A Home Equity Line of Credit (HELOC) is a revolving credit line secured by your home's equity. It allows you to borrow funds as needed up to a certain limit. HELOCs typically have two phases: a draw period and a repayment period.
The Draw Period:
During the draw period (often 5-10 years), you can borrow funds and usually only need to make interest-only payments. This allows flexibility but doesn't reduce the principal balance.
The Repayment Period:
After the draw period ends, the repayment period begins (often 10-20 years). During this phase, you must repay both the principal and the interest. The monthly payments will be significantly higher than the interest-only payments made during the draw period.
How to Calculate Your HELOC Payment (Repayment Period)
The calculator above estimates your monthly payment during the repayment period, assuming a fully amortizing loan. The standard formula for calculating a fixed monthly loan payment (which includes both principal and interest) is:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
M = Your total monthly payment
P = The principal loan amount (the total amount you borrowed on your HELOC)
i = Your monthly interest rate. This is your annual interest rate divided by 12. For example, a 6% annual rate is 0.06 / 12 = 0.005 monthly.
n = The total number of payments over the loan's lifetime. This is the loan term in years multiplied by 12. For a 10-year loan, n = 10 * 12 = 120 payments.
Example Calculation:
Let's say you have a HELOC with the following details:
HELOC Amount (P): $100,000
Annual Interest Rate: 7.0%
Repayment Term: 15 years
First, we convert these to the variables needed for the formula:
Therefore, the estimated monthly payment for this HELOC during the repayment period would be approximately $902.60.
Disclaimer: This calculator provides an estimate based on the standard amortization formula. Actual HELOC terms and payment calculations may vary by lender. It's always best to consult your specific HELOC agreement or lender for precise payment details.
function calculateHELOCPayment() {
var principal = parseFloat(document.getElementById("helocAmount").value);
var annualRate = parseFloat(document.getElementById("interestRate").value);
var termYears = parseFloat(document.getElementById("loanTerm").value);
var paymentResultElement = document.getElementById("paymentResult");
if (isNaN(principal) || isNaN(annualRate) || isNaN(termYears) || principal <= 0 || annualRate < 0 || termYears 0) {
// M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
var numerator = monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments);
var denominator = Math.pow(1 + monthlyRate, numberOfPayments) – 1;
payment = principal * (numerator / denominator);
} else {
// Handle zero interest rate case (simple principal division)
payment = principal / numberOfPayments;
}
paymentResultElement.innerText = "$" + payment.toFixed(2);
paymentResultElement.style.color = "#28a745"; /* Success Green */
}