"How Does a HELOC Draw Period Work, and What Happens When It Ends?"

Ten years ago you signed for a $150,000 line of credit, used $100,000 of it on the kitchen and the roof, and paid it every month the way you would pay a credit card you never quite cleared. This month the lender's letter uses a word you have not seen since the closing table: repayment.

A HELOC (home equity line of credit) usually gives you 10 years to borrow and pay interest only, then 10 to 20 more years of principal and interest. On a $100,000 balance, that switch can raise the payment by roughly $160 to $280 a month. That is the shape on the sheets from two of the HELOC lenders I work with, Quorum and Angel Oak. A sheet, sometimes called a matrix, is the lender's published program chart. Quorum's sheet sets 10 years of draw and 20 years of repayment, and Angel Oak's offers 10, 5 or 3 years of draw with 15, 15 or 12 years of repayment. The dollar jump comes from the made-up example near the bottom.

I'm Jeff Moran, a mortgage broker in Bluffton, South Carolina, originating since 1996, licensed in fifteen states, NMLS #483943, through C2 Financial Corporation. I quote second mortgages and HELOCs directly, and below is how the two periods work on the sheets I work from, with a made-up example that shows the arithmetic.

If you are still deciding between a line of credit, a lump-sum second mortgage and a cash-out refinance, second mortgages and HELOCs explained walks through that choice. The home equity hub compares all four ways to use your equity, and how much you can borrow with a HELOC has the math for the size of the line.

How does a HELOC draw period work?

The draw period is the stretch of years when the line is open. You can take money out, pay it back, and take it out again, up to the credit limit, and you owe interest on the part you have drawn.

Each lender publishes its own number of years, and the table below shows the ones I work from.

Lender and sheet	Draw period	Repayment period	Whole term
Quorum, Second Lien HELOC, May 1, 2026	10 years	20 years	30 years
Quorum, Second Lien Investment HELOC, May 1, 2026	5 years	10 years	15 years
Angel Oak, May 8, 2026	10 years	15 years	25 years
Angel Oak	5 years	15 years	20 years
Angel Oak	3 years	12 years	15 years

Quorum's product snapshot lists the 10-year draw and 20-year repayment on every line it offers except the investment property line, which has a 5-year draw and a 10-year repayment. Angel Oak's matrix names its three shapes as a 25-year, a 20-year and a 15-year HELOC. The 25-year one is not offered when your income is documented with bank statements. That bank-statement program has its own lower cap of $500,000 on the line, separate from the $750,000 maximum below.

The size of the line has its own range. Quorum's Second Lien HELOC runs from $25,000 to $750,000. Angel Oak's HELOC starts at $125,000 and also tops out at $750,000, so a $60,000 line is under Angel Oak's floor.

The draw you have to take at closing

Some lines open with money already out of them. Angel Oak's matrix requires a minimum initial draw of 80%, which I read as 80% of the line. It allows no further draws for 90 days after that, and after the 90 days it sets the minimum draw at $1,000. On a $125,000 line, the smallest Angel Oak line, that reading puts at least $100,000 out on day one.

Quorum's sheet says the opposite in its disclosure language: no draw is required at closing.

Section 1026.40 of Regulation Z, paragraph (d)(10), requires the lender to disclose any minimum draw and minimum outstanding balance requirements, stated as dollar amounts or percentages, with the application.

The payment during the draw period

On both sheets the payment during the draw period is interest only on the balance you have drawn. Angel Oak's matrix says "Interest Only during draw periods," and Quorum's matrix says "Interest only payments are due during the draw period." Nothing in that minimum payment reduces what you owe. If you draw $100,000 in year one and send the minimum every month for ten years, you owe $100,000 in year eleven.

The rate on that balance moves, which makes it a variable rate: your rate changes whenever the index it follows changes. Both lenders use the prime rate as published in the Wall Street Journal. Prime is the bank rate that moves with the Fed, and it is the index, meaning the published rate the line follows. Your rate is that index plus a margin, the fixed amount the lender adds to prime. Angel Oak's sheet points to its rate sheet for the margin, and Quorum's sets it by credit score, loan amount and combined loan-to-value. That margin is the part I quote you directly.

Each sheet does publish where the rate can go. A floor is the lowest rate the line can ever charge, and a lifetime cap is the highest. Quorum's sheet sets a floor of 4.95%, an annual cap of 2% up or down (the most the rate can move in a single year), and a lifetime cap of 18%. Angel Oak's sets a floor of 4% and a ceiling of 18%. Those are the fences on the interest-only payment, and they are the fences on the repayment payment too.

What happens when the HELOC draw period ends?

The line closes. You cannot draw on it any more, and the balance you are carrying that month gets a principal and interest schedule for the repayment period. To amortize means to follow a payment schedule that pays the balance to zero by a set date. Quorum's matrix says "Payments are based on a twenty (20) year amortization." The Angel Oak shapes amortize over 15, 15 or 12 years, depending on which of the three you opened.

The CFPB's plain explanation of a HELOC puts it this way: "Monthly payments are often significantly higher once you enter repayment." It also notes that some lines are due in full when repayment starts; the two lines above amortize instead.

Federal law says what has to be in your paperwork. Regulation Z, section 1026.40, paragraph (d)(5), requires the lender to disclose "the length of the draw period and any repayment period," along with "an explanation of how the minimum periodic payment will be determined and the timing of the payments." If paying only the minimum may not repay any principal, the lender has to say so and state that a balloon payment may result. A balloon payment is a large lump sum due all at once when the schedule ends.

Why the payment goes up when repayment starts

Three things change at once, and they stack.

Principal joins the payment. During the draw you paid interest on the balance. In repayment every payment includes a slice of the balance itself.

The balance is spread over fewer years than the whole term. On Quorum's 30-year line the balance is paid off in the last 20 years. On Angel Oak's 15-year shape it is paid off in the last 12. The shorter that stretch, the bigger the monthly slice of principal.

The rate in year eleven is year eleven's rate. The line stays variable all the way through, within the floor and the caps on the sheet. The rate you pay in repayment is whatever prime plus your margin is by then.

The payment the lender qualifies you on

The lender does not qualify you on the interest-only payment. It qualifies you on the bigger one.

Quorum's matrix uses a principal and interest payment at the prevailing rate, amortized over a 20-year term, to figure your debt-to-income ratio. Angel Oak's matrix figures the ratio "at start rate plus 2% of the maximum line over the repay period." The start rate is the opening rate on your line, before it starts moving with prime. On a $125,000 Angel Oak line, that is a principal and interest payment on the full $125,000. It is figured at two points above the start rate, over the repayment years, whether or not you draw the whole line.

That qualifying payment goes on top of your first mortgage, taxes, insurance and your other monthly debts, and how debt-to-income works walks through the ratio. So the line that fits your equity can be bigger than the line that fits your income.

A fixed second mortgage has no draw period

A home equity loan, the lump-sum fixed second, skips the two periods entirely. You get the whole amount at closing, the rate is fixed, and the payment includes principal from the first month. Luxury Mortgage Corp.'s Simple Seconds guidelines, version 3.0 dated May 12, 2026, set the standard terms at 15 or 30 years. They allow second position only, meaning a second lien that is behind, and paid after, your first mortgage. Fixed-rate loans are qualified at the note rate, the interest rate written on the loan. The minimum loan amount is $150,000 and the maximum is $1,000,000, and section 10.11 of the guidelines says prepayment penalties are not applicable.

Even the fixed second can carry a switch. Luxury's guidelines allow a 10-year interest-only option on the 30-year term. The loan takes a 5% reduction to the maximum combined loan-to-value for it. Combined loan-to-value is your first mortgage plus the new loan, as a percent of the home's value. The lender also qualifies you on a 20-year amortization rather than the interest-only payment. The interest-only years come first there too.

If a single known amount is the job, the fixed second's certainty usually fits it. If the amount comes in stages, the line's draw period is built for that.

Planning for the end of the draw period

1. You'll want to find the two dates in your closing paperwork. The disclosure Regulation Z requires names the draw period and the repayment period, so the month the line closes is known the day you sign.
2. You'll want to decide what balance to carry into year eleven. Paying principal during the draw is your choice, and on the Quorum sheet the line carries no prepayment penalty.
3. You'll want to compare the repayment payment against the alternatives while the draw period is still open. A fixed second mortgage or a cash-out refinance can replace a line that is about to amortize.

Common mistakes with HELOC draw and repayment periods

Treating the interest-only payment as the payment you will always have. It is the minimum for the draw years only.

Sizing the line to the equity when the initial draw rule is 80%. On Angel Oak's matrix, the minimum initial draw is 80%, and that money charges interest from the first month.

Carrying the whole balance at the minimum for ten years. Nothing in the sheets stops you, and the balance in year eleven is the balance you drew.

An example, with invented numbers

Numbers below are made up to show the mechanism. Marcus, his line, his lender and the rate are all invented. The 8.5% is a placeholder picked only so the arithmetic can be shown, and it is not a quote from any lender.

Marcus opens a $125,000 line with a 10-year draw and a 20-year repayment, the Quorum shape, draws $100,000 in the first year, and sends the minimum every month.

Balance drawn                           $100,000
Made-up rate                               8.5%
Interest for one month                   $708.33
                                        --------
Draw-period payment                      $708.33
Balance after ten years of minimums     $100,000

In year eleven the line closes and the $100,000 is paid off with principal and interest over the 20-year repayment period. On the Angel Oak 10-year-draw shape, the repayment period is 15 years instead, so the payment is higher still.

Repayment over 20 years, at 8.5%         $867.82
Jump from the draw-period payment        $159.49   (22.5% more)

Repayment over 15 years, at 8.5%         $984.74
Jump from the draw-period payment        $276.41   (39.0% more)

If prime is two points higher when the draw period ends, the same balance costs more again.

Repayment over 20 years, at 10.5%        $998.38
Repayment over 15 years, at 10.5%      $1,105.40

The lender saw all of this coming before Marcus drew a dollar. On the Quorum shape, the qualifying payment is principal and interest on the full $125,000 line over 20 years, which at the made-up 8.5% is $1,084.78 a month. On the Angel Oak shape, it is the full $125,000 at 10.5% (the start rate plus 2%) over the 15-year repayment, which is $1,381.75 a month.

Your next step

The rate tool on this site prices first mortgages. It does not price a home equity line or a second mortgage, so for those I quote you directly, and each lender above keeps its own state list (Quorum's HELOC is not offered in Texas). You are welcome to call me at (843) 765-0000 or email me at jeff@solverya.com. Please have your current mortgage statement, an idea of your home's value, the amount you have in mind, and, if you already have a line, the month its draw period ends.

If the question underneath is whether to replace your first mortgage with a cash-out refinance instead of adding a second, the rate tool can show you pricing for that scenario on your own time. You can choose a rate option that works best for you, and that selection can change later.

Nothing here is a loan approval, a denial or a commitment to lend. Draw periods, minimum draws, floors and caps vary by lender, by state and by file, which is why the table above carries each sheet's date.

Common questions

How long is the draw period on a HELOC?

The draw period on a HELOC is the number of years you can borrow against the line, and each lender sets its own. On the Quorum Second Lien HELOC sheet, the draw period is 10 years, followed by a 20-year repayment period. Angel Oak's matrix offers a 10-year draw with a 15-year repayment, a 5-year draw with a 15-year repayment, and a 3-year draw with a 12-year repayment.

Do you pay interest only during a HELOC draw period?

On the sheets I work from, yes. Angel Oak's matrix says the HELOC is interest only during the draw period, and Quorum's matrix says interest-only payments are due during the draw period. None of that payment goes to principal, so a balance carried at the minimum for the whole draw period is the same balance when repayment begins.

What happens when a HELOC draw period ends?

When a HELOC draw period ends, the line closes to new draws and the balance you are carrying is paid off with principal and interest over the repayment period. Quorum's matrix bases those payments on a 20-year amortization, and Angel Oak's amortizes over 15 or 12 years, depending on the shape of the line. The CFPB notes that monthly payments are often significantly higher once repayment begins.

Does a home equity loan have a draw period?

No. A home equity loan is a lump-sum second mortgage with a fixed rate and a payment that includes principal from the first month. Luxury Mortgage Corp.'s Simple Seconds guidelines set the standard terms at 15 or 30 years and say prepayment penalties are not applicable. Those guidelines do allow a 10-year interest-only option on the 30-year term, with a lower maximum combined loan-to-value and qualification on a 20-year amortization, so even that option switches to a principal-and-interest payment later.