Home Equity Line Of Credit Minimum Payment Calculator

HELOC Minimum Payment Formula:

\[ PMT_{min} = \max(I, fixed_{min}) \]

Monthly Interest Amount:

Minimum Payment (PMT_min):

Unit Converter ▲

Unit Converter ▼

From:	To:

1. What is HELOC Minimum Payment?

The HELOC (Home Equity Line of Credit) minimum payment is typically calculated as the greater of the monthly interest charge or a fixed minimum amount set by the lender. This ensures that payments cover at least the accruing interest while maintaining a minimum payment threshold.

2. How Does the Calculator Work?

The calculator uses the HELOC minimum payment formula:

\[ PMT_{min} = \max(I, fixed_{min}) \]

Where:

$ PMT_{min} $ — Minimum monthly payment ($)
$ I $ — Monthly interest amount = balance × monthly interest rate ($)
$ fixed_{min} $ — Lender's fixed minimum payment amount ($)

Calculation Steps:

Convert annual interest rate to monthly rate: monthly rate = annual rate ÷ 100 ÷ 12
Calculate monthly interest: I = outstanding balance × monthly rate
Determine minimum payment: PMT_min = max(I, fixed_min)

3. Importance of Minimum Payment Calculation

Details: Understanding your HELOC minimum payment helps with budgeting and ensures you meet lender requirements. Paying only the minimum extends the repayment period and increases total interest costs.

4. Using the Calculator

Tips: Enter your current HELOC balance, annual interest rate, and the fixed minimum payment amount specified by your lender. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why is there a fixed minimum payment?
A: Lenders set fixed minimums to ensure consistent cash flow and prevent extremely small payments that would barely reduce the principal balance.

Q2: What happens if I pay only the minimum?
A: You'll cover the interest charges but make little progress on principal reduction, extending the loan term and increasing total interest paid.

Q3: Can the minimum payment change over time?
A: Yes, as your balance decreases or interest rates change, the interest component of the minimum payment will adjust accordingly.

Q4: What's a typical fixed minimum amount?
A: This varies by lender but is often around $50-$100 for smaller balances or 1-2% of the credit limit for larger lines.

Q5: Should I pay more than the minimum?
A: Yes, paying more than the minimum reduces principal faster, shortens the repayment period, and decreases total interest costs significantly.