borrow).
- Input interest rate — Enter your current APR. HELOC rates are typically variable, but use your current rate for estimation.
- Set draw period details — Enter the total length of your draw period (usually 10 years) and how many years are remaining.
- Set repayment period — Enter the repayment term (usually 10, 15, or 20 years). Check your loan agreement if unsure.
- Add extra payments (optional) — If you plan to pay extra each month to reduce principal faster, enter that amount here.
- Click Calculate — See the "payment shock" comparison between your current interest-only payment and the future fully amortized payment.
📐 HELOC Formula & Calculation Method
Draw Period Payment (Interest Only)
Variables: During the draw phase, you simply pay the accrued interest. For $50,000 at 8.5%: $50,000 × (0.085 ÷ 12) = $354.17/month.
Repayment Period Payment (Amortized)
Variables: P = Remaining Balance, r = Monthly Interest Rate, n = Total Repayment Months. This calculates a fixed payment to pay off the balance perfectly by end of term.
📊 HELOC Payment Examples
Example 1: The "Payment Shock" Scenario
Scenario: Mark has a $50,000 HELOC balance at 8.5% interest. His 10-year draw period is ending, entering a 20-year repayment phase.
- Current Payment (Draw): $50,000 × 8.5% ÷ 12 = $354/mo
- New Payment (Repayment): Amortizing $50,000 over 20 years at 8.5% = $434/mo
- Result: Payment increases by $80/month (23% increase).
Example 2: Paying Principal During Draw
Scenario: Lisa has the same $50,000 loan but pays $100 extra monthly during the 5 years remaining in her draw period.
- Total Extra Paid: $100 × 60 months = $6,000 + interest savings.
- Balance at Repayment Start: Reduced to ~$44,000.
- New Repayment Amount: $382/mo instead of $434/mo.
- Result: Lower future payments and thousands saved in interest.
Example 3: Short Repayment Term
Scenario: James has a $100,000 balance at 7% and faces a 10-year repayment period (some HELOCs are 10 draw / 10 repay).
- Draw Payment: $583/mo (interest only).
- Repayment Payment: Amortizing $100,000 over 10 years at 7% = $1,161/mo.
- Result: Payment doubles! This is a severe payment shock scenario common with 10-year repayment terms.
📊 HELOC Rate & Term Reference 2026
| Credit Score | Est. APR (2026) | Draw Period | Repayment Period | Typical LTV |
|---|---|---|---|---|
| 760+ (Excellent) | 7.50% - 8.25% | 10 Years | 20 Years | up to 95% |
| 700-759 (Good) | 8.25% - 9.50% | 10 Years | 15-20 Years | up to 90% |
| 640-699 (Fair) | 9.50% - 11.50% | 5-10 Years | 10-15 Years | up to 80% |
| Below 640 | 11.50%+ | Varies | 10-20 Years | Limited availability |
Note: Rates are variable based on Prime Rate (currently ~7.75-8.50% range estimate for 2026).
💡 Important Tips for HELOC Borrowers
- Prepare for the Reset: The end of the draw period is called the "reset." Know exactly when this date is to avoid surprise payment hikes.
- Refinance Options: If the payment shock is too high, consider refinancing into a new HELOC (resetting the clock) or a fixed-rate Home Equity Loan before the draw period ends.
- Variable Rate Risk: Most HELOCs have variable rates. If the Fed raises rates, your payment goes up immediately. Some lenders allow you to "lock" a portion of your balance at a fixed rate.
- Pay Principal Early: Every dollar paid toward principal during the draw period reduces your balance dollar-for-dollar, unlike amortized loans where early payments are mostly interest.
- Tax Deductibility: Interest on HELOCs is only tax-deductible if the funds are used to "buy, build, or substantially improve" the home securing the loan. Using it for debt consolidation is not deductible.
❓ Frequently Asked Questions
Payment shock occurs when the interest-only draw period ends and principal repayment begins. Monthly payments can jump 50% to 100% or more, depending on the interest rate and repayment term.
Usually, you cannot extend an existing draw period. You would typically need to apply for a refinance into a new HELOC, which would start a fresh 10-year draw period, subject to current credit approval and property value.
Interest is calculated daily based on your average daily balance. Formula: (Balance × APR) ÷ 365 = Daily Interest Charge. This is accumulated and billed monthly.
Always pay principal if you can. Paying interest-only keeps your monthly cost low now but leaves the entire debt for later. Paying principal reduces total interest costs and builds equity.
If you sell your home, the HELOC must be paid off in full at closing, just like your primary mortgage. The lien must be released to transfer clear title to the buyer.
🔗 Related Calculators
📚 Official Resources
- CFPB Home Equity Guide
- Federal Reserve HELOC Guide
- FTC Home Equity Shopping Guide
- IRS Pub 936 (Mortgage Deductions)
⚠️ Disclaimer: This calculator provides estimates based on constant interest rates. Most HELOCs have variable rates that can change monthly, significantly affecting your actual payment and amortization.
Last updated: January 2026 | Created by Omnicalculator.space