Crunch My Mortgage

Interest-only and HELOC payment calculator

Your payment during an interest-only or HELOC draw period, the higher payment once repayment starts, and what the interest-only years add to the total interest.

Your inputs

Open this link to restore these inputs:

Estimate for education only. Not a loan offer, a rate quote or financial advice; actual terms come from a lender. crunchmymortgage.com

Starting values are placeholders, not market data. Replace them with your own numbers.

Loan or credit line

For a HELOC, the balance drawn (or that you plan to draw).

Held constant for the whole loan. HELOC rates usually vary.

Periods

Payments cover interest only. 0 for none.

Years to repay the full balance afterward.

Results

Interest-only payment $583.33

A month for the first 10 years, while the balance stays at $100,000

Repayment $775.30 a month for 20 years
The jump +$191.97 +32.9% a month

After 10 years the payment rises from $583.33 to $775.30, because the full $100,000 must then be repaid in 20 years instead of 30 years.

Total interest
$156,071
Interest if amortizing from day one
$139,511
Extra interest from interest-only years
$16,560
Payment if amortizing from day one
$665.30

What you still owe, year by year

Your plan compared with paying down principal from the first month over the same total time. Hover or tap for any year.

  • Interest-only plan
  • Amortizing from day one

Balances at the end of each year, at the rate you entered held constant.

What this calculator does

It estimates what you pay while only interest is due, what you pay once principal must be repaid, and how large that change is, so you can see the second payment long before it arrives.

Two kinds of borrowing share this shape. An interest-only mortgage starts with a set number of years in which the payment covers only interest, then switches to payments that repay the loan over the years left. A home equity line of credit (HELOC) has a draw period, when you can borrow, repay and borrow again, and on many lines the minimum payment is the interest on what you owe. A repayment period follows, when new borrowing stops and the balance is paid off with principal and interest.

One model covers both. Enter the amount borrowed (for a HELOC, the balance you have drawn or expect to have drawn), the rate, the length of the interest-only or draw period, and the length of the repayment period. The results show both payments, the jump between them, and the total interest compared with a loan that repays principal from the first month.

How the math works

During the interest-only period, the payment is one month of interest on the balance:

I = B × R12
I
monthly interest-only payment
B
balance borrowed
R
annual interest rate as a decimal (8.5% → 0.085)

Since the payment equals the interest exactly, no principal is repaid and the balance does not fall. It sits at the full amount until the period ends, which is the flat stretch in the chart.

When repayment begins, the whole balance is amortized over the repayment period alone, with the standard payment formula:

M = B × r(1 + r)n(1 + r)n − 1
M
monthly payment during repayment
r
monthly rate: R ÷ 12
n
months in the repayment period

Because the same balance must be repaid in fewer months than the loan's full length, this payment is higher than it would have been had principal been repaid from the start. For comparison, the calculator also amortizes the same amount at the same rate over the full combined length, which shows the interest the interest-only years add.

Lenders often figure interest daily rather than monthly: the balance times the annual rate divided by 365 (or 360), times the days in the billing cycle. Monthly amounts then vary slightly with the length of the month. This calculator uses one-twelfth of the annual rate.

Worked example

Suppose a HELOC with $80,000 drawn at 8.5%, a 10-year draw period with interest-only payments, and a 20-year repayment period.

Worked example

  1. Draw period payment: $80,000 × 0.085 ÷ 12 = $566.67 a month. After 10 years the balance is still $80,000, and $68,000 has gone to interest.
  2. Repayment: r = 8.5% ÷ 12 = 0.007083, n = 240, (1 + r)240 = 5.4412. M = $80,000 × 0.007083 × 5.4412 ÷ 4.4412 = $694.26.
  3. The jump: $694.26 − $566.67 = $127.59 a month, an increase of 22.5%.
  4. Amortizing the same $80,000 from day one over 30 years would cost $615.13 a month throughout, with $141,448 in total interest.

Total interest on the interest-only plan: $68,000 + $86,621 = $154,622, or $13,173 more than amortizing from the start.

Rate changes matter too. HELOC rates usually move with an index, so the same line at 10.5% would need $700.00 during the draw period and $798.70 once repayment starts. Running a few higher rates through the calculator shows how sensitive both payments are.

Common mistakes

  1. Budgeting on the interest-only payment. It is the lower of the two payments and it is temporary. The repayment payment usually lasts longer, and it is the one the budget has to carry later.
  2. Assuming the rate will stay where it is. Most HELOCs and many interest-only mortgages have adjustable rates. A higher rate raises both the interest-only payment and the later payment.
  3. Leaving out future draws. On a credit line, every new draw raises the balance and the interest. Enter the balance you expect at the end of the draw period to see the repayment payment you would face.
  4. Assuming interest-only is the required minimum. Minimum payment rules vary: some lines require part of the principal, a percentage of the balance, or a set minimum. Your agreement spells out the rule.
  5. Missing a balloon. Some lines and loans do not convert to a repayment period at all; the full balance comes due when the interest-only period ends. Check before relying on a repayment schedule.

Limits of this estimate

  • It holds the rate you enter constant for the whole loan. HELOC rates are usually variable, so real payments will move with the rate.
  • It computes interest at one-twelfth of the annual rate each month. With daily interest, actual amounts can differ by a few dollars from month to month.
  • It assumes the full amount is owed from the first month, with no new draws or principal payments during the interest-only period.
  • It does not include fees, closing costs, rate caps or floors, or any property tax and insurance paid alongside the loan.
  • It assumes repayment follows the interest-only period as level monthly payments. Lines with a balloon or a different minimum payment rule work differently.

Frequently asked questions

Why doesn't my balance go down during the interest-only period?

Because the payment is exactly the interest charged for the month. Nothing is left over to reduce principal, so you owe the same amount at the end of the period as at the start, plus anything new you borrowed on a credit line.

How much will my payment go up when repayment starts?

It depends mostly on the rate and how long the repayment period is: the shorter it is, the bigger the jump. On the $80,000 example at 8.5%, the payment rises 23% with a 20-year repayment period, 39% with 15 years and 75% with 10 years.

Can I pay principal during the interest-only period?

Many loans and credit lines allow it; check your agreement. Principal you repay lowers the balance, so it lowers both the interest-only payment and the payment once repayment starts. On a HELOC, repaid amounts can often be borrowed again during the draw period. This calculator assumes the balance stays at the amount you enter.

What happens when a HELOC draw period ends?

Typically you can no longer borrow, and the balance is repaid over the repayment period with payments that include principal. Some lines work differently: a few require the whole balance to be paid at the end of the draw period. Your agreement states which applies.

Is an interest-only loan more expensive overall?

At the same rate and total length, yes, because the full balance carries interest for longer. In the example, total interest is $154,622, compared with $141,448 if the same amount were repaid from the first month over the same 30 years.

Does this work for an interest-only adjustable-rate mortgage?

For the structure, yes; for rate changes, no. It holds your rate constant. To see what an adjustment would do to the payment, use the ARM payment calculator with the rate and caps from your loan documents.

Next steps: if the rate on your loan or line can change, the ARM payment calculator shows a payment after an adjustment. To weigh replacing the loan with a new one, the refinance break-even calculator counts the closing costs. For a first mortgage with tax and insurance included, use the mortgage payment calculator.