Home Equity Loan Calculator
A home equity loan lets you borrow a lump sum against the equity in your home at a fixed interest rate, repaid over a set term with equal monthly payments. Because the loan is secured by your home, interest rates are typically lower than unsecured personal loans or credit cards, making home equity loans a popular choice for home improvements, debt consolidation, or major one-time expenses. The monthly payment is calculated using the standard mortgage amortisation formula and remains constant for the life of the loan. This calculator shows your monthly payment, total interest cost, and total repayment amount for any home equity loan amount, rate, and term you enter.
Home equity loan payment formula
Monthly Rate r = Annual Rate / 12
n = Term in Years x 12
Monthly Payment = P x r x (1 + r)^n / ((1 + r)^n - 1)
Total Repayment = Monthly Payment x n
Total Interest = Total Repayment - Loan Amount
Home equity borrowing limits
- Most lenders cap combined LTV (first mortgage + home equity loan) at 80-85% of appraised value.
- Available equity = Home Value x 0.80 - Mortgage Balance (using 80% CLTV example).
- Minimum loan amounts often start at $10,000-$25,000; many lenders have no maximum.
- Fixed terms commonly range from 5 to 30 years; shorter terms mean higher payments but less total interest.
Home equity loans: frequently asked questions
What is the difference between a home equity loan and a HELOC?
A home equity loan (also called a second mortgage) provides a lump sum at a fixed interest rate, with equal monthly payments over a set term. A HELOC (Home Equity Line of Credit) is a revolving line of credit with a variable interest rate, where you draw and repay as needed during a draw period. A home equity loan is better for one-time large expenses; a HELOC is better for ongoing or uncertain costs.
How much equity can I borrow against?
Most lenders allow you to borrow up to 80-85% of your home's appraised value, minus your existing mortgage balance. For example, if your home is worth $400,000, 80% is $320,000. If your mortgage balance is $200,000, you could borrow up to $120,000 with a home equity loan. Some lenders offer higher combined LTV ratios, but these typically carry higher rates.
Is home equity loan interest tax deductible?
Interest on a home equity loan is deductible under the Tax Cuts and Jobs Act only if the loan proceeds are used to 'buy, build, or substantially improve' the home securing the loan, and you itemize deductions. Interest used to pay off personal debt, fund education, or cover other expenses is not deductible. Consult a tax professional for your specific situation.
What credit score do I need for a home equity loan?
Most lenders require a minimum credit score of 620 for a home equity loan, though better rates are typically available with scores of 700 or higher. Lenders also evaluate your combined loan-to-value ratio (CLTV), debt-to-income ratio, and income stability. Meeting minimum requirements does not guarantee approval.
What happens if I default on a home equity loan?
A home equity loan is secured by your home. If you default, the lender can foreclose on your property to recover the outstanding balance. This is the key risk: you are putting your home on the line. Before taking a home equity loan, ensure the monthly payments fit comfortably within your budget, including in worst-case income scenarios.
Official sources
- Consumer Financial Protection Bureau: What is a Home Equity Loan?
- Federal Reserve: H.15 Selected Interest Rates (reference for market rates).
Reviewed by the CalculatorHub team, edited by James Graham, 14 June 2026. See our methodology.