What will the monthly payment for my HELOC be?

When you open a home equity line of credit (HELOC), you’re likely wondering how much your monthly payment will be. Your payment isn’t one-size-fits-all—it’s based on your interest rate, how much you’ve used, your loan term, and whether you’re still borrowing (draw period) or paying it back (repayment period).

A benefit of the longer loan term of a HELOC (compared to a personal loan) is that your monthly payments are stretched out over as many as 25 years, which can make them more manageable than if they were condensed into a 5 year time period. The term of a HELOC is split into a draw and repayment period, and during the draw period you’re only required to make payments towards interest.

HELOC monthly payment estimates

While you'll need to know the size of your loan and the interest rate to figure out your exact monthly payment, seeing calculations using a 7% interest rate and a typical 10-year draw and 15 year repayment period can help you estimate your own monthly payments.

Keep in mind that HELOC interest rates are often variable in that they are tied to an index, such as the Prime rate and therefore can change over time.

HELOC monthly payment estimates (7% APR)

What is a HELOC draw period, and what do you pay?

The HELOC draw period is the time during which you can tap into your line of credit, using the funds to renovate your home, pay for your children's education or cover any other expenses you need. The amount of your line of credit, or how much you can borrow, is partly based on how much equity you have in your home. The typical length of a draw period is 10 years, though some may be shorter or longer.

During the draw period, you'll need to make payments on the HELOC, but they can be interest-only, not towards the principal amount you're approved to borrow. You won't actually lower the balance during this time, which is why payments can jump up when you enter the repayment period.

It's worth noting that while you aren't obligated to start repaying the borrowed amount during the draw period, you also aren't prevented from repaying the principal. If you decide to pay more than the interest each month, you can reduce your payment amount during the repayment period and potentially shorten the HELOC's repayment term.

What is a HELOC repayment period, and how does the payment change?

Once the draw period ends, your HELOC enters the repayment period. During repayment, you can't draw funds from the line of credit, and you're now obligated to pay back the principal and interest.

Depending on how much you ended up borrowing during the draw period and the current interest rate, your monthly payments could jump up significantly. Since the rate on most HELOCs are variable, your repayment period payments may change as the prime rate fluctuates. If rates drop, so too can your monthly payments. If they go up, your monthly payments will go up accordingly.

The length of the repayment period also affects the payment amount. A Citizens HELOC offers a 15-year repayment term, which can mean higher monthly payments than a longer term option, but less overall interest paid.

How much could my payment jump at repayment?

The more you borrow, the higher your payment will be once you enter the repayment period. For instance, if you borrow $150,000 at 7% interest, you'll likely pay $875 per month during the draw period, assuming you make interest-only payments. Once you enter the 15-year repayment period, if the interest rate stays at 7%, your monthly payment will jump to $1,348.24, up by $473.24.

The difference between payment amounts grows the more you borrow. With a $250,000 HELOC at the same interest rate, you'll pay $1,458.33 during the draw period and $2,247.07 during repayment.

Using the repayment period amount when you calculate your budget will help you avoid any unpleasant surprises. Chipping away at the principal during the draw period helps reduce how much you owe in the end.

What affects your HELOC monthly payment?

Four factors affect your monthly HELOC payment:

• Amount drawn: You only need to repay and pay interest on the amount you actually borrow. If you have a $100,000 credit line but only use $50,000, you'll pay interest on the $50,000 and ultimately repay $50,000 in principal.
• Interest rate: The interest rate on your HELOC is tied to the prime rate as it’s most likely a variable rate. When rates are up, your payments will be higher. If they fall, your monthly payments decreasing accordingly. How often rates change depends on the economy and decisions by the Federal Reserve, some years there are multiple changes other times there are no changes.
• HELOC phase: Payments can be lower during the draw period because you're only paying interest. Repayment-period payments include the principal, so they are often significantly higher.
• Repayment term length: The more time you have to repay the HELOC, the lower your monthly payments, but the more interest you'll end up paying over time. A shorter repayment period means a higher monthly payment but less total amount paid.

Frequently asked questions

Do HELOC payments increase after the draw period ends?

Yes, HELOC payments can increase once the draw period ends, as payments move from being interest-only to principal and interest, which can increase the monthly payment obligation considerably.

How does a variable interest rate affect my HELOC payment?

A variable interest rate means your HELOC payment can increase or decrease as interest rates rise or fall. Variable HELOC rates are tied to the prime rate – which is based on the federal funds rate. The Federal Reserve (Fed) meets about 8 times per year to decide whether to adjust the federal funds rate. Some years there are multiple changes, other times there are no adjustments for long periods of time, Interest rate fluctuations can affect both the draw period and repayment period payment amounts.

What do I need to qualify for a HELOC with Citizens?

Qualification requirements can vary based on the type of HELOC, but generally include your credit score, home equity, income, and overall financial profile. For example, a Citizens GoalBuilder HELOC typically requires a minimum credit score of 620, while a standard HELOC may require a score of 680 or higher. Citizens FastLine® can provide a personalized assessment to help determine which option you may qualify for based on your individual financial situation.

Get your HELOC rate

Get a personalized offer, including rate and line of credit amount, with Citizens FastLine® in just two to three minutes with no impact on your credit score. Find out more about a Citizens HELOC.