Home Equity Loan Calculator
Calculate how much equity you have in your home and the maximum amount you can borrow with a home equity loan. Enter your home value, current mortgage balance, and desired LTV limit to see your borrowing power. Then add the interest rate and term to get the exact monthly payment, total interest cost, and combined loan-to-value ratio.
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How It Works
Equity is the portion of your home you actually own. It equals market value minus mortgage balance. This grows as you pay down the mortgage and as the home appreciates in value.
Equity = Home Value - Mortgage Balance$450K home - $250K mortgage = $200K equityLenders limit total debt to a percentage of home value. The maximum home equity loan equals the LTV limit times the home value minus the existing mortgage balance.
Max Loan = (Home Value x LTV%) - Mortgage Balance($450K x 80%) - $250K = $110K max borrowableHome equity loans have fixed rates and fixed monthly payments calculated using standard amortization. The payment depends on the loan amount, interest rate, and term.
M = P x r(1+r)^n / [(1+r)^n - 1]$80K at 8.5% for 15yr = $788/moCombined LTV includes both your first mortgage and the home equity loan divided by the home value. Lenders use this to assess total risk. Most prefer combined LTV below 80%.
CLTV = (Mortgage + HE Loan) / Home Value x 100($250K + $80K) / $450K = 73.3% CLTVMultiply the monthly payment by the total number of payments and subtract the original loan amount. This reveals the full interest cost of the home equity loan.
Total Interest = (Monthly x Months) - Loan Amount$788 x 180 - $80K = $61,840 total interestCompare borrowing at 80%, 85%, and 90% LTV to see how it affects the available amount and monthly payment. Higher LTV means more borrowing but higher risk and potentially higher rates.
Compare max loan at different LTV limits80% = $110K; 85% = $132.5K; 90% = $155KQuick Reference
Common examples — verify instantly above.
$450K home, $250K owed
Home equity
$200,000
80% LTV limit
Max borrowable
$110,000
85% LTV limit
Max borrowable
$132,500
$80K at 8.5%, 15yr
Monthly payment
$788/mo
$100K at 8%, 20yr
Monthly payment
$836/mo
$50K at 7.5%, 10yr
Monthly payment
$594/mo
$80K at 8.5%, 15yr
Total interest
$61,840
Combined LTV
$250K + $80K on $450K
73.3%
Tips & Shortcuts
Get a professional appraisal or use recent comparable sales to determine your home's current market value accurately before applying.
Keep your combined LTV below 80% if possible to get the best interest rates and avoid additional fees or restrictions.
Compare home equity loan rates from banks, credit unions, and online lenders — rates can vary by 1% to 2% between lenders for the same borrower profile.
Consider a shorter term (10 or 15 years) if you can afford the higher payment. The interest savings compared to a 20 or 30 year term are substantial.
Use home equity loan funds for home improvements to potentially increase your home's value and keep the interest tax-deductible.
Factor the home equity loan payment into your debt-to-income ratio before applying. Lenders want total DTI below 43% for most loan products.
Common Mistakes to Avoid
Using the purchase price instead of current market value
Home values change over time. Use a recent appraisal, comparable sales, or online estimate for the current market value. Your equity may be higher or lower than you expect.
Borrowing the maximum available without considering repayment
Just because you can borrow $110,000 does not mean you should. Calculate the monthly payment and ensure it fits comfortably in your budget with room for emergencies.
Ignoring the combined loan-to-value ratio
Lenders look at total debt against the home, not just the new loan. A high combined LTV means higher rates and the risk of being underwater if home values decline.
Using home equity for depreciating assets or consumption
Borrowing against your home for vacations, cars, or consumer spending puts your home at risk for items that lose value. Reserve home equity borrowing for investments that build value.
Not comparing home equity loan versus HELOC for your situation
If you need a lump sum for a specific project, a fixed-rate home equity loan is better. If you need flexible access over time, a HELOC may be more appropriate and cost-effective.
Forgetting closing costs on the home equity loan
Home equity loans often have closing costs of 2% to 5% of the loan amount. Factor these into the total cost comparison when deciding whether to borrow.
Frequently Asked Questions
Home equity equals your home's current market value minus your outstanding mortgage balance. If your home is worth $450,000 and you owe $250,000, you have $200,000 in equity.
Most lenders allow a combined LTV of 80% to 90%. If your home is worth $450,000 and you owe $250,000, at 80% LTV you can borrow up to $110,000 ($450K x 80% - $250K). Some lenders go up to 90% LTV for qualified borrowers.
A home equity loan gives you a lump sum at a fixed interest rate with fixed monthly payments. A HELOC is a revolving credit line with a variable rate — you draw funds as needed during the draw period and then repay during the repayment period.
Interest on home equity loans is tax deductible if the funds are used to buy, build, or substantially improve the home that secures the loan. Interest on funds used for other purposes like debt consolidation or vacation is not deductible.
Most lenders require a minimum credit score of 680 for a home equity loan, with better rates available at 720 and above. Some lenders accept scores as low as 620 but charge significantly higher rates.
Yes. A home equity loan is secured by your home as collateral. If you default on payments, the lender can foreclose. This is why it is important to borrow only what you can comfortably repay.
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