Quick answer
A HELOC drawdown simulator shows both phases of a home equity line: the interest-only draw period and the amortising repayment that follows. Draw $100,000 at 8.5% and the draw-period payment is $708 a month — but when repayment begins over 20 years, the same balance costs $868 a month, and total repayment-phase interest is about $108,278. The simulator's job is to stop the first figure from fooling you.
How the HELOC Drawdown works, step by step
Enter your home value, current mortgage balance and the lender's maximum combined loan-to-value to see the largest line available. Then enter the amount you plan to draw, the (variable) HELOC rate and the repayment term to model the payments. If the draw exceeds the available credit, the tool caps the results at the available maximum and warns you.
During the draw period — commonly 10 years — you may borrow, repay and borrow again, and the required payment is usually interest only. The balance does not fall unless you pay extra. During repayment — commonly 15 to 20 years — the line closes and the balance amortises like a loan, which is why the payment jumps even if the rate never moves.
The rate itself is the third risk: most HELOCs are variable, priced as prime plus a margin. Prime stood at 7.00% in November 2026, after the Federal Reserve raised its target range to 3.75% to 4.00% in September and held it in October; Bankrate's national average HELOC rate was 7.49% in early November 2026. A simulator run at today's rate is a snapshot; re-run it two points higher to see the payment you might actually be committing to.
The repayment-phase interest total is the figure that should drive the decision, not the monthly payment. On a $100,000 draw at 8.5%, twenty years of repayment adds about $108,278 of interest — more than the amount borrowed. Shortening the repayment term to 15 years raises the payment to about $985 but cuts the interest to about $77,253, saving roughly $31,000 for $117 more a month.
Check the combined loan-to-value after the draw as well as the payment. The example leaves the home at 66.7% combined LTV, which most lenders accept comfortably. A draw that pushes combined LTV toward 90% leaves little room if prices fall — and a lender can freeze or reduce a line if the home's value drops significantly, which is exactly when you would most want the money.
The formula
Credit limit = (Max combined LTV × home value) − mortgage balance. Interest-only payment = drawn amount × annual rate ÷ 12. Repayment payment = drawn amount × [r(1 + r)^n] ÷ [(1 + r)^n − 1] over the repayment term. Total repayment interest = (repayment payment × months) − drawn amount.
Worked example — try it on the calculator above
Worked example: $600,000 home, $300,000 mortgage, $100,000 draw
At an 85% max combined LTV, the credit ceiling is $510,000; minus the $300,000 mortgage, the largest line is $210,000. Draw $100,000 at 8.5%: the interest-only payment is $100,000 × 8.5% ÷ 12 = $708.33 a month, and the balance stays $100,000. When the draw period ends and the balance amortises over 20 years at the same rate, the payment becomes $867.82 and the interest over the repayment phase totals about $108,278. Ten years of interest-only payments ($85,000 if the balance never moved) bought no equity at all.
Frequently Asked Questions
What is the current typical HELOC rate?
HELOCs price off the prime rate plus a margin, so they move with monetary policy. Prime was 7.00% in November 2026 and Bankrate's national average HELOC rate was 7.49% in early November. Your margin depends on credit score and combined LTV; the prime part is identical for everyone. Always model the payment at prime plus 2 points before drawing.
Can the lender freeze or cut my HELOC?
Yes, in defined circumstances — most notably if the home's value falls significantly or your financial situation deteriorates materially. Lenders used this power widely in 2008–2009. A HELOC is therefore unreliable as a sole emergency reserve: keep cash savings as the primary buffer and treat the line as a secondary one.
Is HELOC interest tax-deductible?
Only if the funds buy, build or substantially improve the home that secures the line, and only for taxpayers who itemise, within the mortgage debt limit of $750,000 for loans taken out after December 15, 2017 ($375,000 if married filing separately) — a limit the One Big Beautiful Bill Act made permanent. Interest on HELOC funds used for other spending is not deductible, whatever the lender's marketing implies.
Should I pay more than interest-only during the draw period?
If you intend to carry the balance into repayment, yes — every dollar of principal paid during the draw period is a dollar that does not amortise at the higher repayment payment. In the example, paying the balance down to $60,000 before repayment cuts the 20-year repayment payment from $867.82 to about $521 and removes roughly $43,300 of repayment-phase interest.
Estimates, not advice. This calculator provides educational estimates based on the inputs you enter and the assumptions shown on this page. It is not financial, tax or investment advice, and it cannot see your full situation. Verify important figures against official sources, and consider a qualified professional for decisions about your own money. See our Disclaimer and Methodology.