Line of Credit Calculator

May 9, 2026

Borrowing $35,000 against your home equity to renovate a kitchen sounds manageable until you try to predict the monthly cost. A line of credit is not a standard installment loan: it has a draw period when you may pay only interest, followed by a repayment period when principal joins the bill. A line of credit calculator removes the guesswork by modeling both phases and showing exactly what you will owe each month and in total interest.

Line of Credit Details

Credit Limit ($)

Amount Drawn ($)

You only pay interest on the amount you draw, not the full credit limit. The drawn amount cannot exceed the limit.Annual Percentage Rate (%) For variable-rate lines, enter the current rate. Most HELOCs and personal lines carry variable rates tied to the prime rate plus a margin. Ask your lender about the lifetime rate cap.

Draw Period (years)

Repayment Period (years)

Typical HELOC: 10-year draw period followed by 20-year repayment. Personal and business lines may have shorter terms. Set draw period to 0 if your line has no interest-only phase.

Optional: Extra principal payments during draw

Monthly extra principal payment ($) Paying extra principal during the draw period reduces the balance that enters amortization, lowering your repayment payment and lifetime interest. Even small amounts make a significant difference over time.

Your Estimated Payments

Draw period: – (interest only)

Repayment period: – (principal + interest)

Total interest (draw period): –
Total interest (repayment period): –
Total interest (lifetime): –
Total payments (principal + interest): –

Results are estimates. Actual payments depend on your lender's fee schedule, compounding method, and whether your rate is fixed or variable. For HELOCs, consult IRS Publication 936 regarding interest deductibility.

The calculator above separates the lifecycle into two distinct parts. It uses the approved credit limit, the amount you actually plan to draw, the annual percentage rate, the draw period, and the repayment term. First, it computes your estimated cost during the draw phase–typically interest-only or a minimum percentage of the balance–then projects the fully amortized payment once principal repayment begins. It also sums the interest across both stages so you can compare scenarios instantly.

How much will your line of credit payments be?

This is the core question most borrowers face. During the draw period, lenders typically require interest-only payments or a small percentage of the outstanding balance. If you withdraw $40,000 on a HELOC carrying an 8.75% APR, the expected monthly cost during a 10-year draw is roughly $292 in interest alone.

When the draw period closes, the outstanding balance must be repaid over a set term, often 20 years. The loan now behaves like a conventional amortizing mortgage. Using the same $40,000 balance at 8.75%, the monthly payment rises to about $353 because each installment covers interest plus principal.

What formula does a line of credit calculator use?

Two formulas drive the results.

For the draw period, the interest due each month is straightforward:

Monthly interest = Current balance × (APR / 12)

For the repayment period, the calculator uses the standard amortization formula:

M = P × [ i(1 + i)^n ] / [ (1 + i)^n − 1 ]

Where:

M = monthly payment
P = remaining principal balance
i = monthly interest rate (APR divided by 12)
n = total number of payments in the repayment term

If you make principal payments during the draw period, the calculator reduces P before the amortization phase begins.

Example calculation for a $40,000 HELOC

Consider a home equity line with a $40,000 initial draw, an 8.75% fixed APR, a 10-year draw period, and a 20-year repayment term.

Years 1–10 (draw): You pay interest only.
$40,000 × (0.0875 / 12) = **$292 per month**.
Over 10 years you pay $35,040 in interest and still owe the original $40,000.
Years 11–30 (repayment): The balance amortizes over 240 months.
Using the formula above, the payment equals **about $353 per month**. Total interest in this phase equals roughly $44,720.
Total cost: Across 30 years you pay **about $79,760 in interest** on top of the $40,000 principal.

Making even occasional principal reductions during the draw period would lower both the repayment payment and the lifetime interest.

Fixed versus variable rates and why they matter

Most home equity lines and many personal lines carry variable rates tied to a benchmark such as the prime rate plus a margin. A calculator assumes the APR you enter stays constant, which is useful for planning but rarely matches real life. If the benchmark rises by 1 percentage point during your draw period, the monthly interest on a $40,000 balance climbs by roughly $33. Before committing, ask your lender for the lifetime cap and the periodic adjustment limits.

When is a line of credit cheaper than a term loan?

A line of credit rewards discipline. If you need $40,000 for six months to bridge a home sale, pay it back, and leave the account open but empty for emergencies, you pay interest only on the months you carry a balance. A fixed installment loan charges interest on the full lump sum from day one regardless of early payoff. Conversely, if you borrow the maximum limit immediately and take the full term to repay, a low-rate term loan often costs less because revolving lines usually carry higher APRs.

Key factors that change your total interest

Draw timing: Taking the full limit on day one maximizes interest; drawing only what you need, when you need it, keeps balances low.
Voluntary principal payments: Paying down the balance during the draw period reduces the principal entering amortization.
Rate type: A fixed-rate line locks in predictable payments; a variable rate shifts with market conditions.
Term length: A 15-year repayment term raises the monthly amount but cuts lifetime interest significantly compared with a 25-year term.

Results from any line of credit calculator are estimates. Actual payments depend on your lender’s specific fee schedule, compounding conventions, and whether your rate is fixed or variable.

Frequently Asked Questions

Can I pay off a line of credit early during the draw period?

Yes. Most lenders allow you to pay down principal during the draw period without penalty. Reducing the balance lowers your monthly interest charge and the total amount you must repay once the amortization phase begins.

Why did my HELOC payment increase after five years?

Many HELOCs start with an interest-only draw period, often lasting 5 to 10 years. When that period ends, the loan enters repayment, requiring principal plus interest. This switch usually causes a sharp rise in the monthly amount due.

Does using a line of credit affect my credit score?

Opening a line of credit triggers a hard inquiry and can lower your average account age, which may slightly reduce your score. However, using less than 30% of the limit and making on-time payments can improve your credit utilization ratio over time.

What is the usual length of a draw and repayment period?

Home equity lines commonly offer a 10-year draw period followed by a 20-year repayment term. Personal and business lines vary more widely, ranging from 12-month draw windows to 5-year blended terms depending on the lender.

Is interest on a home equity line of credit tax deductible?

As of 2026, interest may be deductible only if the funds are used to buy, build, or substantially improve the home securing the loan. Limits and rules change, so consult IRS Publication 936 or a tax professional for current guidance.

Can I use this calculator for a business line of credit?

Yes. The math is the same for business and personal lines. Simply enter the amount drawn, the APR, the draw term, and the amortization period. Keep in mind that business LOCs may have different fee structures or balloon requirements not captured in a standard model.