Interest-Only HELOC Payment Calculator — Draw Period Costs

Calculate Your Draw Period Payment

Amount Drawn / Balance

The amount you've drawn from your credit line

Interest Rate

Your current HELOC variable rate

Draw Period Remaining

yrs

Years left in your draw period

Interest-only payments are calculated as: Balance × (Annual Rate ÷ 12). Your payment changes automatically if your variable rate moves up or down. Check the current average via Freddie Mac's published rates.

Monthly Interest-Only Payment

Your draw period minimum

Total Interest Over Draw Period

If balance stays constant

How Your Payment Changes at Different Draw Amounts

What this means

Your interest-only payment covers only the cost of borrowing — your balance stays the same unless you pay more than the minimum.

What Is an Interest-Only HELOC Payment?

During the draw period (typically the first 10 years of a HELOC), most lenders only require you to pay the interest that accrues each month on your outstanding balance. No principal is required to be repaid during this phase, which is why draw period payments are significantly lower than what you'll pay once the repayment period begins.

The Formula Is Simple

Interest-only payment = Balance × (Annual Rate ÷ 12). On a $40,000 balance at 8.5%, that's $40,000 × (0.085 ÷ 12) = approximately $283 per month. The catch is that when the draw period ends, you'll still owe the full $40,000 — and your payment will jump to cover both principal and interest over the remaining repayment term.

Don't confuse low payments with low cost

Interest-only payments feel affordable, but you're not reducing your debt at all. Every dollar you pay during the draw period goes entirely to the lender as interest. Use the HELOC Payoff Calculator to see what happens if you pay above the minimum.

How Variable Rates Affect Your Payment

Because HELOC rates are variable, your interest-only payment can change month to month as the prime rate moves. A 1% rate increase on a $50,000 balance adds approximately $42 per month to your payment. Try the HELOC Payment Calculator to model both your draw period and repayment period costs together.

Interest-Only Payment FAQs

Yes, and you should if you can afford to. Paying more than the interest-only minimum during the draw period reduces your principal, which lowers future interest charges and reduces the payment shock when repayment begins.

Once the draw period ends, you can no longer borrow and your minimum payment switches from interest-only to a full amortizing payment covering both principal and interest. If you've paid nothing toward principal, this jump can be substantial.

Yes. Interest-only payments are calculated on the outstanding balance, so every additional draw increases your monthly minimum. The three scenario boxes in the calculator above show how your payment scales at different draw amounts.