How to Calculate a Line of Credit Payment

A HELOC allows you to borrow money as needed against your home.

A home equity line of credit (HELOC) functions similarly to a credit card in that you have a limit on how much you can borrow and you must make minimum payments on the amount you are borrowing each month. However, because the HELOC is secured by your home, you can usually borrow much more but if you fail to repay the loan, you could lose your home. Typically, lenders require that you make a payment that covers the accrued interest at a minimum.

Step 1

Contact your lender to determine the current interest rate and the amount you owe on your HELOC. According to the Federal Reserve Bank, most HELOCs have a variable rate, which could change from month to month.

Step 2

Divide the interest rate by 1,200 to convert from an annual percentage to a monthly decimal. You would divide by 12 to convert from annual to monthly and then by 100 to convert from a percentage to a decimal, but by dividing by 1200 you simplify the process. For example, if the annual rate was 8.82 percent, you divide by 1200 to get 0.00735.

Step 3

Multiply the monthly rate expressed as a decimal to calculate your minimum payment. In this example, if you borrowed $25,000, you would multiply 0.00735 by $25,000 to get $183.75 as your minimum monthly payment.


Beware that the minimum monthly payment only covers the interest on your loan, not any principal, so you will still owe the same amount after your payment.

Things You'll Need

  • Calculator

  • Loan rate