A Home Equity Line of Credit (HELOC) is a flexible revolving credit facility that allows homeowners to borrow against the equity in their homes. Unlike a home equity loan which provides a lump sum, a HELOC functions more like a credit card, with a draw period during which you can borrow funds and a repayment period during which you must pay back the borrowed amount plus interest.
How is the HELOC Payment Calculated?
The calculation of a HELOC payment is typically based on the outstanding balance, the interest rate, and the remaining term of the repayment period. During the draw period, many HELOCs only require interest-only payments. However, once the repayment period begins, payments will include both principal and interest, calculated using a standard amortization formula. The formula used here estimates the fixed principal and interest payment needed to fully amortize the loan over the specified repayment term, assuming the entire credit limit is drawn at the start of the repayment period.
The formula for calculating the monthly payment (M) for an amortizing loan is:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
P = Principal loan amount (the HELOC credit limit in this case).
n = Total number of payments (Loan Term in Years * Payments Per Year).
Key Factors for Your HELOC Payment:
HELOC Credit Limit: This is the maximum amount you can borrow. The payment calculation assumes you have drawn the full limit to estimate the repayment amount.
Annual Interest Rate: HELOC rates are often variable, meaning they can change over time. This calculator uses a fixed annual rate for estimation. Always check your HELOC agreement for details on rate adjustments.
Repayment Period (Years): This is the duration over which you will repay the borrowed principal and interest. A longer term generally means lower monthly payments but higher total interest paid over the life of the loan.
Payments Per Year: Most commonly monthly (12), but can vary.
Using This Calculator:
Enter your HELOC's credit limit, the current annual interest rate, the length of the repayment period in years, and how many payments you'll make per year. The calculator will then provide an estimated monthly payment required to pay off the loan by the end of the term.
Disclaimer: This calculator provides an estimate for informational purposes only. It does not constitute financial advice. Actual payments may vary based on the specific terms of your HELOC agreement, including variable interest rates, fees, and the actual amount drawn. Consult with your lender for precise figures.
function calculateHELOCPayment() {
var loanAmount = parseFloat(document.getElementById("loanAmount").value);
var annualInterestRate = parseFloat(document.getElementById("interestRate").value);
var loanTermYears = parseFloat(document.getElementById("loanTermYears").value);
var paymentFrequency = parseFloat(document.getElementById("paymentFrequency").value);
var resultDiv = document.getElementById("result");
var resultValueDiv = document.getElementById("result-value");
if (isNaN(loanAmount) || isNaN(annualInterestRate) || isNaN(loanTermYears) || isNaN(paymentFrequency) ||
loanAmount <= 0 || annualInterestRate < 0 || loanTermYears <= 0 || paymentFrequency 0) {
payment = loanAmount * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
} else {
// If interest rate is 0, payment is just principal divided by number of payments
payment = loanAmount / numberOfPayments;
}
resultValueDiv.textContent = "$" + payment.toFixed(2);
resultDiv.style.display = "block";
}