Home Equity Loan Calculator

A home equity loan calculator shows you exactly how much you can borrow against your home, what your monthly payment will be, and how much total interest you will pay over the life of the loan. A homeowner with a $450,000 home and a $250,000 mortgage balance has $200,000 in equity — and can typically borrow up to $110,000 as a home equity loan at a fixed rate, with a predictable monthly payment and a set repayment timeline.

Home equity loans are one of the most cost‑effective ways to borrow large sums because your home secures the debt — which means lenders charge significantly lower interest rates than personal loans or credit cards. The same $50,000 borrowed as a personal loan at 14% costs $1,163 per month over five years. The same amount as a home equity loan at 7% over ten years costs only $581 per month — with far less total interest. The trade‑off is clear: your home is the collateral, and failing to repay puts it at risk.

Use this free Home Equity Loan Calculator to instantly determine how much equity you have, how much you can borrow, your monthly payment, and your total interest cost — for any combination of loan amount, interest rate, and term. No sign‑up required. Use our loan calculator to estimate monthly payments, total interest costs, and repayment schedule for any loan amount quickly.

What Is a Home Equity Loan?

A home equity loan — also called a second mortgage or a home equity installment loan — is a fixed‑rate loan secured by the equity in your home. You receive the full loan amount as a lump sum upfront, then repay it in equal monthly installments over a fixed term, typically 5 to 30 years. The interest rate is fixed for the life of the loan, so your payment never changes.

Equity is the portion of your home’s value that you own outright — the difference between what your home is currently worth and what you still owe on your mortgage. As you pay down your mortgage and as your home appreciates in value, your equity grows. A home equity loan converts a portion of that equity back into spendable cash while leaving your first mortgage intact.

Use our mortgage calculator to calculate monthly payments, interest costs, and loan affordability based on home price, rate, and term.

Home Equity Loan — Key Terms

Home Equity: Current market value of your home minus your remaining mortgage balance.
Loan‑to‑Value Ratio (LTV): Total debt secured by your home divided by its appraised value.
Combined LTV (CLTV): First mortgage + home equity loan divided by home value.
Fixed Rate: Interest rate that stays the same for the entire loan term.
Second Mortgage: A home equity loan ranks second behind your primary mortgage in repayment priority.

How Much Can You Borrow With a Home Equity Loan?

The maximum amount you can borrow depends on your home’s current market value, your existing mortgage balance, your credit score, and the lender’s maximum combined loan‑to‑value ratio (CLTV). Most lenders allow a CLTV of up to 80% to 85% of your home’s appraised value.

Maximum Home Equity Loan = (Home Value × 0.80) − Existing Mortgage Balance

Example: A home worth $450,000 with a $250,000 mortgage: ($450,000 × 0.80) − $250,000 = $360,000 − $250,000 = $110,000 maximum home equity loan. The table below shows borrowing limits across common home values and mortgage balances:

Equity Examples Table

• Home Value — Mortgage Balance — Equity — Max Loan (80% LTV) — Available to Borrow
  • $250,000 — $150,000 — $100,000 — $200,000 — $50,000
  • $350,000 — $200,000 — $150,000 — $280,000 — $80,000
  • $450,000 — $250,000 — $200,000 — $360,000 — $110,000
  • $500,000 — $280,000 — $220,000 — $400,000 — $120,000
  • $600,000 — $300,000 — $300,000 — $480,000 — $180,000
  • $750,000 — $350,000 — $400,000 — $600,000 — $250,000

Note that “Available to Borrow” is the maximum under an 80% CLTV cap. Some lenders allow 85% or even 90% CLTV for well‑qualified borrowers — but higher CLTV means less equity cushion and greater risk if home values decline. Always confirm the maximum CLTV with your specific lender before calculating.

How Your Home Equity Loan Payment Is Calculated

Home equity loan payments use the same standard loan amortization formula as mortgages and auto loans. Each monthly payment is fixed and covers both the accrued interest on the outstanding balance and a portion of the principal.

Monthly Payment = P × [r(1+r)ⁿ] ÷ [(1+r)ⁿ − 1]

P = Loan amount (principal) | r = Monthly rate = Annual rate ÷ 12 | n = Total monthly payments (years × 12)

Worked Example — $75,000 at 7.0% for 15 Years

• Monthly rate (r): 7.0% ÷ 12 = 0.5833% = 0.005833
• Number of payments (n): 15 × 12 = 180
• Monthly Payment: $75,000 × [0.005833 × (1.005833)¹⁸⁰] ÷ [(1.005833)¹⁸⁰ − 1]
• Result: $673.83 per month
• Total paid: $673.83 × 180 = $121,289
• Total interest: $121,289 − $75,000 = $46,289

The calculator applies this formula instantly for any inputs. The table below shows monthly payments, total costs, and interest for seven common loan scenarios:

Monthly Payment Table

• Loan Amount — Rate — Term — Monthly Pmt — Total Paid — Interest
  • $30,000 — 6.5% — 10 yr — $340.47 — $40,856 — $10,856
  • $50,000 — 6.5% — 10 yr — $567.45 — $68,094 — $18,094
  • $75,000 — 7.0% — 15 yr — $673.83 — $121,289 — $46,289
  • $100,000 — 7.0% — 15 yr — $898.83 — $161,789 — $61,789
  • $125,000 — 7.5% — 20 yr — $1,005.96 — $241,430 — $116,430
  • $150,000 — 7.5% — 20 yr — $1,207.15 — $289,716 — $139,716
  • $200,000 — 8.0% — 20 yr — $1,672.77 — $401,465 — $201,465

The dominant pattern: longer terms lower your monthly payment but substantially increase total interest. A $100,000 loan at 7% over 10 years costs $13,548 less in total interest than the same loan over 15 years — but requires a payment that is $275 higher each month. Always calculate both before deciding on a term.

Use our interest calculator to estimate total interest, monthly costs, and savings by adjusting rates, loan terms, and payment amounts easily.

How to Use the Home Equity Loan Calculator

Step 1 — Enter Your Home’s Current Market Value

Use a realistic current market value — not your purchase price or tax assessment. You can estimate your home’s value from recent comparable sales in your neighborhood, online estimation tools like Zillow or Redfin, or a formal appraisal. Lenders will require an official appraisal before closing, so use a conservative estimate in the calculator.

Step 2 — Enter Your Current Mortgage Balance

Enter the remaining principal balance on your first mortgage — the amount you still owe, not your original loan amount. You can find this on your most recent mortgage statement or by logging into your lender’s online portal. Include any second mortgages or home equity lines already in place.

Available Equity = Home Value − Mortgage Balance

Step 3 — Enter the Loan Amount You Want to Borrow

Enter the specific amount you need — up to the maximum calculated by the 80% CLTV formula. Borrowing only what you genuinely need reduces your payment and total interest. Many homeowners borrow the exact amount required for their project rather than the maximum available to maintain equity cushion.

Step 4 — Enter the Interest Rate and Loan Term

Enter the annual interest rate offered by your lender. If you have not applied yet, use the credit score rate table in the next section to estimate. Common terms are 10, 15, 20, or 30 years. The calculator shows your monthly payment and total interest for the term you enter — run it with multiple terms to compare.

Step 5 — Review Your Full Cost Breakdown

The calculator returns your monthly payment, total amount paid over the loan life, total interest charged, and your remaining equity after borrowing. Use these figures to confirm the loan fits your budget and that sufficient equity remains after the loan to protect against a decline in home value.

Use our home affordability calculator to determine how much house you can afford based on income, expenses, and loan requirements.

Credit Score and Home Equity Loan Rates

Your credit score is the primary factor determining the interest rate you receive on a home equity loan. The table below shows typical rate ranges and estimated monthly payments on a $75,000 loan over 15 years by credit score tier:

Credit Score Rate Table

• Credit Score — Typical Rate Range — On $75,000 / 15yr — Rating
  • 760 – 850 — 6.0% – 7.0% — $633 – $674/mo — Excellent
  • 700 – 759 — 7.0% – 8.5% — $674 – $738/mo — Good
  • 640 – 699 — 8.5% – 10.5% — $738 – $830/mo — Fair
  • 580 – 639 — 10.5% – 13.0% — $830 – $964/mo — Poor
  • Below 580 — May not qualify — — — Very Poor

The financial impact of credit score is substantial. On a $75,000 loan over 15 years, the difference between an excellent‑credit rate of 6.5% and a fair‑credit rate of 10% is approximately $150 per month and $27,000 in total interest. If your credit score is below 700, spending 6–12 months improving it before applying can produce meaningful savings. Key levers: pay down revolving credit balances below 30% utilization, correct any credit report errors, and avoid opening new accounts before applying.

Home Equity Loan vs. HELOC vs. Cash‑Out Refinance

Home equity loans are one of three common ways to access home equity. The right choice depends on whether you need a lump sum or ongoing access to funds, whether you prefer a fixed or variable rate, and how your existing mortgage compares to current rates.

HEL vs HELOC vs Cash‑Out Comparison Table

• Feature — Home Equity Loan — HELOC — Cash‑Out Refinance
  • Interest Rate — Fixed — Variable (usually) — Fixed or Variable
  • Disbursement — Lump sum — Draw as needed — Lump sum
  • Payment — Fixed monthly — Interest‑only in draw period — Fixed monthly
  • Closing Costs — 2%–5% of loan — 2%–5% of credit line — 2%–5% of new mortgage
  • Best For — One‑time large expense — Ongoing or uncertain costs — Replacing existing mortgage
  • Risk to Home — Yes – collateral — Yes – collateral — Yes – collateral
  • Tax Deductible? — Yes, if for home improvement — Yes, if for home improvement — Yes, if for home improvement

When a Home Equity Loan Is the Best Choice

Choose a home equity loan when you have a specific, one‑time expense with a known cost — a kitchen renovation, a debt consolidation payoff, a college tuition bill, or a medical expense. The fixed rate and fixed payment make budgeting predictable, and you only pay interest on the amount you borrow, not an open credit line.

When a HELOC Is the Better Option

A Home Equity Line of Credit (HELOC) works better for ongoing or uncertain costs — a multi‑phase renovation, a business that needs periodic capital injections, or expenses you may not incur all at once. You draw only what you need, pay interest only on what you use, and replenish the line as you repay. The trade‑off is a variable rate that can rise significantly if interest rates increase.

When Cash‑Out Refinancing Makes More Sense

If current mortgage rates are significantly lower than your existing rate, a cash‑out refinance replaces your entire mortgage at the new rate and provides the equity cash simultaneously. This is the most efficient option when refinancing already makes sense — but it restarts your mortgage amortization clock and carries full closing costs on the entire new loan balance.

Best Uses for a Home Equity Loan

Home Improvements and Renovations

Home improvements are the most financially sound use of a home equity loan because the spending directly increases the asset securing the debt. A kitchen renovation, bathroom remodel, or roof replacement adds value to the home — potentially increasing equity beyond the amount borrowed. The IRS also permits interest deductions on home equity loans used for home improvement, reducing the effective cost of the debt.

Debt Consolidation

Using a home equity loan to pay off high‑interest credit card debt is a common and often financially rational strategy. Replacing credit card debt at 20%+ APR with a home equity loan at 7%–8% reduces monthly payments and total interest dramatically. The critical discipline required: do not accumulate new credit card debt after consolidation, or the net result is more total debt against your home.

Education Expenses

Home equity loans carry lower rates than most private student loans and offer predictable repayment. For families funding college tuition, a home equity loan can be more cost‑effective than Parent PLUS loans, which carried rates of 8.05% or higher in recent years. The fixed term also prevents the open‑ended repayment that many student loans create.

Emergency Fund or Medical Expenses

Large unexpected expenses — major medical bills, emergency repairs, or family financial crises — are appropriate uses of home equity when no better alternative exists. The relatively low interest rate minimizes the ongoing cost, and the fixed payment makes the debt manageable. This use should be considered carefully, as it converts unsecured or one‑time expenses into long‑term debt secured by your home.

Risks and Common Mistakes to Avoid

Risk 1 — Your Home Is the Collateral

Unlike a personal loan or credit card, defaulting on a home equity loan can result in foreclosure. Lenders have the legal right to force the sale of your home to recover the debt. This makes the consequences of non‑payment fundamentally different from other borrowing. Never take a home equity loan to fund discretionary spending, vacations, or depreciating assets that will not help you repay the debt.

Risk 2 — Negative Equity If Home Values Fall

Borrowing close to the maximum 80%–85% CLTV leaves little cushion if your home’s value declines. A 10% drop in home value on a home where you have borrowed to 80% CLTV leaves you with very limited equity — and potentially underwater if values drop further. Maintaining a meaningful equity buffer above the loan protects your financial position if the housing market weakens.

Mistake — Using Home Equity for Depreciating Assets

Taking a 15‑year home equity loan to fund a vacation, a new car, or consumer electronics converts short‑lived consumption spending into long‑term secured debt at the cost of your home’s equity. By the time the 15‑year loan is paid off, the funded asset will have been gone for over a decade. Reserve home equity loans for investments in durable assets or high‑interest debt elimination.

Mistake — Not Comparing Multiple Lenders

Home equity loan rates vary significantly across banks, credit unions, and online lenders. The difference between the highest and lowest offered rate from multiple lenders on a $75,000 loan can exceed 1.5% — translating to more than **$100 per month and $18,000 in total interest over 15 years. Always obtain at least three quotes, including from credit unions, which typically offer the most competitive rates.

FINAL THOUGHTS 

A home equity loan is one of the most powerful and lowest-cost borrowing tools available to homeowners — but it is secured by your most valuable asset. The calculator makes the numbers transparent: how much equity you have, how much you can borrow, what the monthly cost will be, and what the total interest charge will be over the loan’s life. Use it to compare scenarios before applying, and borrow only what you need for purposes that genuinely justify pledging your home as collateral.

Frequently Asked Questions

What is a home equity loan and how does it work?

A home equity loan is a fixed-rate second mortgage that lets you borrow against the equity built up in your home. You receive the full loan amount as a lump sum upfront and repay it in equal monthly installments over a fixed term of 5 to 30 years. The loan is secured by your home, which is why interest rates are significantly 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% of your home’s appraised value minus your existing mortgage balance. This is called the combined loan-to-value (CLTV) limit. For example, if your home is worth $400,000 and you owe $220,000 on your mortgage, you can borrow up to $320,000 minus $220,000 — a maximum of $100,000. Some lenders allow up to 85% CLTV for well-qualified borrowers.

What credit score do I need to qualify for a home equity loan?

Most lenders require a minimum credit score of 620 to qualify for a home equity loan, though scores below 680 typically result in higher interest rates and stricter terms. To receive the most competitive rates, you generally need a score of 720 or higher. Lenders also evaluate your debt-to-income ratio, employment history, and the amount of equity you hold in the home before approving the loan.

What is the difference between a home equity loan and a HELOC?

A home equity loan provides a fixed lump sum at a fixed interest rate, with equal monthly payments for the entire term. A HELOC is a revolving line of credit with a variable interest rate — you draw funds as needed during a draw period and pay interest only on what you use. Home equity loans suit one-time large expenses; HELOCs suit ongoing or uncertain borrowing needs with flexible timing.

Is the interest on a home equity loan tax deductible?

Home equity loan interest is tax deductible only when the loan proceeds are used to buy, build, or substantially improve the home securing the loan. The IRS eliminated the deduction for home equity loans used for personal expenses such as debt consolidation, vacations, or consumer purchases under the Tax Cuts and Jobs Act of 2017. Always consult a tax professional to confirm deductibility based on your specific use of funds.

What are typical closing costs on a home equity loan?

Home equity loan closing costs typically range from 2% to 5% of the loan amount, covering appraisal fees, title search, origination fees, and recording fees. On a $75,000 loan, that is $1,500 to $3,750 in upfront costs. Some lenders offer no-closing-cost home equity loans by slightly increasing the interest rate instead. Always calculate the break-even point to determine which option is more cost-effective for your timeline.

Can I pay off a home equity loan early?

Yes — most home equity loans can be paid off early without penalty, though some lenders charge a prepayment penalty within the first three to five years. Because interest accrues on the outstanding balance, making additional principal payments reduces total interest paid and shortens the repayment period. Always verify prepayment terms in your loan agreement before making extra payments, and specify that any extra payment should be applied to principal.

What happens to my home equity loan if I sell my house?

If you sell your home, the proceeds first pay off your primary mortgage and then your home equity loan in full at closing. Any remaining proceeds belong to you as equity. You cannot transfer a home equity loan to a new property. This means your home equity loan becomes immediately due in full upon sale, which is why knowing your outstanding balance is important when evaluating offers and calculating your net sale proceeds.

About This Calculator

This home equity loan calculator is part of Intelligent Calculator’s Finance suite — built on standard loan amortization methodology and US residential lending guidelines. For informational purposes only. Not financial advice. Free. No sign-up required.