Home Equity Loan Calculator

A home equity loan is a fixed-rate, lump-sum loan secured by the equity in your home — sometimes called a second mortgage. You receive the entire loan amount at closing, then repay it in equal monthly installments over a set term (typically 5 to 20 years). Because both the interest rate and payment are fixed, your budget is predictable from day one. A Home Equity Line of Credit (HELOC), by contrast, works more like a credit card: you receive a revolving credit line you can draw from and repay repeatedly during a draw period (usually 10 years), after which the balance enters a repayment period. HELOCs almost always carry variable interest rates tied to the prime rate, so your monthly payment can fluctuate with market conditions. A home equity loan is the better choice when you need a specific sum for a defined purpose — a home renovation, debt consolidation, or large one-time expense — and you want payment certainty. A HELOC is better suited to ongoing or uncertain funding needs where you want flexibility to borrow only what you need, when you need it.

The maximum you can borrow depends on three factors: your home's current market value, your remaining mortgage balance, and the Combined Loan-to-Value (CLTV) limit your lender allows. Most lenders cap CLTV at 80–85%, meaning the sum of your first mortgage and the new home equity loan cannot exceed 80–85% of your home's appraised value. For example, on a $400,000 home with $200,000 owed on the first mortgage and an 85% CLTV limit, you could borrow up to $140,000 ($400,000 × 85% = $340,000 − $200,000 = $140,000). Beyond the CLTV limit, lenders also evaluate your credit score (typically 620+ is required, with better rates above 700), your debt-to-income (DTI) ratio (most lenders prefer 43% or below), and your employment history. The appraised value used for underwriting is the lender's official appraisal, not an online estimate, which may differ from your entered amount. Always get quotes from multiple lenders before committing.

CLTV stands for Combined Loan-to-Value ratio. It measures the total of all loans secured by your home — your first mortgage plus any home equity loan or HELOC — divided by the home's current appraised value, expressed as a percentage. For example, a $200,000 first mortgage plus a $50,000 home equity loan on a $400,000 home produces a CLTV of 62.5% ($250,000 ÷ $400,000). Lenders use CLTV to assess risk: the higher the CLTV, the more you owe relative to the home's value, and the less cushion the lender has if you default and the home needs to be sold. Most conventional lenders cap CLTV at 80%, some go to 85%, and a small number of credit unions or online lenders allow up to 90%. A lower CLTV generally qualifies you for a lower interest rate because the lender's collateral position is stronger. Keeping your CLTV below 80% also means you avoid PMI-like protections some lenders require at higher leverage levels. Monitoring your CLTV after borrowing is also important: if home values decline, your CLTV rises, which can limit future refinancing options.

Home equity loan rates change frequently with broader interest rate conditions, so this calculator lets you enter the exact rate your lender quotes. Several factors determine the rate you receive personally. Your credit score is the most influential: borrowers with scores above 740 typically qualify for the best rates, while scores below 620 may not qualify at all. Your CLTV also matters — the more equity you retain after the loan (lower CLTV), the lower the risk to the lender and, generally, the lower your rate. Your debt-to-income ratio plays a role too: a lower DTI signals financial stability. The loan term affects rate as well, since shorter terms often carry modestly lower rates than 20-year terms. The loan amount can influence pricing — some lenders offer tiered rates based on how much you borrow. Finally, the lender type matters: credit unions, community banks, and online lenders each have different pricing models, and shopping multiple lenders can yield rate differences of half a percentage point or more. Home equity loan rates are typically higher than first mortgage rates because second-lien loans carry more risk for the lender (the first mortgage is repaid first in a foreclosure), but they are usually substantially lower than personal loan or credit card rates.

Under the Tax Cuts and Jobs Act of 2017, home equity loan interest is deductible only if the loan proceeds are used to buy, build, or substantially improve the home that secures the loan. If you use the funds for other purposes — such as paying off credit card debt, funding a vacation, or buying a car — the interest is not deductible. When the deduction does apply, you must itemize deductions on Schedule A rather than taking the standard deduction, and the combined debt limit for the mortgage interest deduction (first mortgage plus home equity loan) is $750,000 for loans taken out after December 15, 2017 (or $1,000,000 for debt incurred before that date). Because tax rules are complex, change periodically, and depend on your individual situation, you should consult a qualified tax professional (CPA or enrolled agent) before assuming any deductibility. The calculator does not account for any potential tax benefit; your effective after-tax cost of borrowing may be lower than the numbers shown if you qualify for the deduction.

A home equity loan is secured debt — your home serves as collateral. If you miss payments, the consequences escalate quickly. Most lenders will report the delinquency to credit bureaus after 30 days, damaging your credit score. After 90 to 120 days of missed payments, the lender can begin foreclosure proceedings, which could ultimately result in the sale of your home to recover the outstanding loan balance. Because the home equity loan is a second lien, the first mortgage lender is paid first from any foreclosure proceeds; the home equity lender receives only what remains. This also means that, in practice, a second-lien lender may be cautious about initiating foreclosure unless there is substantial equity — but the legal right to foreclose exists regardless. If you are struggling to make payments, contact your lender immediately. Options may include a loan modification, temporary forbearance, or refinancing into a longer term to reduce monthly payments. You can also explore nonprofit credit counseling through organizations like the National Foundation for Credit Counseling (NFCC) for guidance on hardship options. Never ignore the problem: proactive communication with your lender gives you far more options than waiting until default.