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Interest-only payment

Also known as: interest only, IO payment

A payment that covers interest for the period but does not reduce principal.

An interest-only payment equals the outstanding balance times the periodic interest rate. Principal stays the same unless you pay extra. Many HELOCs use interest-only payments during the draw period, then switch to amortizing payments in repayment. Real HELOC rates are often variable, so interest-only amounts can change over time.

See also

Interest rateDraw periodPrincipalHELOC
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Definitions are for general education. Loan products, insurance, and taxes vary by lender, location, and your situation. FinanceFlow calculators produce estimates only and are not a lender quote or professional advice.