What is the draw period on a HELOC?

The draw period is the opening phase — typically 5 to 10 years — during which you can borrow, repay, and borrow again up to your credit limit. Most lenders require only interest payments on the outstanding balance during this phase, so the balance does not fall unless you pay extra voluntarily.

What happens when the HELOC draw period ends?

The line closes to new draws and the repayment period begins: you pay principal plus interest on the remaining balance over a set term, often 10 to 20 years. Because principal is now included, the monthly payment jumps — on a $50,000 balance at 8%, from $333.33 interest-only to $477.83 amortized over 15 years, a 43% increase.

Are HELOC rates fixed or variable?

Usually variable: the rate is an index (commonly the prime rate) plus a margin, so it moves as the index moves. Some lenders offer a fixed-rate option on all or part of the balance. A variable rate is the main risk of a HELOC — payments in this calculator assume today's rate stays constant.

How much can I borrow with a HELOC?

Most lenders cap the combined loan-to-value at 80–85%: home value × cap − mortgage balance. On a $600,000 home with a $250,000 mortgage at an 80% cap, the maximum line is $230,000.

HELOC Calculator

Line of Credit

Loan Amount (drawn)

Interest Rate

Draw Period

years

You can borrow, repay and redraw during the draw period; most lenders require interest-only payments.

Repayment Period

years

After the draw period, the line closes and the balance amortizes over this term.

Start Date

Include Closing Costs & Fees

Closing Costs

Costs Paid

Annual Fee

$/year

Charged during the draw period only, to keep the line open.

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How Large a Line Can You Get?

Lenders cap the combined loan-to-value ratio (CLTV) — mortgage balance plus the new line, as a share of the home's value — typically at 80–85%. Your room is home value × cap − mortgage balance:

Current Home Value

Mortgage Balance Owed

Max LTV the Lender Allows

What Is a HELOC?

A home equity line of credit is a revolving credit line secured by your home — closer to a credit card than to a loan. Instead of one lump sum, you get a limit you can draw against, repay, and redraw, which suits expenses that arrive in stages: a renovation paid contractor by contractor, tuition billed semester by semester. Its life splits into two very different phases, and this calculator exists because the second phase is where borrowers get surprised.

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Phase 1: the draw period (interest-only)

For typically 5 to 10 years you may draw up to the limit, and most lenders require only interest payments on what you owe. That keeps payments low — $333.33 a month on a $50,000 balance at 8% — but the balance does not shrink by a cent unless you pay extra on purpose. Many HELOCs also charge a modest annual fee during this phase for keeping the line open. Treat the low payment as a minimum, not a plan: every dollar of principal you repay voluntarily during the draw period is a dollar that never enters the much more expensive second phase.

Phase 2: repayment — and the payment jump

When the draw period ends, the line closes and the remaining balance converts to an amortizing loan over the repayment period, commonly 10 to 20 years. On the default numbers here, the payment leaps from $333.33 to $477.83 — a 43% jump — on the very same balance. Budget for that jump from day one; borrowers who only ever planned around the interest-only figure are the ones who end up refinancing in a hurry or selling under pressure. Layered on top is the HELOC's defining risk: the rate is usually variable, set as an index (often prime) plus a margin, so both phases' payments can rise further if the index climbs. Every figure on this page holds today's rate constant — stress-test your budget at a rate 2 points higher.

Costs: closing costs, annual fees, and the APR

Upfront costs (application, appraisal, origination, title, document fees) typically run 1–5% of the line. "No-closing-cost" HELOCs exist, but the charge migrates into a higher margin or an early-termination fee if you close the line within a few years. With $2,000 of closing costs and a $50 annual fee, the default line's true cost rises from an 8.00% rate to an 8.56% APR — the figure to compare across lenders, since it is the only one that counts the fees. One more lender power worth knowing before you sign: if your home's value drops sharply or your finances deteriorate, the lender may freeze or reduce your line — a HELOC is flexible in both directions.

HELOC vs home equity loan vs cash-out refinance

	HELOC	Home Equity Loan	Cash-Out Refinance
You receive	A credit line, drawn as needed	One lump sum	Cash from a new, larger first mortgage
Rate	Usually variable	Fixed	Fixed or adjustable
Payments	Interest-only during draw, then amortizing	Fixed from month one	One combined mortgage payment
Best for	Phased, uncertain-size expenses	A known one-time expense with payment certainty	When today's mortgage rates beat your current one

Qualification mirrors the home equity loan: CLTV caps (80–85% typical, ~$1M absolute), credit scores below roughly 630 often fail, and lenders generally want total debt-to-income at or below 43%. And the same tax caution applies — interest is generally deductible only when the money buys, builds, or substantially improves the home. Model the lump-sum alternative on our home equity loan calculator.

FAQ

What is the draw period?

The opening 5–10 years when you can draw, repay, and redraw up to your limit, usually paying interest only.

What happens when the draw period ends?

Draws stop and the balance amortizes over the repayment period. On $50,000 at 8%, the payment rises from $333.33 to $477.83 — plan for the jump.

Is a HELOC rate fixed?

Usually not — it floats with an index plus a margin. Some lenders let you fix a portion of the balance; ask before signing.

Can the lender freeze my line?

Yes, if the home's value falls significantly or your financial situation worsens materially. Never treat an undrawn HELOC as an emergency fund of last resort.

Disclaimer: This calculator provides estimates for educational purposes only and does not constitute financial advice. It assumes the full amount is drawn at the start, the rate stays constant, and no voluntary principal payments are made during the draw period; actual HELOC terms vary by lender.