The draw period is when you can borrow; the repayment period is when you pay down the balance. At the end, the payment, your ability to borrow and whether a balloon is due can change. A balloon results when minimum payments do not fully amortize the balance by a set date. Your 1026.40(d)(5) disclosure covers the payment and balloon terms.
Not financial, tax or legal advice. A HELOC is secured by your home. Your agreement and your lender’s disclosures control; this page cannot tell you what your contract says.
The end of the draw period should not have to be a surprise. Federal rules require the lender to write down, before you sign, how long the draw period lasts, how the minimum payment is set and whether a balloon payment can result. This page ties the payment and balloon questions to the disclosure lines that answer them, and flags borrowing during repayment as a contract term. It gives no payoff numbers; those live on the risks page, linked below.
What changes when the draw period ends?
Three questions get mixed together, and they have different answers. Payment: how the minimum payment is calculated after the draw period. Access: whether you can still borrow. Balance: whether the balance is repaid gradually or some of it comes due in one sum. The Regulation Z payment-terms disclosure, quoted below, covers the length of each period and the payment rules. The lines quoted on this page do not say whether new draws are allowed during repayment; that is a term of your agreement, so ask.
Regulation Z section 1026.40(d)(5) begins by requiring the lender to disclose the payment terms of the plan and to reflect any different terms that apply in the draw and repayment periods:
The payment terms of the plan. If different payment terms may apply to the draw and any repayment period, or if different payment terms may apply within either period, the disclosures shall reflect the different payment terms.
(i) The length of the draw period and any repayment period.
Item (i) requires the length of the draw period and of any repayment period. The regulation requires the length, not a calendar date, and the length may be counted from a start point your agreement sets (opening, closing or first draw). Ask the lender for the exact end-of-draw date in writing. The Consumer Financial Protection Bureau’s page “What is a HELOC?” (last updated August 28, 2026, as shown on the page; consumerfinance.gov; accessed September 24, 2026) describes the same two phases: a period in which you borrow, then a period in which you pay back what you borrowed. What a shift from one to the other does to the size of a payment, with worked numbers, is on the risks page.
How is my payment set after the draw period?
The next line of section 1026.40(d)(5) is where the formula lives. The regulation’s first sentence of item (ii) asks for the rule and the timing, and item (iii) requires a worked example:
An explanation of how the minimum periodic payment will be determined and the timing of the payments.
An example, based on a $10,000 outstanding balance and a recent annual percentage rate, showing the minimum periodic payment, any balloon payment, and the time it would take to repay the $10,000 outstanding balance if the consumer made only those payments and obtained no additional extensions of credit.
The example is a standardized $10,000 illustration, not a forecast for your balance. It is useful because it shows the minimum payment and any balloon side by side. The payment can differ between periods; the regulation says the disclosures “shall reflect the different payment terms” (quoted above). Chase’s HELOC explainer (published March 7, 2025, edited March 9, 2026; accessed September 24, 2026) says interest-only payments are typical during the draw period at that lender. That describes one lender’s product, not every HELOC. If your draw-period payment is interest-only, the disclosure line above is where you find out how it is recalculated afterward.
Rates add a second layer: if the rate is variable, the payment can also move because the rate moves. For the three dates that matter for that, see the three-dates section of the rate-mechanics page.
Does the whole balance come due at once?
Not automatically. A balloon payment is a specific mechanism: the regulation defines it by whether the minimum payments fully amortize the balance by a specified date, not by the draw period ending as such:
If paying only the minimum periodic payments may not repay any of the principal or may repay less than the outstanding balance, a statement of this fact, as well as a statement that a balloon payment may result. A balloon payment results if paying the minimum periodic payments does not fully amortize the outstanding balance by a specified date or time, and the consumer must repay the entire outstanding balance at such time.
So the question is whether your minimum payments amortize the balance, meaning pay it down to zero, by the date in your disclosure. If they do, no balloon arises. If they do not, the disclosure must say a balloon may result. The CFPB page cited above says that in some cases you may have to pay back the whole amount you borrowed as soon as the repayment period begins (accessed September 24, 2026). Chase’s explainer, cited above, says a balloon is not standard for all HELOCs. Both statements can be true at once; which one describes your line is a fact about your agreement. This page does not know it.
Is that different from the lender ending the plan early?
Yes. A scheduled balloon follows from terms you were shown. Terminating the plan and demanding the balance before the original term is a separate rule. Outside the reverse-mortgage carve-out shown in the text, Regulation Z says a creditor may not do so unless one of four grounds applies:
(2) Terminate a plan and demand repayment of the entire outstanding balance in advance of the original term (except for reverse mortgage transactions that are subject to paragraph (f)(4) of this section) unless:
(i) There is fraud or material misrepresentation by the consumer in connection with the plan;
(ii) The consumer fails to meet the repayment terms of the agreement for any outstanding balance;
(iii) Any action or inaction by the consumer adversely affects the creditor’s security for the plan, or any right of the creditor in such security; or
(iv) Federal law dealing with credit extended by a depository institution to its executive officers specifically requires that as a condition of the plan the credit shall become due and payable on demand, provided that the creditor includes such a provision in the initial agreement.
Stopping new draws or lowering the limit is a third, different provision, covered with its own text on the risks page. Read the current eCFR text before relying on any of it; your contract’s terms also apply.
What can I do as the draw period ends?
Options depend on the lender. US Bank’s end-of-draw page (undated; accessed September 24, 2026) lists these for its own customers: lock a fixed rate, open a new HELOC or a home equity loan, pay extra principal, or pay the line off. Treat that as one lender’s menu, not a general entitlement.
The regulation lines quoted here do not address two things, so ask: whether a line can be renewed or extended, and whether the lender will tell you in writing before the draw period ends. Supervisory guidance from the federal banking agencies (SR 14-5, July 1, 2014) addresses end-of-draw risk and encourages lenders to contact borrowers ahead of time. That guidance is directed at lenders and supervisors; it is not a right you can point to in your contract. For how a HELOC compares with a home equity loan or a refinance as an exit, see the structure comparison; for rate-related questions, see how to read a rate sheet.
What should I ask before opening a line?
Regulation Z sets the timing and the housekeeping. The disclosures must be provided when the application is provided, and the lender must include a note to keep them:
The disclosures and brochure required by paragraphs (d) and (e) of this section shall be provided at the time an application is provided to the consumer.
A statement that the consumer should make or otherwise retain a copy of the disclosures.
Keep the copy, then check it against this list. Items 1 to 4 correspond to a regulation line; items 5 to 8 are not covered by the lines quoted here (some may appear elsewhere in your disclosures or agreement, for example under 1026.40(d)(10), which requires disclosure of limits on extensions of credit), so ask them directly.
- Draw and repayment length (1026.40(d)(5)(i)): how long is the draw period, how long is any repayment period, and what is the exact end-of-draw date?
- Payment formula and timing (1026.40(d)(5)(ii)): how is the minimum payment determined in each period?
- Balloon statement (1026.40(d)(5)(ii)): do minimum payments fully amortize the balance by a specified date, or may a balloon result?
- The $10,000 example (1026.40(d)(5)(iii)): what are the minimum payment, any balloon and the repayment time in the example?
- Can I still borrow during the repayment period?
- Will you notify me in writing before the draw period ends, and how far ahead?
- Can the line be renewed or extended, and at what cost?
- Can I lock a fixed rate on part of the balance, and on what terms?
The answers to items 5 to 8 belong in writing, since this page cannot tell you what a lender will offer. For what the numbers can look like when a draw period ends on a real balance, use the scenario on the risks page, which is a model, not your loan. Whether a lender will approve the line, and how it counts combined loan-to-value, is covered on HELOC Qualification: CLTV, Credit Score, Lender Rules.
Key terms
- Draw period
- The phase of a HELOC in which you can borrow against the line, up to its limit.
- Repayment period
- The phase in which you repay what you owe; its length and payment rules should be in your disclosure.
- Interest-only payment
- A payment that covers interest but does not reduce the balance. Whether your line has one is in the payment-terms disclosure.
- Amortizing payment
- A payment sized to pay the balance to zero by a set date.
- Balloon payment
- Per Regulation Z, a payment that results if minimum payments do not fully amortize the balance by a specified date and the consumer must repay the entire outstanding balance at that time.
- End-of-draw date
- The date the draw period ends. Regulation Z requires disclosure of the draw period’s length (1026.40(d)(5)(i)); confirm the date itself with the lender.
- Renewal or extension
- A lender-specific option to continue or restart a draw period. Not required by the regulation quoted here; ask.
Frequently asked questions
Can I still borrow during the repayment period?
The regulation lines quoted here do not answer this. It is a term of your agreement; ask the lender and get it in writing.
Is the whole balance due at the end of the draw period?
Not automatically; a balloon is the mechanism that can require it. Regulation Z defines a balloon as a payment that results when minimum payments do not fully amortize the balance by a specified date. The CFPB says that in some cases the whole amount may be due when repayment begins (page accessed September 24, 2026), and Chase says a balloon is not standard for all HELOCs. Check your disclosure.
Can a draw period be extended or renewed?
That depends on the lender. The regulation text on this page does not require renewal or extension. One lender’s page (US Bank, accessed September 24, 2026) lists a new HELOC or a home equity loan among its options; another lender may differ.
Will my payment change when repayment starts?
It can. Regulation Z requires the lender to disclose how the minimum payment is determined and to reflect different payment terms for the draw and repayment periods. How much it changes depends on your terms and balance.
Which page answers your question?
- How a variable rate is built, and the dates to find in your paperwork: How HELOC Interest Rates Work.
- HELOC vs home equity loan vs cash-out refinance: the structure comparison.
- What the end of a draw period, a rate rise or a frozen line would do, with numbers: draw period, rate rise and lender rights.
- How a HELOC compares with extra payments on two example loans: Does Velocity Banking Work?
- New to the method: What Is Velocity Banking?
- Your own numbers: the spreadsheet. The overview: velocity banking hub.
- To log real chunks and payments as they happen, our Velocity Mortgage App has a chunk tracker for subscribers; its projection compares the HELOC path with minimum payments only, so it does not read your lender’s terms.
Sources and method
- Regulation text: 12 CFR 1026.40, current as of September 23, 2026, copied verbatim from the eCFR; the quoted lines are (b) first sentence, (d)(1), (d)(5) first and second sentences, (d)(5)(i), (d)(5)(ii), (d)(5)(iii) first sentence and (f)(2). Section 1026.40 covers open-end plans secured by the dwelling. Read the current eCFR text before relying on it.
- Consumer Financial Protection Bureau, What is a HELOC?, last updated August 28, 2026 per the page; accessed September 24, 2026. Paraphrased, not quoted.
- Chase HELOC explainer (chase.com, published March 7, 2025, edited March 9, 2026) and US Bank end-of-draw page (usbank.com, undated), both accessed September 24, 2026 and paraphrased. Each describes that lender’s product; neither is a statement about all HELOCs.
- Interagency supervisory guidance SR 14-5, July 1, 2014, is cited from a secondary summary; this page does not quote it and did not re-read its full text.
- Limits: this page gives no model numbers. Whether a lender gives advance notice, offers renewal or allows draws in repayment is not established by the sources above; ask the lender. Nothing here is a statement about your contract.
About the Author Michael
MBA in Quantitative Finance – Wharton School (University of Pennsylvania)."I built products for the banks. Now, I dismantle them for you."Michael Schmidt is a veteran financial strategist and the architect of the Mortgage Killer Method.With over 15 years of experience inside America's largest lending institutions, Michael worked behind closed doors structuring mortgage backed-securities. He saw firsthand how the "30-year fixed" system is engineered to prioritize institutional profit over homeowner equity.In 2015, Michael walked away from Wall Street with a clear objective: to reverse-engineer banking mathematics for the average American family. He specializes in aggressive principal reduction strategies, using HELOCs to cut amortization timelines by decades.Michael brings German precision to debt management. His frameworks are not theories—they are mathematical certainties. To date, he has helped over 1,500 families reclaim an estimated $50 million in interest from the banking system.Expertise: Strategic Debt Elimination, Amortization Mechanics, Cash Flow Optimization.Background: Former VP of Lending Strategies.
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