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HELOC and ARM Stress Test

What a floating balance costs at the next four rate steps, and how much movement exhausts your cushion.

Payment after the next reset

Computed

$345+$73 a month at the 2.00% cap
The cushion survives one adjustment and not two. That buys time; it does not buy a plan.
Cushion ceiling
205 bps
At the lifetime cap
$660
+100 bps costs
$440 a year

The line

A draw-period HELOC is interest-only, so its payment moves one for one with the rate.

Index plus margin, as printed on the statement.

months

The contract

The largest move the contract allows at one reset — 2% on most HELOCs.

An absolute rate, not a spread. Above this the payment cannot rise, so the engine stops projecting.

months

Repayment-phase term for a HELOC, or months remaining on an ARM.

solves

What you could absorb without touching savings or another line of credit.

MoveRatePaymentChangeExtra cash, 12 mo
Today7.40%$271——
+25 bps7.65%$281+$9$110
+50 bps7.90%$290+$18$220
+100 bps8.40%$308+$37$440
+200 bps9.40%$345+$73$880
Lifetime cap18.00%$660+$389$4,664

A blocked step is a rate the contract forbids. The engine reports the ceiling instead of projecting past it.

Where the payment goes

Interest-only equivalent
$271 a month
Fully amortizing today
$271 a month
Cushion exhausted after
205 bps
Extra cash at +200 bps
$880 a year
The draw-to-repayment step is a second shock on the same line: interest-only becomes a fully amortizing payment with no rate change at all.

Caps are inputs, not assumptions. Read the note, the rider or the HELOC agreement and type what it says; a stress test against caps the contract does not contain is theatre.

Nothing here is a projection of where rates go. The table is a schedule of what each move costs, so the visit can be planned against a number rather than a feeling.

Figures are monthly cash. Annual columns are twelve of those months, not a projection.

The cap is the whole story

A HELOC payment is not a number, it is a schedule. What matters is the largest move the contract allows at one reset, and how many of those the household budget can absorb before the payment becomes a second problem.

Draw to repayment is a second shock

When the draw period ends, an interest-only line becomes a fully amortizing payment over a decade or two. The rate does not have to move at all for the payment to double, which is why the repayment phase is priced here rather than mentioned in a footnote.

Why a blocked step is printed

A stress test that projects a 9% line to 11% when the contract caps it at 8% produces a scarier number and a wrong one. Steps past the lifetime ceiling are reported as blocked, with the ceiling named.

What it ran

draw payment = balance × rate / 12

repayment payment = PMT(balance, rate, months remaining)

cushion ceiling = smallest Δrate where payment rise ≥ monthly cushion

extra cash = Δpayment × 12 (cash, not interest)

Coverage

Nothing here forecasts rates. The engine runs a fixed ladder of increases — 25, 50, 100 and 200 basis points — against the caps you enter, so the output is a price list rather than a prediction.

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