Home Equity Loan Calculator
Estimate your available equity, borrowing power & monthly payments
What Is a Home Equity Loan?
A home equity loan allows you to borrow money against the equity you've built in your home. Equity is the difference between your home's current market value and your outstanding mortgage balance. Home equity loans are often called "second mortgages" because they use your property as collateral, typically come with fixed interest rates, and are repaid in predictable monthly installments over a set term.
Homeowners commonly use equity loans for home renovations, debt consolidation, major life expenses, or education costs. Because these loans are secured by your property, they often offer lower interest rates compared to unsecured personal loans or credit cards.
How to Use This Home Equity Loan Calculator
Our calculator is designed to give you a clear picture of your borrowing power and the associated costs. Here's how to use it:
- Enter Your Home's Current Value – Use a realistic estimate. You can check recent comparable sales in your area or use online valuation tools for a ballpark figure.
- Enter Your Outstanding Mortgage Balance – This is the remaining principal you owe on your primary mortgage. You can find this on your latest mortgage statement.
- Set the Interest Rate – Input the rate you expect or have been quoted. Rates vary based on credit score, lender, and market conditions. As of 2024–2025, home equity loan rates typically range from 6.5% to 9.5%.
- Choose a Loan Term – Longer terms (20–30 years) mean lower monthly payments but more total interest. Shorter terms (5–15 years) save on interest but increase monthly obligations.
- Adjust the LTV Slider – The standard LTV ratio is 80%, meaning you can borrow up to 80% of your home's value (minus your mortgage). Some lenders allow up to 90–95%, but this comes with higher risk and potentially higher rates.
Hit "Calculate My Equity & Payment" and the tool instantly displays your total equity, maximum borrowable amount, estimated monthly payment, total interest, and more.
Understanding Your Results
- Total Home Equity: Your home's value minus your mortgage balance. This represents your ownership stake.
- Max Loan Amount: The maximum you can borrow based on the LTV ratio you selected. Formula: (Home Value × LTV%) − Mortgage Balance.
- Estimated Monthly Payment: What you'd pay each month, including principal and interest, calculated using standard amortization.
- Total Interest Paid: The total interest cost over the full loan term. A higher rate or longer term significantly increases this number.
- Total Repayment: The sum of all payments (principal + interest) over the loan's life.
- Combined LTV After Loan: Your total debt (mortgage + new loan) divided by your home's value. A lower percentage is safer.
What Is Loan-to-Value (LTV) Ratio?
The Loan-to-Value (LTV) ratio is a key metric lenders use to assess risk. It's calculated by dividing the total loan amount by the appraised value of the property. For example, if your home is worth $400,000 and you owe $250,000 on your mortgage, your current LTV is 62.5%. If you take out a $70,000 home equity loan, your combined LTV rises to 80% ($320,000 total debt ÷ $400,000 value).
Most lenders prefer a combined LTV of 80% or lower. A lower LTV generally qualifies you for better interest rates and more favorable terms. If your LTV exceeds 80%, you may still qualify but could face higher rates or be required to pay private mortgage insurance (PMI).
Home Equity Loan vs. HELOC: What's the Difference?
While both let you tap into home equity, they work differently:
- Home Equity Loan: A lump-sum loan with a fixed interest rate and fixed monthly payments. Best for one-time, large expenses where you know exactly how much you need (e.g., a major renovation).
- HELOC (Home Equity Line of Credit): A revolving credit line with a variable interest rate. You draw funds as needed during a "draw period" (typically 10 years) and then repay during a "repayment period." Best for ongoing or uncertain expenses.
This calculator is optimized for fixed-rate home equity loans. If you're considering a HELOC, use this as a starting point but be aware that variable rates and draw periods add complexity.
Tips for Using Home Equity Wisely
- Borrow Only What You Need: Just because you can borrow $70,000 doesn't mean you should. Every dollar borrowed accrues interest.
- Shop Around: Rates and terms vary significantly between lenders. Compare offers from banks, credit unions, and online lenders.
- Consider the Tax Implications: Interest on home equity loans may be tax-deductible if the funds are used for substantial home improvements. Consult a tax professional for guidance.
- Have a Repayment Plan: Defaulting on a home equity loan can lead to foreclosure. Make sure the monthly payment fits comfortably within your budget.
- Check Your Credit Score: A higher credit score (typically 680+) unlocks better rates. Review your credit report before applying.
Frequently Asked Questions
Most lenders require at least 15–20% equity in your home after accounting for the new loan. This means your combined LTV should typically be 80–85% or lower. Some specialty lenders may go higher, but terms become less favorable.
It's possible but challenging. Lenders generally prefer credit scores of 620 or above. With a lower score, you may face higher interest rates, stricter LTV limits, or additional documentation requirements. Improving your credit before applying can save you thousands.
The process typically takes 2 to 6 weeks, including application, appraisal, underwriting, and closing. Some online lenders offer streamlined processes that can be faster.
Yes, closing costs usually range from 2% to 5% of the loan amount and may include appraisal fees, title search, origination fees, and recording fees. Some lenders offer "no-closing-cost" options, but these often come with higher interest rates.
It can be, because home equity loans often have lower rates than credit cards or personal loans. However, you're converting unsecured debt into secured debt tied to your home, which increases your risk. Weigh the savings against the potential consequences of default.
