Home Equity Loan Calculator
- Updated
- Formula shown
- Free, no sign-up
Results
Borrowing $50,000 costs $492.37 a month; you can borrow up to $175,000 at 85% combined LTV.
- Mortgage balance
- $250,000
- Home equity loan
- $50,000
- Equity left
- $200,000
| Year | Principal | Interest | Balance |
|---|---|---|---|
| 1 | $1,725 | $4,184 | $48,275 |
| 2 | $1,877 | $4,031 | $46,398 |
| 3 | $2,043 | $3,865 | $44,355 |
| 4 | $2,224 | $3,685 | $42,132 |
| 5 | $2,420 | $3,488 | $39,712 |
| 6 | $2,634 | $3,274 | $37,078 |
| 7 | $2,867 | $3,042 | $34,211 |
| 8 | $3,120 | $2,788 | $31,091 |
| 9 | $3,396 | $2,512 | $27,695 |
| 10 | $3,696 | $2,212 | $23,999 |
A home equity loan is secured by your home: missing payments can lead to foreclosure. Closing costs and any fees are not included.
How to use the home equity loan calculator
- Enter what your home is worth and what you still owe on your mortgage (add any other loan secured on the home).
- Set the lender's maximum combined loan-to-value (CLTV). 85% is a common limit, but it varies by lender, credit score and property.
- Enter the amount you want to borrow, the fixed rate you were quoted and the term.
- Check that the amount fits within your borrowable equity, then compare terms by payment and total interest.
Home equity formulas
Combined LTV = (mortgage balance + new loan) ÷ home value
Payment = loan × r(1 + r)n ÷ ((1 + r)n − 1)
Lenders don't lend against all of your equity. They cap the total of every loan on the home, your first mortgage plus the new one, at a share of its value: the combined loan-to-value. Whatever room is left under that cap is what you can borrow. A home equity loan is then a regular fixed-rate installment loan, so the payment uses the standard amortization formula. r is the annual rate ÷ 12 and n is the number of monthly payments.
Worked example
Your home is worth $500,000 and you owe $250,000, so you have $250,000 of equity. At an 85% CLTV limit a lender will allow total loans of $425,000, leaving $175,000 you could borrow. Taking $50,000 at 8.5% over 15 years costs $492.37 a month and $38,627 in interest. Afterwards your combined LTV is 60%, well inside the limit.
Payment on $50,000 at 8.5% by term
| Term | Monthly payment | Total interest |
|---|---|---|
| 5 years | $1,025.83 | $11,550 |
| 10 years | $619.93 | $24,391 |
| 15 years | $492.37 | $38,627 |
| 20 years | $433.91 | $54,139 |
| 30 years | $384.46 | $88,404 |
A longer term cuts the payment but multiplies the interest: 30 years costs more than seven times the interest of 5 years.
How much can you borrow? ($200,000 owed)
| Home value | 80% CLTV | 85% CLTV | 90% CLTV |
|---|---|---|---|
| $300,000 | $40,000 | $55,000 | $70,000 |
| $400,000 | $120,000 | $140,000 | $160,000 |
| $600,000 | $280,000 | $310,000 | $340,000 |
Home equity loan or something else?
- Home equity loan: a lump sum at a fixed rate, repaid in equal payments. Good for one known cost, such as a renovation quote or consolidating debt.
- HELOC: a credit line you draw as needed, usually at a variable rate with interest-only payments at first. See the HELOC calculator for the payment jump when repayment starts.
- Cash-out refinance: replaces your whole mortgage with a bigger one. It can make sense if current rates are below your mortgage rate. If they are higher, it re-prices your whole balance. Compare with the refinance calculator.
Before you borrow against your home
- Your home is the collateral. Falling behind can lead to foreclosure, so borrow for things that hold their value or cut costs.
- Count the fees. Appraisal, origination and closing costs can run to a few percent of the loan. Some lenders waive them if you keep the loan for a minimum period.
- Interest may be deductible. In the US, interest on home equity debt used to buy, build or substantially improve the home that secures it can be deductible if you itemize. Check IRS Publication 936 or a tax adviser.
- Values move. If prices fall, a high CLTV can leave you owing more than the home is worth, which makes selling or refinancing harder.
To see how a lower mortgage balance grows your equity, try the mortgage payoff calculator, or the amortization calculator for a full schedule.
Frequently asked questions
How much equity can I borrow from my home?
Multiply your home value by the lender’s maximum combined loan-to-value and subtract what you owe. A $500,000 home with a $250,000 mortgage at an 85% limit gives $500,000 × 0.85 − $250,000 = $175,000.
What is the payment on a $50,000 home equity loan?
At 8.5% fixed, it is $1,025.83 a month over 5 years, $619.93 over 10 years, $492.37 over 15 years and $433.91 over 20 years. Total interest ranges from about $11,550 over 5 years to about $54,140 over 20.
What is combined loan-to-value (CLTV)?
CLTV is the total of all loans secured by the home divided by its value. With a $250,000 mortgage and a new $50,000 equity loan on a $500,000 home, the CLTV is 60%. Many lenders cap it between 80% and 90%.
Is a home equity loan better than a HELOC?
A home equity loan suits a single, known cost: you get a lump sum at a fixed rate with a set payment. A HELOC suits costs that come in stages, but its rate is usually variable and the payment rises when the interest-only draw period ends.
Is home equity loan interest tax deductible?
In the US it can be, if you itemize and the money is used to buy, build or substantially improve the home that secures the loan, within the overall mortgage-debt limits. Interest on equity used for other purposes, such as paying off cards, is not deductible. See IRS Publication 936.