Home Equity Loan Calculator
Created by: Olivia Harper
Last updated:
Enter your home value, mortgage balance, LTV limit, loan amount, rate, and term to see your available equity, fixed monthly payment, total interest, and a rate sensitivity table — everything you need to evaluate a fixed home equity loan.
Home Equity Loan Calculator
FinanceCalculate your available equity, maximum loan amount, fixed monthly payment, and total interest for a home equity loan — plus a rate sensitivity table.
What Is a Home Equity Loan?
A home equity loan — sometimes called a second mortgage — lets you borrow against the equity you have built in your home.
You receive a lump sum at a fixed interest rate and repay it in equal monthly installments over the loan term.
Because your home serves as collateral, home equity loan rates are significantly lower than unsecured borrowing options.
Home equity loans are commonly used for major home improvements, debt consolidation, medical expenses, and education costs.
The fixed rate and predictable payment schedule make budgeting straightforward — unlike HELOCs, which have variable rates and fluctuating balances.
How Home Equity Loan Amounts Are Calculated
Your maximum loan is constrained by the combined LTV limit — typically 80–85% of home value minus your existing mortgage.
Enter your home value, outstanding mortgage, desired loan amount, rate, and term.
The calculator checks whether your requested amount fits within the LTV limit and computes your monthly payment and total interest.
Home Equity Loan Formulas
Available equity = home value × LTV limit% − outstanding mortgage
Loan amount = min(requested amount, available equity)
Monthly payment = P × r(1+r)^n / ((1+r)^n − 1)
Total interest = monthly payment × term months − loan amount
Example Scenarios
Kitchen Renovation Loan
Home value: $380,000. Mortgage: $210,000. LTV limit: 85%. Available equity: $323,000 − $210,000 = $113,000. Loan: $40,000 at 8% for 10 years. Monthly payment: $485. Total interest: $18,200. Total cost: $58,200.
Debt Consolidation Analysis
Borrower has $30,000 in credit card debt at 21% (min payment $750/month). Home equity loan: $30,000 at 7.5% for 7 years. Payment: $456/month. Total interest: $8,300 vs credit card interest of ~$22,000 at minimum payments. Saves $13,700 — but home is now collateral.
How People Use This Calculator
- Homeowners funding a major renovation with predictable fixed monthly payments.
- Anyone comparing a home equity loan versus HELOC for a specific expense.
- Borrowers evaluating debt consolidation from high-rate credit cards to a secured loan.
- People modeling how different loan terms (10 vs 15 vs 20 years) affect monthly vs total cost.
- Financial advisors reviewing equity utilization for clients approaching retirement.
Tips for Home Equity Loan Decisions
Shop at least three lenders.
Home equity loan rates vary significantly — a 0.5% difference on a $50,000 loan over 10 years is about $1,500 in total interest.
Check your bank, a credit union, and an online lender before committing.
Be conservative about borrowing your full equity.
Real estate markets fluctuate.
If your home value drops 15–20%, you could find yourself underwater — owing more than the home is worth.
Leave a meaningful equity cushion, especially if you might need to sell in the next 5–7 years.
Frequently Asked Questions
What is a home equity loan?
A home equity loan is a fixed-rate, lump-sum loan secured by your home's equity. You borrow a set amount, receive it all at once, and repay it with fixed monthly payments over a specified term — typically 5 to 30 years. Because it is secured by your home, rates are typically much lower than unsecured personal loans or credit cards.
How much can I borrow with a home equity loan?
Most lenders allow you to borrow up to 80–85% of your home's appraised value, combined with your existing mortgage. If your home is worth $500,000 and you owe $300,000, your combined maximum is 85% × $500,000 = $425,000. Your maximum home equity loan is $425,000 − $300,000 = $125,000.
What is the difference between a home equity loan and a HELOC?
A home equity loan is a fixed-rate, lump-sum disbursement with fixed monthly payments — predictable and suitable for known one-time expenses. A HELOC is a revolving variable-rate credit line — flexible and suitable for ongoing or uncertain expenses. Home equity loans cost slightly more in total interest but offer payment certainty; HELOCs offer draw flexibility but carry rate risk.
Are home equity loan payments tax deductible?
Interest on a home equity loan is deductible only if the proceeds are used to "buy, build, or substantially improve" the home securing the loan — per the Tax Cuts and Jobs Act of 2017. Interest used for debt consolidation, consumer purchases, or other purposes is generally not deductible. Consult a tax professional for your situation.
What credit score do I need for a home equity loan?
Most lenders require a credit score of at least 620 for a home equity loan, with better rates available above 700. Lenders also evaluate your debt-to-income ratio (typically must be below 43%), payment history, and the combined LTV of your mortgage plus the new loan. Higher equity and better credit translate to lower rates.
Should I use a home equity loan to consolidate debt?
Home equity loans can dramatically lower the interest rate on high-rate consumer debt (credit cards at 22% versus home equity at 7–9%). However, the critical risk is converting unsecured debt to secured debt — your home is now collateral. If you cannot make payments on the home equity loan, you could lose your home. Only consider this for debts you're fully committed to eliminating with disciplined budgeting.
Sources and References
- Consumer Financial Protection Bureau (CFPB). Home Equity Loans. consumerfinance.gov.
- Federal Deposit Insurance Corporation (FDIC). Consumer Information on Home Equity Loans.
- Internal Revenue Service (IRS). Publication 936: Home Mortgage Interest Deduction.