Your home is likely your largest asset, and the difference between what it is worth and what you still owe on it — your home equity — can become a powerful source of cash. A home equity loan lets you borrow against that equity as a single, lump-sum second mortgage with a fixed interest rate and a fixed monthly payment. This calculator estimates exactly what that monthly payment will be, how much you can realistically borrow under your lender's loan-to-value limit, and how much interest you will pay over the life of the loan.
A home equity loan is not a HELOC. A HELOC is a revolving line of credit you draw from and repay repeatedly, usually with a variable rate. A home equity loan delivers the full amount up front, charges a fixed rate for the entire term, and repays on a set amortization schedule — the same structure as a first mortgage, just smaller and subordinate.
How to Use
- Enter your Current Home Value — an honest market figure, such as a recent appraisal or comparable sales in your area.
- Add your Remaining First Mortgage balance — what you still owe on your primary home loan today.
- Set the Max Combined Loan-to-Value (CLTV). Most lenders allow total mortgage debt (first loan plus new equity loan) up to 80%–85% of the home's value; 80% is the safe default.
- Type the Loan Amount You Want — the lump sum you plan to borrow.
- Enter the Interest Rate (APR). Home equity loan rates are fixed and typically run a few points above a first mortgage; test a range of ±0.5% to see how rate-sensitive your payment is.
- Choose the Loan Term — 5, 10, 15, or 20 years. A shorter term raises the payment but sharply cuts total interest.
The result card first shows your Max You Can Borrow — the ceiling set by your CLTV limit — then your fixed monthly principal-and-interest payment, the total interest paid over the life of the loan, the total loan cost, and your combined loan-to-value ratio once the new loan is added.
How the Math Works
Your monthly payment uses the same standard amortization formula used by every major US lender:
M = P × r(1 + r)ⁿ / ((1 + r)ⁿ − 1)
Where M is the monthly payment, P is the loan amount, r is the monthly rate (the annual APR divided by 12), and n is the number of monthly payments (years times 12). Your borrowing ceiling comes from:
Max you can borrow = home value × CLTV% − remaining first mortgage
For example, on a $400,000 home with a $180,000 remaining mortgage at an 80% CLTV limit: $400,000 × 0.80 = $320,000 of total allowed debt, minus $180,000 already owed = $140,000 you can borrow. If you then take $100,000 at 8.5% for 10 years, the monthly P&I is about $1,239.86, and total interest over the decade is roughly $48,783.
If the rate is 0%, the formula would divide by zero, so the engine simply splits the principal evenly across the months — $50,000 over 120 months equals $416.67 per month.
Home Equity Loan vs. HELOC vs. Cash-Out Refinance
These are the three main ways to turn equity into cash, and they behave very differently:
- Home equity loan — one lump sum, fixed rate, fixed payment. Best when you know exactly how much you need and want payment stability.
- HELOC — a revolving credit line, usually variable rate. Best when costs are spread out (a long renovation) and you only draw what you need.
- Cash-out refinance — replace your first mortgage with a larger one and pocket the difference. Best when current mortgage rates are at or below your existing rate, since you reset the whole loan.
A common rule of thumb: choose a home equity loan for a defined project with a known price tag, and keep the rate risk off your back.
Examples
Example 1 — Funding a kitchen remodel. A homeowner has a $400,000 house, owes $180,000, and qualifies at 80% CLTV. They want $100,000 for a renovation at 8.5% over 10 years. The calculator shows they could borrow up to $140,000, their requested $100,000 is comfortably within the limit, and the fixed payment is about $1,240 per month with roughly $48,783 of total interest.
Example 2 — Paying off high-interest credit cards. A borrower with a $525,000 home, a $275,000 remaining balance, and an 85% CLTV limit wants $75,000 at 9.25% over 5 years. Max borrowing is about $171,250; the 5-year payment is near $1,566 per month, but total interest is only ~$18,960 — a fraction of what 20% credit-card interest would have cost.
Example 3 — A high-value property. On a $1,500,000 home with $600,000 owed and an 80% limit, the available equity is $600,000. Borrowing $400,000 at 8.0% over 15 years yields a payment of about $3,823 per month and total interest near $288,070 — worth modeling before committing, since the combined loan-to-value lands at 66.7%.
FAQ
How much money can I borrow with a home equity loan?
Most lenders cap your total mortgage debt at 80%–85% of your home's current value (the combined loan-to-value, or CLTV). Subtract your remaining first mortgage and you get your maximum. On a $400,000 home with $180,000 owed at 80% CLTV, you could borrow up to about $140,000.
How is the monthly payment on a home equity loan calculated?
It uses the fixed amortization formula M = P × r(1+r)ⁿ / ((1+r)ⁿ − 1), where P is the loan amount, r is the monthly rate (annual APR divided by 12), and n is the number of monthly payments. Because the rate is fixed, the payment never changes over the term.
Is a home equity loan the same as a HELOC?
No. A home equity loan gives you one lump sum at a fixed rate with a fixed payment. A HELOC is a revolving line of credit you draw from and repay repeatedly, usually at a variable rate. Use this calculator for the lump-sum, fixed-rate product; a HELOC calculator models the revolving one.
What credit score do I need for a home equity loan?
Many lenders prefer a credit score of at least 620–680, a CLTV at or below 85%, and a debt-to-income ratio under 43%. Higher scores typically unlock lower rates and higher allowed borrowing, so checking your score before applying is worthwhile.
What can I use a home equity loan for?
Common uses include home renovations, consolidating high-interest debt, funding education, or covering major emergencies. Because the loan is secured by your home, the rate is usually far lower than unsecured credit cards — but your home is collateral, so defaulting can put it at risk.
Are home equity loan interest rates fixed or variable?
True home equity loans are fixed-rate, meaning your APR and monthly payment stay the same for the entire term. That predictability is their main advantage over a HELOC, whose variable rate can rise over time.
Disclaimer
This home equity loan calculator is provided for informational purposes only and does not constitute financial, lending, or tax advice. Estimates are based on the inputs you enter and the standard amortization formula; actual offers, rates, and CLTV limits vary by lender, credit profile, location, and loan program. Always confirm your final terms directly with a licensed lender before borrowing against your home.