Home Equity Loan Calculator
Plan your home improvements or debt consolidation with fixed-rate precision.
Home Equity Loan Calculator
Built up equity in your home? A home equity loan lets you borrow against it at rates far lower than credit cards or personal loans. This calculator shows how much you can borrow and what your monthly payment will be.
What Is a Home Equity Loan?
A home equity loan (also called a second mortgage) lets you borrow a lump sum against the equity in your home. You receive the money upfront and repay it in fixed monthly installments at a fixed interest rate. Your home serves as collateral.
How to Use This Calculator
- Enter your home's current appraised value.
- Enter your current mortgage balance.
- Enter the lender's maximum LTV (typically 80%–85%).
- Enter the interest rate and loan term.
- Click Calculate to see your available equity and monthly payment.
Home Equity Formula
Available Equity = (Home Value × Max LTV) − Current Mortgage Balance
Example: Home worth $400,000 × 80% LTV = $320,000 − $200,000 mortgage = $120,000 available to borrow
Example Calculation
Home value: $400,000 | Mortgage balance: $220,000 | Max LTV: 80% | Rate: 8.5% | 10-year term
- Max borrowable: $320,000 − $220,000 = $100,000
- Monthly payment on $100,000 at 8.5% for 10 years: ≈ $1,240/month
- Total interest paid: ≈ $48,800
Home Equity Loan vs. HELOC
- Home Equity Loan: Fixed rate, lump sum, predictable payments. Best for one-time large expenses.
- HELOC: Variable rate, revolving credit line, flexible draws. Best for ongoing or uncertain expenses. See our HELOC Calculator.
Common Mistakes to Avoid
- Borrowing more than you need — Your home is collateral. Default means foreclosure. Borrow conservatively.
- Using equity for depreciating purchases — Don't use home equity to buy cars or vacations. Home improvements that add value are a better use.
- Ignoring closing costs — Home equity loans typically have 2%–5% closing costs. Factor these in.
- Not comparing to personal loan rates — For smaller amounts, an unsecured personal loan may be simpler with no risk to your home.
Frequently Asked Questions
What can I use a home equity loan for?
Common uses: home renovations, debt consolidation, medical bills, education costs, and major purchases. Interest may be tax-deductible when used for home improvements (consult a tax advisor).
How long does it take to get a home equity loan?
Typically 2–6 weeks from application to funding. It involves an appraisal, underwriting, and closing — similar to a purchase mortgage process.
What credit score do I need?
Most lenders require 620+, with better rates available at 700+. You'll also need sufficient equity and a manageable debt-to-income ratio.
Will a home equity loan affect my primary mortgage?
No — your first mortgage remains unchanged. A home equity loan is a separate, second loan on the same property. Both are liens against your home.
Is home equity loan interest tax-deductible?
Post-2017, interest is only deductible if the loan is used to buy, build, or substantially improve the home. Consult a tax professional for your situation.
Conclusion
A home equity loan is one of the cheapest ways to borrow money — if you use it wisely. Calculate your available equity and monthly payment here, then decide if it makes sense for your financial goals.
Related: HELOC Calculator | Mortgage Calculator | Personal Loan Calculator | Debt Consolidation Calculator
Financial Tip
Use the amortization schedule to see how much of your payment goes toward principal each year. In the early years, interest costs are at their highest.
