HELOC Terms for Homeowners Who Need to Know When Repayment Starts

The Quick Read: Repayment starts on the date your note sets as the end of the draw period, not when you stop spending, and from that day the line closes to new borrowing and your payment covers principal plus interest instead of interest alone. Nothing about the property or your finances triggers it. It is a contract date, and the note is where you find it.

• Two phases: a draw period where you borrow and usually pay interest only, then a repayment period where you pay the balance down.
• Market versus network: consumer education sources describe draws of 5 to 10 years. Home equity lines placed through Lendmire’s wholesale network use shorter, set structures.
• Pricing floats: variable pricing means the payment can move in both phases. On network lines it never converts to fixed.
• Investor catch: a HELOC payment never shows up in the DSCR ratio on your rental loans, but your cash flow still has to carry it.

The Two Phases at a Glance

A HELOC is a revolving line secured by property equity. It has a draw phase and a repayment phase, and almost every confusing term in the agreement is just a rule about one of them.

NerdWallet says a draw period can last as long as 10 years and repayment can run up to 20 years, with no more withdrawals once repayment begins. Experian puts a typical draw at 5 to 10 years followed by a 20-year repayment, and notes some lenders offer 15- or 20-year draws. ConsumerAffairs agrees on about 5 to 10 years and adds that draw length varies by bank. Treat those as patterns, not rules.

Notice the third row. Interest-only payments do not reduce what you owe. The full drawn amount begins amortizing when the draw ends, which is why the switch feels abrupt to people who only paid the minimum.

How Do You Find Your Exact Repayment Start Date?

Open the note and the HELOC agreement, not the marketing page. Some lenders use the word “term” for only one phase, so a line advertised as a 20-year product may mean a short draw plus a long repayment, or the reverse. Check these items, in this order:

1. Draw end date. This is the day new borrowing stops and repayment begins.

2. Repayment term. It is the number of years the balance amortizes after the draw ends.

3. Index and margin. These decide how variable pricing moves, in both phases.

4. Conversion option. Some lines let you lock part or all of the balance. Network lines do not.

5. Balloon clause. Experian says some HELOCs make the entire balance due when the draw ends. Find out if yours is one.

6. Prepayment or early-closure fees. These matter if you plan to refinance before the switch.

Then put the draw end date in your calendar with a reminder a year ahead. It sounds basic, and it is the step most people skip.

What Happens to the Payment on the Switch Date

The payment steps up because the same balance must now amortize over a finite number of years. A shorter repayment window means a bigger payment, and variable pricing can push it higher still. NerdWallet calls the larger repayment-period bills “a rude awakening” for borrowers who paid only the minimum.

Picture an investor who drew most of a line to fund the down payment on a fourth rental. For five years the payment covers interest on that balance. On the switch date the line closes and the payment now also retires principal over the repayment term. The balance did not change. The payment did. That is why you should model the repayment payment yourself, before you draw.

How Lines Work Across Lendmire’s Network

Lendmire is a broker. It arranges home equity lines through select wholesale partners, and those partners set the terms, so every figure below is subject to lender guidelines and full file review. The structures are tighter than the market-wide patterns above.

On an investment property, the line is a 5-year interest-only draw followed by a 25-year fully amortizing repayment. That is the only structure offered there. Combined loan-to-value (CLTV, meaning all liens on the property as a share of its value) tops out at 70% on investment lines, with a 700 minimum credit score and a line size up to $500,000.

On primary residences and second homes, two structures exist: a 3-year draw with a 17-year repayment, or a 5-year draw with a 25-year repayment. Tennessee shortens both. Leverage ceilings on those lines run higher than on investment properties and depend on credit tier, so quote the one for the occupancy you actually have.

Three features apply across the network:

• At least 75% of the line is drawn at closing.
• Pricing floats through both the draw and the repayment period and never converts to fixed.
• The line is a standalone loan in first or second lien position.

For this reason “when does repayment start” gets answered sooner here than in the market-typical 10-year-draw picture. That is a feature of the structure, not a flaw. A shorter draw means less time paying interest on a balance that is not shrinking.

Qualifying has its own limit. Debt-to-income (DTI, your monthly debts as a share of monthly income) tops out at 50%, and the program reviews your file on the interest-only payment calculated on the maximum draw. That test is measured on the draw-period payment, not the larger repayment payment. Run that second number yourself.

Availability is narrower than the DSCR side of the business. Lendmire’s home equity lines are offered in 16 full-service states, while its DSCR investor loans reach 41 markets, Washington, D.C. included.

Where the General Rule Breaks

The rule is “repayment starts at the end of the draw.” Here is where reality gets more complicated.

Balloon structures. A balloon makes the whole balance due at the end of the draw instead of amortizing. Experian says only some HELOCs work this way, so check your note rather than assuming. The federal HELOC booklet, published by the Consumer Financial Protection Bureau (CFPB), also warns about plans that can be renewed or closed at the end of the draw. Confirm that language in the CFPB booklet itself.

Rental use restrictions. That same booklet states that renting your home to others may be prohibited under the terms of your line. This matters most for lines on a home you live in. Read the use clause before you plan around rental income from the secured property.

Never drawing, or drawing little. The clock runs on the contract date whether the balance is zero or maxed. Network lines make this less common, because at least 75% is drawn at closing.

Early endings. Some agreements let the lender freeze, reduce, or end the line on a default. Read the default clause so you know which events matter.

Fixed-rate conversion. The CFPB’s consumer page notes that some HELOCs let you convert part or all of the balance to a fixed rate, which is more predictable but usually costs more than the variable option. Network lines do not offer it.

Title and vesting. On these lines, the individual borrower or a revocable living trust holds title. LLCs, corporations, partnerships, and irrevocable, blind, or land trusts cannot, per program terms. A property already deeded to an LLC needs a vesting change, or a DSCR cash-out refinance instead.

Property types. The lines cover single-family, 2-4 units, PUDs, townhomes, and condos including non-warrantable ones. Manufactured homes, co-ops, condotels, log homes, and commercial or mixed-use properties are not offered.

What Are Your Options Before the Draw Ends?

You have five realistic moves, and the right one depends on your balance, your rents, and what else you plan to buy.

On the DSCR cash-out route, most programs in the network top out around 75% LTV on standard rentals, with about 6 months of seasoning as the common expectation. Coverage of 1.00 is where select programs start, and stronger ratios open better pricing and leverage. A separate select-lender path goes below 1.00 with leverage and terms adjusted. That is generally a better fit for a rental with real equity than an investment HELOC capped at 70% CLTV. Whether it pencils depends on your property, credit, and lender guidelines.

Depending on the lending market, you might also refinance the HELOC into a fixed-rate loan when repayment begins. Experian and NerdWallet both suggest paying principal during the draw if you can, which is the simplest way to blunt the step-up.

A Countdown for the Last Year of the Draw

• 12 months out: pull the note, confirm the draw end date and the repayment term, and check for a balloon clause.
• 6 months out: model the full principal-and-interest payment against current rents, using a higher index than today’s. If the numbers are thin, start comparing refinance or payoff routes now.
• 3 months out: decide. Pay down, refinance, or plan to ride into repayment. If you refinance, a new loan needs time to be arranged and reviewed, so do not wait for the last month.
• If the payment is a stretch: contact the servicer before a payment is missed. The CFPB booklet warns that falling behind could mean losing the home, and on an investor line that means the pledged property.

What This Means for a Rental Investor

The HELOC payment sits outside the DSCR ratio on your other loans. DSCR compares a property’s rent to its own payment, covering principal, interest, taxes, insurance, and any HOA dues. A line on a different property never enters that math. It is a real cost the ratio never sees, and clearing 1.00 on a rental is not the same as positive cash flow.

Timing is the second trap. If you use a line to fund the next purchase, note when the draw ends. If repayment begins just as that property closes, the step-up lands on top of acquisition costs, repairs, and lease-up vacancy. The cleanest files show enough equity and enough rental coverage at once. Lendmire’s complete DSCR loans guide walks through how the rental side is underwritten.

Key Terms Defined

Draw period: the stretch when you can borrow, repay, and re-borrow up to the credit limit, usually paying interest on the drawn balance.

Repayment period: the stretch after the draw ends, when the line is closed and you pay principal plus interest on a schedule.

CLTV (combined loan-to-value): all loans secured by the property, added together, as a percentage of its value.

Balloon payment: a lump sum for the whole remaining balance, due at a set date instead of spreading it over scheduled payments.

Index and margin: the benchmark that moves your variable pricing, plus the fixed amount the lender adds on top of it.

Interest-only payment: a payment that covers interest and nothing else, so the balance stays the same.

Comparing Lines Before You Sign

If you are considering a home equity line and want to see how the numbers work, Lendmire can help you compare HELOC options based on the property, the equity available, credit profile, combined leverage, and your goals. Call 828-256-2183 or request a quote through the site. The site’s calculator gives an illustrative estimate you can edit, not a quote.

About Lendmire

Lendmire — NMLS# 2371349 — is a mortgage broker that arranges home equity lines of credit in its 16 full-service states through wholesale lenders, on primary residences, second homes and investment properties. Every line is subject to the lender’s guidelines and full underwriting. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.

Investors who want the broader program framework can review how DSCR loans work.

References

1. NerdWallet – HELOC calculator page

2. Experian – What is a draw period on a HELOC

3. ConsumerAffairs – HELOC draw period

4. CFPB – What You Should Know About Home Equity Lines of Credit

5. CFPB – Ask CFPB: What is a HELOC