A home equity loan lets you borrow against the value you've built up in your home. You receive a lump sum at a fixed interest rate and repay it in equal monthly installments — which makes it a predictable way to finance big one-time expenses like a kitchen remodel, an addition, or a major bill. Because the loan is secured by your house, rates are typically far lower than credit cards or personal loans, often just one to two percentage points above primary mortgage rates.
The key number is your combined loan-to-value (CLTV) ratio: your mortgage balance plus the new equity loan, divided by your home's value. Most lenders cap CLTV at 80%, meaning you can borrow up to 80% of your home's value minus what you still owe. For example, a $500,000 home with a $300,000 mortgage supports up to $100,000 of equity borrowing at the 80% cap. Borrow less than the maximum and you keep a cushion of equity; borrow more (some lenders allow 85–90% CLTV) and you'll pay a higher rate.
Our calculator does three jobs at once: it shows your maximum borrowable amount under your lender's LTV cap, computes the monthly payment for your chosen loan amount, rate and term using the standard amortization formula, and reveals the total interest you'll pay over the life of the loan. Comparing a 10-year term against a 15-year term is eye-opening — the shorter term usually slashes total interest by a third or more for a few hundred dollars extra per month.
How to use the Home Equity Loan Calculator
- Enter your current home value — a recent appraisal, or a conservative estimate from a recent comparable sale.
- Enter your remaining mortgage balance — the payoff figure from your latest mortgage statement.
- Enter the loan amount you want — the calculator checks it against your maximum borrowing limit automatically.
- Set the APR and term — equity loans typically run 5 to 30 years; adjust the max CLTV (default 80%) to match your lender's policy.
- Click Calculate Equity Loan to see your borrowing limit, monthly payment, total interest, and post-loan LTV.
Tips for accurate results
- Use a conservative home value — lenders appraise independently and overestimating only delays your application.
- Most lenders cap combined LTV at 80%; some go to 85–90% at higher rates, so check your lender's policy.
- A shorter term means a higher payment but much less total interest — compare 10 vs 15 years to see the difference.
- Remember that a home equity loan puts your home at risk: borrow only what you can comfortably repay.
Home equity loan vs HELOC
The two products often get confused. A home equity loan is a lump sum with a fixed rate and a fixed monthly payment — best when you know the exact cost, like a contractor's quote for a renovation. A HELOC is a revolving credit line with a variable rate that you draw from as needed, paying interest only on what you use — better for ongoing or uncertain costs, but your payment can rise with rates. This calculator models the fixed home equity loan; if you're shopping for a HELOC, compare the advertised variable APR against the fixed rates here.
Frequently asked questions
How much can I borrow with a home equity loan?
Most lenders let you borrow up to 80% of your home's value, minus what you still owe on your mortgage. For example, a $500,000 home with a $300,000 mortgage gives up to $100,000 in borrowing power. Some lenders allow 85% to 90% combined loan-to-value at higher rates.
What is the difference between a home equity loan and a HELOC?
A home equity loan gives you a lump sum with a fixed rate and fixed monthly payments, ideal for one-time expenses like a renovation. A HELOC is a revolving credit line with a variable rate that you draw from as needed, similar to a credit card secured by your home.
Is interest on a home equity loan tax deductible?
In the US, home equity loan interest is deductible only if the money is used to buy, build, or substantially improve the home securing the loan, and you itemize deductions. Interest on money used for credit card payoff or a car is not deductible. Check current IRS rules or ask a tax professional.
What is a good interest rate on a home equity loan?
Home equity loan rates are usually 1–2 percentage points above primary mortgage rates and well below credit card rates. Your rate depends on your credit score, combined loan-to-value ratio, loan term, and lender. Getting quotes from at least three lenders can easily save you a full percentage point.