Calculator Methodology & Sources
The calculator models one balance drawn at the start of a HELOC and held unchanged through an interest-only draw period. It then models equal principal-and-interest payments during the repayment period. The entered APR remains constant for both periods; the initial values are illustrative, not live lender quotes.
The calculation
Let B be the entered balance, r the entered annual percentage rate divided by 100 and 12, and n the repayment years multiplied by 12. The estimated monthly draw payment is B × r. For the repayment phase, the monthly payment is B × r / (1 − (1 + r)−n). If r is zero, it is B / n. Each repayment month's interest is the remaining balance × r; the rest of that month's payment reduces principal.
Total interest adds the modeled interest for both phases. Total payments are the draw payments plus the scheduled repayment payments. The payoff date adds both periods to the current date. The displayed schedule shows annual snapshots and the final month; the calculation uses unrounded values and displays rounded amounts.
What the estimate leaves out
Actual HELOCs can have changing rates, daily interest accrual, additional draws or principal payments, different minimum payments, balloon payments, fees and other terms. This tool does not model them, tax effects, or whether you qualify. The rate slider covers 3%–15%, and its term and balance ranges are also limited; it cannot model every offer. Compare the estimate with your lender's disclosures and try different rates to understand sensitivity.
Sources for further reading
- CFPB Regulation Z HELOC disclosures for plan terms and rate disclosures.
- Federal Reserve H.15 for published bank prime loan rates, which may differ from a lender's specific index.
- IRS Publication 936 for home mortgage interest deduction rules.
These estimates are educational, not a loan offer or financial, tax or legal advice.