Home Equity Loan Calculator
Calculate home equity loan payments and borrowing capacity. See monthly payment, total interest, available equity, and combined LTV ratio.
Current market value of your home
Remaining balance on primary mortgage
Amount you want to borrow
Annual interest rate for home equity loan
Repayment period (typically 10, 15, or 20 years)
What is a home equity loan and how does it work?
A home equity loan (second mortgage) lets you borrow against your home's equity with a lump sum payment and fixed interest rate. Equity = Home Value - Mortgage Balance. Example: $400k home, $250k mortgage = $150k equity. Can typically borrow 80-85% of equity ($120-127k). Fixed rate (currently 7-9%), fixed monthly payment, 5-30 year terms. Used for: Home improvements, debt consolidation, major expenses. Risk: Home is collateral - default means foreclosure.
Home equity loan vs HELOC - which is better?
Home Equity Loan: Lump sum, fixed rate, fixed payment, predictable costs. Best for: One-time expenses, fixed project costs, prefer stability. HELOC (Line of Credit): Draw as needed, variable rate, interest-only option initially, flexible. Best for: Ongoing expenses, uncertain amounts, taking advantage of rate drops. Rates: HEL typically 0.25-0.5% higher. Consider: HEL for major renovations, HELOC for multiple projects or emergency fund.
What is the maximum I can borrow with a home equity loan?
Maximum based on Combined Loan-to-Value (CLTV): Most lenders: 80-85% CLTV, Some allow: 90% CLTV (higher rates), Super prime: up to 95% CLTV (rare). Formula: (Mortgage + Home Equity Loan) / Home Value ≤ 85%. Example: $400k home, $200k mortgage, 85% CLTV = max $140k equity loan ($340k total / $400k = 85%). Also limited by: Debt-to-income ratio (<43%), Credit score (720+ for best rates), Income verification.
Are home equity loan interest payments tax deductible?
Depends on usage (post-2017 tax law): Deductible: If used to buy, build, or substantially improve the home securing the loan, up to $750k total mortgage debt ($375k married filing separately). Not deductible: If used for debt consolidation, car purchase, vacation, education, investments. Must itemize deductions (vs standard deduction). Track carefully: Keep receipts, separate account for home improvement expenses. Consult tax advisor for your situation.