Tools
HELOC vs. Home Equity Loan Calculator
Two ways to borrow against equity that behave very differently. This models both on the same borrowed amount and shows what happens to the HELOC if rates move against you.
Quick Answer
A HELOC is a revolving, usually variable-rate line with a draw period, while a home equity loan is a fixed-rate lump sum amortized over a set term. Comparing them means weighing early-payment flexibility and interest-only draws against payment certainty and a guaranteed payoff date. Rate assumptions, how quickly the balance is repaid, and whether funds are needed all at once determine which costs less.
Amount borrowed
Home equity loan (fixed)
HELOC (variable)
Modeled monthly payments
$970 vs $729
Home equity loan payment versus the HELOC's initial draw-period payment, at the rates and terms entered.
Home equity loan
- Fixed rate
- 8.250%
- Monthly payment
- $970.14
- Total interest
- $74,625
- Total paid
- $174,625
HELOC
- Variable rate entered
- 8.750%
- Initial draw-period payment
- $729.17
- Estimated repayment-period payment
- $883.71
- Modeled total interest
- $199,591
- Modeled total paid
- $299,591
Which Equity Strategy Fits What You're Trying to Do?
Fixed payments, variable rates, draw periods, repayment terms, and how long you'll carry the debt can materially change the answer.
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Side-by-side comparison
| Home equity loan | HELOC | |
|---|---|---|
| Rate structure | Fixed as entered | Variable — modeled flat |
| Rate used | 8.250% | 8.750% |
| Initial monthly payment | $970.14 | $729.17 |
| Later monthly payment | $970.14 | $883.71 |
| Modeled total interest | $74,625 | $199,591 |
| Modeled total paid | $174,625 | $299,591 |
HELOC rate scenarios
HELOC rates are variable. These rows re-run the same HELOC model at higher rates so you can see how sensitive the payment is. They are illustrations of arithmetic, not predictions of future rates.
| Rate scenario | Draw payment | Repayment payment | Modeled interest | Modeled total |
|---|---|---|---|---|
| Entered rate (8.750%) | $729.17 | $883.71 | $199,591 | $299,591 |
| +1% (9.750%) | $812.50 | $948.52 | $225,144 | $325,144 |
| +2% (10.750%) | $895.83 | $1,015.23 | $251,155 | $351,155 |
| +3% (11.750%) | $979.17 | $1,083.71 | $277,590 | $377,590 |
Key differences
Home equity loan
Generally a lump-sum second mortgage with a fixed rate and a fixed repayment schedule when structured as a fixed-rate loan. The payment is known in advance and does not move with an index.
HELOC
A revolving line of credit that generally carries a variable rate. Draw and repayment structures depend on the product: many allow interest-only payments during the draw period, after which the balance amortizes and the payment can rise sharply.
Any difference in modeled total interest between the two columns applies only to the amounts, terms, and rate scenario you entered. Change the HELOC rate scenario and the comparison can reverse.
Assumptions used
- The full amount borrowed is drawn on day one and no further draws or repayments occur during the draw period.
- The HELOC rate you enter is held flat for the entire model. Real HELOC rates adjust with an index.
- Interest-only draw periods leave the principal balance untouched, so the repayment-period payment amortizes the full balance over the repayment years.
- Annual fees, draw fees, closing costs, and minimum-draw requirements are not modeled.
- Example values are pre-filled for demonstration and are not current market rates.
Results are estimates for educational purposes only and are based on the information and assumptions entered. They are not a loan approval, commitment to lend, or rate quote. Actual loan terms, payments, eligibility, taxes, insurance, and other costs may differ.
Variable-rate products carry rate risk. This tool does not predict future index movement, and the scenarios shown are arithmetic illustrations of the assumptions you entered.
Cascada Mortgage Advisors, Inc. DBA HomeFlow (NMLS #2470941, CA DRE #02206556) is a licensed mortgage broker, not a direct lender. Any interest rate you enter is your own assumption, not a HomeFlow rate.
What this calculator does
It applies the same borrowed amount to a fixed-rate home equity loan and to a HELOC, then reports the monthly payment, total interest, and total paid for each. For the HELOC it models the draw period and the repayment period separately, because the payment usually changes between them.
How the calculation works
The home equity loan uses the standard fixed-rate amortization formula over the term you select. For an interest-only HELOC draw period, the monthly payment is balance × rate ÷ 12 and the principal balance is unchanged, so the repayment-period payment amortizes the full balance over the repayment years. If you select an amortizing draw structure, the balance amortizes across the combined draw and repayment window instead.
What the result means
The comparison holds only for the rates and terms you entered. A HELOC's initial payment is frequently lower, particularly with an interest-only draw period, but that payment covers no principal and the repayment-period payment can be substantially higher. The rate-scenario table models the entered rate plus one, two, and three points to show how sensitive the HELOC is. Those scenarios are arithmetic, not forecasts.
Important limitations
The model assumes the entire amount is drawn immediately with no further draws or repayments, and holds the HELOC rate flat within each scenario. Real HELOC rates adjust with an index on their own schedule, and many carry rate caps, floors, annual fees, draw fees, and minimum-draw requirements that are not modeled here. Availability of either product depends on equity, credit, occupancy, and lender guidelines.