To calculate a HELOC interest-only payment, take your current outstanding balance, multiply it by your annual percentage rate, divide by 365, then multiply the result by the number of days in your billing cycle. That gives you the minimum interest owed for the month. The calculation takes about thirty seconds once you have the three figures in front of you, and it works for any HELOC in its draw period, when most lenders require interest only rather than principal and interest.
The Three Numbers You Need
Pull your most recent HELOC statement. Federal law, through Regulation Z, requires your lender to put the figures you need on every periodic statement so you can verify the charges yourself.1National Credit Union Administration. Truth in Lending Act (Regulation Z)
The first is your outstanding principal balance. This is what you’ve actually drawn against the line, not your total credit limit. It appears on your statement as the balance at the closing date of the billing cycle, and it moves every time you write a check against the line or make a payment.2eCFR. 12 CFR 1026.7 – Periodic Statement
The second is your annual percentage rate. For most HELOCs, the APR is variable and built from two parts: the prime rate, published daily in the Wall Street Journal, plus a fixed margin your lender set when you opened the line. Margins vary by lender, credit score, and equity position. Your statement must show the periodic rate and the corresponding APR applied to your balance.2eCFR. 12 CFR 1026.7 – Periodic Statement
The third is the number of days in the billing cycle. This fluctuates. A February cycle might cover 28 days; a July cycle, 31. The exact count appears on the statement, usually near the date range.
All three change regularly, so a calculation that was right in March won’t be right in April. Use the numbers from the current statement every time.
The Formula, Step by Step
The math works in four steps. No financial calculator required.
- Convert the APR to a decimal. Divide the percentage by 100. An 8.5% rate becomes 0.085.
- Find the daily rate. Divide that decimal by 365. So 0.085 ÷ 365 = 0.00023288.
- Calculate daily interest. Multiply the daily rate by your outstanding balance. On a $60,000 balance: 0.00023288 × $60,000 = $13.97 per day.
- Multiply by the days in the billing cycle. For a 31-day cycle: $13.97 × 31 = $433.15. That’s your interest-only payment.
The result is the minimum you owe to keep the account current. Anything you pay above that chips away at principal.
A Second Example
Say you’ve drawn $40,000 and your APR is 7.25%. Converting: 0.0725 ÷ 365 = 0.00019863. Daily interest: 0.00019863 × $40,000 = $7.95. Over a 30-day cycle, that’s $238.50. Over a 28-day February cycle, it drops to $222.60. A $16 difference between months is small, but it shows why the calendar belongs in the formula.
Check Your Lender’s Day-Count Method
Most consumer HELOC lenders divide by 365 days (or 366 in a leap year), which is what the examples above assume. Some lenders use a 360-day year for the daily rate while still counting the actual number of days in the billing cycle. That seemingly small difference produces a slightly higher payment, because dividing by 360 creates a larger daily rate. Your loan agreement specifies which method applies. If you run the formula and your answer doesn’t match the statement, the day-count convention is the first thing to check.
Why the Payment Isn’t the Same Each Month
Interest-only HELOC payments aren’t fixed. Three variables move them, often at the same time.
The biggest driver is usually the rate. Because most HELOCs are tied to the prime rate, when the Federal Reserve raises or lowers the federal funds rate target, banks tend to adjust the prime rate by the same amount.3Board of Governors of the Federal Reserve System. What Is the Prime Rate, and Does the Federal Reserve Set the Prime Rate? As of early 2026, the Wall Street Journal prime rate sits at 6.75%. Your HELOC rate is that figure plus your margin, so every quarter-point Fed move flows through to your statement. Your loan agreement also discloses a lifetime maximum rate; Regulation Z requires lenders to tell you the highest APR your plan can ever reach.4Consumer Financial Protection Bureau. 12 CFR 1026.40 – Requirements for Home Equity Plans
The second variable is the balance. A HELOC is revolving credit, so every draw increases the balance and every extra payment decreases it. Even a modest $2,000 draw mid-cycle changes how much interest accrues for the remaining days. Lenders typically compute interest daily on the actual balance, so the timing of draws and payments within the month matters as much as the amounts.
The third variable is the calendar. A 31-day cycle in January generates about 10% more interest than a 28-day cycle in February, even if the rate and balance don’t change at all. This is the easiest piece to overlook when you’re trying to budget a flat monthly amount.
Using the Formula to Prepare for the Repayment Period
The draw period on most HELOCs lasts about ten years. Once it closes, you enter a repayment period, commonly 10 to 20 years, during which you can no longer borrow against the line and must start paying down principal alongside interest. The monthly payment increase can be dramatic. It’s not unusual for the new payment to double or triple the interest-only amount, depending on the remaining balance and the repayment term.
Federal rules required your lender to warn you about this upfront. When you first received your HELOC disclosures, Regulation Z required the lender to explain the length of both the draw period and the repayment period, show how minimum payments would be determined, and disclose whether a balloon payment might result if minimum payments during the draw period didn’t reduce principal.5eCFR. 12 CFR 1026.40 – Requirements for Home Equity Plans Those disclosures included an example based on a $10,000 balance showing exactly how long repayment would take and what the payments would look like.
Running the interest-only formula gives you a baseline. Take the same outstanding balance you used in step 3, plug it into a standard amortization calculator with your current rate and the repayment term, and compare the result to your current interest-only payment. The gap is the payment shock you need to plan for. Paying down principal during the draw period, even in small amounts, shrinks that gap.