Interest only, then a real payoff
The interest-only payment is the balance times the annual rate divided by twelve, rounded half-up to the cent. On $10,000.00 at 6 percent, that is $50.00. The six percent is a checkable rate, not a HELOC offer. On the form's opening balance of $50,000.00 at 8 percent, the interest-only payment is $333.33. Eight percent is also an example. The CFPB's HELOC explanation says many plans have minimum payments based on the current balance, and that some plans are interest-only during the draw period, which means those payments do not reduce principal. If you pay only that amount, the balance you typed is still there when the draw period ends.
The second number is the fixed payment that would amortize that same balance over the repayment term you type, using the same function as the mortgage calculator. On the opening example the amortizing payment is $606.64 and the interest over that term is $22,796.36. It is larger than the interest-only figure because it includes principal. The CFPB says monthly payments are often significantly higher once a HELOC enters repayment, and that some plans require the whole balance at the start of repayment. A balloon is not modeled. If your note is a balloon, the amortizing payment here is the payment that would avoid the balloon, not the payment the note requires.
The rate on a real line moves
The CFPB says HELOCs usually have a variable interest rate, so the payment can change from month to month even if you do not draw more money. Some plans let you convert part of the balance to a fixed rate, and that fixed rate is usually higher than the variable rate and more predictable. This form cannot see an index or a margin. It holds the rate you type for every month of both calculations. That is useful for checking the arithmetic and misleading if you treat it as the payment next year. Read it as "if this rate lasted." The refinance page is the one that compares two fixed mortgage rates and a pile of closing costs. A HELOC is not that comparison.
The draw period itself is not a term this page invents. The CFPB says a draw period could last ten years, for example. "For example" is not a rule that your line lasts ten years. The repayment term on the form is the term you type for the amortizing payment. It is not a claim that ten years is standard. If your agreement says twenty years of repayment, type twenty. The interest-only figure does not depend on that term. It depends on the balance and the rate.
The home is the collateral
A HELOC is secured by the home. The CFPB's home-loan toolkit says one way to borrow against the home is a HELOC, points readers to the Bureau's HELOC material, and then says financial counselors caution homeowners against using a HELOC to wipe out credit card debt. The reason in the toolkit is practical: if the line is a quick fix for a spending problem, you can end up back in debt and lose the home. This calculator will compute an interest-only payment on a balance. It will not compare that rate with a card APR and declare a winner. The credit-card payoff is a separate page, with its own interest method, because a card is unsecured revolving credit and a HELOC is not.
The same toolkit says the Truth in Lending Act gives a right to rescind a refinance or a HELOC within three days of receiving a proper notice of the right to rescind, and that you cannot rescind if you are using the HELOC to buy a home. Three days is a legal window with conditions. This page does not count the days and does not tell you whether a notice was proper. If you are inside that window, the payment estimate is not the thing to rely on. The notice is.
What the two payments leave out
Fees to open the line, a minimum draw, and an annual fee are not in either payment. The CFPB says some plans require a minimum amount each time you borrow, for example $300.00, or a minimum outstanding balance. The three hundred dollars is the Bureau's example of a minimum draw, not a fee this calculator adds. Interest is computed on the balance you type, as if that balance sat still. If you draw more next month, the interest-only payment rises. If you pay the balance down, it falls. The form does not keep a running tab of draws. One balance, one rate, two ways of paying it.
Private mortgage insurance on a first mortgage is a different product. The PMI page is about a conventional first lien and the 80 and 78 percent balances in the cancellation rules. A HELOC can be a junior lien, and the CFPB's PMI cancellation answer says a junior lien can matter when you ask to cancel PMI on the first mortgage. This page does not model that interaction. Giuseppe Ilarda, the site owner, writes and checks these two payments. They are educational. The disclaimer says they are not financial advice and not an offer of credit. A lender's HELOC disclosure is the document that sets the index, the margin, the draw period, and the payment formula. If that formula is not interest-only, the first number here is the wrong description of your plan, and the second number is only the fully amortizing alternative.