Home Equity Loan Calculator

About the Home Equity Loan Calculator

A home equity loan calculator determines how much you can borrow from your home equity, computes your fixed monthly payment, and shows the total interest cost over the loan term. A home equity loan — sometimes called a second mortgage — lets you borrow against the equity you have built in your home, typically up to 80-85% of the home's appraised value minus your current mortgage balance. Unlike a HELOC (home equity line of credit), a home equity loan provides a lump sum at a fixed interest rate with a fixed monthly payment — making it predictable and suitable for large one-time expenses like home renovations, debt consolidation, or major purchases. In 2025, home equity loan rates typically range from 7-10% for well-qualified borrowers — significantly lower than unsecured personal loan rates (10-20%) or credit cards (18-28%), making home equity an attractive but serious borrowing option. Our calculator shows your maximum available equity, the payment on any loan amount within that limit, the combined loan-to-value ratio (CLTV), and total interest cost over the loan term.

How It Works

Maximum home equity loan amount: Max loan = (Home value × max LTV%) - Current mortgage balance. Most lenders cap combined LTV at 80% (some 85-90%). Combined LTV = (Mortgage balance + Equity loan) / Home value × 100. Monthly payment: standard amortization formula on the equity loan amount at the quoted rate for the term years. Total interest = Monthly payment × total months - Loan amount. Example: $450,000 home, $280,000 mortgage, 8.5% rate, 10-year term, 80% max CLTV. Max loan = $450,000 × 0.80 - $280,000 = $360,000 - $280,000 = $80,000 maximum. If borrowing $50,000: monthly payment = $50,000 × [0.007083 × (1.007083)^120] / [(1.007083)^120 - 1] = $621.25/month. Total interest = $621.25 × 120 - $50,000 = $24,550. Combined LTV = ($280,000 + $50,000) / $450,000 = 73.3% — well within the 80% limit.

Tips & Best Practices

• ✓Home equity loans are secured by your property — this is the critical distinction from unsecured personal loans. Defaulting on a home equity loan can trigger foreclosure proceedings. Only borrow what you can service reliably even if your income declines.
• ✓Home equity loan interest is tax-deductible only if the funds are used to buy, build, or substantially improve the home securing the loan. Using equity for debt consolidation, education, or a vacation eliminates the deductibility under the 2017 Tax Cuts and Jobs Act rules.
• ✓CLTV matters more than standalone LTV: a 75% first mortgage LTV and a 15% home equity loan brings combined LTV to 90% — above most lenders maximum for second mortgages. The calculator automatically shows your CLTV so you can evaluate approval likelihood.
• ✓Fixed rate advantage over HELOC: if you need a specific amount for a defined purpose (kitchen renovation, debt payoff), the fixed rate and fixed payment of a home equity loan is more predictable than a HELOC at variable rates. In rising rate environments, locking a fixed rate provides certainty.
• ✓Closing costs on home equity loans: typically 2-5% of the loan amount for origination fees, appraisal, and title search. On a $50,000 home equity loan, closing costs of $1,500-$2,500 represent 3-5% — factor this into your APR comparison against other borrowing options.
• ✓Refi versus second mortgage: if current mortgage rates are significantly lower than your existing rate, a cash-out refinance (single new mortgage covering both the existing balance and new cash needed) may offer a lower blended rate than a second mortgage. Compare total costs of both approaches.

Who Uses This Calculator

Homeowners planning major renovations who want a predictable fixed payment rather than a variable HELOC. Borrowers comparing home equity loans against personal loans for large expenses based on rate and total cost. People evaluating cash-out refinancing versus a home equity loan for accessing built-up equity. Financial planners helping clients access home equity for investment, education funding, or retirement supplementation. Anyone calculating their maximum available equity before discussing options with a lender.