HELOC vs Home Equity Loan Guide: Formula & Worked Example
Short answer
Compare an interest-only HELOC draw with a fixed home equity loan. In the fixed example below, home equity loan payment is 477.83 / mo. Your answer depends on the inputs and assumptions you choose.
Formula
Result = HELOC vs Home Equity Loan calculation using amount to borrow, heloc rate, heloc draw period, heloc repayment period, home equity loan rate, loan term
The inputs are amount to borrow, heloc rate, heloc draw period, heloc repayment period, home equity loan rate, loan term. Use the input scale shown beside each field and keep time periods and units consistent. Only round the final result for display.
Worked example
- Amount to borrow
- 50000
- HELOC rate
- 8.5
- HELOC draw period
- 10
- HELOC repayment period
- 20
- Home equity loan rate
- 8
- Loan term
- 15
- Home equity loan payment: 477.83 / mo
- HELOC interest-only payment: 354.17 / mo
- HELOC repayment payment: 433.91 / mo
- Total interest – loan: 36,008.69
- Total interest – HELOC: 96,638.79
Understanding the result
Compare an interest-only HELOC draw with a fixed home equity loan. Start with the base example, then replace each value with the figure that matches your situation.
Amount to borrow
The example uses 50000 for amount to borrow. This is an illustration, not a recommended value. Keep the unit and time period shown by the field.
HELOC rate
The example uses 8.5 % for heloc rate. This is an illustration, not a recommended value. Keep the unit and time period shown by the field.
HELOC draw period
The example uses 10 years for heloc draw period. This is an illustration, not a recommended value. Keep the unit and time period shown by the field.
HELOC repayment period
The example uses 20 years for heloc repayment period. This is an illustration, not a recommended value. Keep the unit and time period shown by the field.
Home equity loan rate
The example uses 8 % for home equity loan rate. This is an illustration, not a recommended value. Keep the unit and time period shown by the field.
Loan term
The example uses 15 years for loan term. This is an illustration, not a recommended value. Keep the unit and time period shown by the field.
What the comparison means
The comparison changes only amount to borrow, keeping every other example input fixed. This isolates that input's effect on the primary result. It does not predict future outcomes.
Rates, fees, eligibility, local tax rules and provider rounding can change the final amount. Reference tax and exchange-rate data may be outdated; verify the official source before deciding.
Comparison
| Scenario | Input | Result |
|---|---|---|
| Lower input | Amount to borrow: 40000 | Home equity loan payment: 382.26 / mo |
| Base example | Amount to borrow: 50000 | Home equity loan payment: 477.83 / mo |
| Higher input | Amount to borrow: 60000 | Home equity loan payment: 573.39 / mo |
Common mistakes
- Using the wrong units for amount to borrow.
- Comparing results while changing more than one input at a time.
- Rates, fees, eligibility, local tax rules and provider rounding can change the final amount. Reference tax and exchange-rate data may be outdated; verify the official source before deciding.
Checklist
- Confirm amount to borrow.
- Confirm heloc rate is expressed in %.
- Confirm heloc draw period is expressed in years.
- Confirm heloc repayment period is expressed in years.
- Confirm home equity loan rate is expressed in %.
- Check the result against your source or provider.
Calculators Percentage Editorial Team
Calculator guides from the Calculators Percentage team. These introductory examples are educational, not professional advice.
Last reviewed:
Rates, fees, eligibility, local tax rules and provider rounding can change the final amount. Reference tax and exchange-rate data may be outdated; verify the official source before deciding.