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🏠 HEL · HELOC · LTV Check · Amortization · Equity Visual

Home Equity Loan Calculator

Calculate monthly payments, total interest, and equity utilization for a Home Equity Loan (HEL) or Home Equity Line of Credit (HELOC). Includes LTV check and amortization schedule.

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Enter your home details above
Monthly payment, equity breakdown, and amortization will appear here
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Home Equity Breakdown
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Closing + Interest
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Balance Over Time
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🏠 Mortgage Calc 💳 Loan Calculator 📋 Amortization 💰 Down Payment % Interest Rate 🧾 Income Tax

What Is a Home Equity Loan?

A home equity loan (HEL) allows homeowners to borrow against the equity they've built in their property — the difference between the home's current market value and the remaining mortgage balance. It is a second mortgage: you receive a lump sum and repay it over a fixed term at a fixed interest rate. Because the loan is secured by your home, rates are typically much lower than personal loans or credit cards. For a complete mortgage picture, also see our Mortgage Calculator and Amortization Calculator.

How Available Equity Is Calculated

Maximum Borrowing Amount
Home Equity = Home Value − Mortgage Balance Max CLTV = 80% of Home Value (most lenders) Max Borrow = (Home Value × 0.80) − Mortgage Balance

Example: $400,000 home, $220,000 mortgage → Max borrow = ($400,000 × 0.80) − $220,000 = $320,000 − $220,000 = $100,000 available equity

The Combined Loan-to-Value (CLTV) ratio is the total of your first mortgage plus the equity loan divided by the home value. Most lenders require CLTV ≤ 80%, though some go up to 85–90% with higher rates or PMI. Use our Loan Calculator to compare home equity loan rates with personal loan alternatives.

Home Equity Loan vs HELOC — Key Differences

🏠 Home Equity Loan (HEL)

  • Fixed interest rate — predictable payments
  • Lump sum disbursed at closing
  • Fixed repayment term (5–30 years)
  • Best for one-time, known expenses
  • Fully amortizing from day one
  • Closing costs typically 2–5% of loan
  • Great for: renovations, debt consolidation

📊 HELOC (Home Equity Line of Credit)

  • Variable interest rate — payments fluctuate
  • Revolving credit line — draw as needed
  • Draw period (5–10 yrs) + repayment (10–20 yrs)
  • Interest-only payments during draw period
  • Best for ongoing or uncertain expenses
  • Only pay interest on amount drawn
  • Great for: phased renovations, education costs

Common Uses for Home Equity Borrowing

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Home Renovation

Kitchen/bathroom remodels, additions, or repairs often increase home value — using equity to fund improvements can be self-reinforcing. See our Mortgage Calculator for refinance comparison.

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Debt Consolidation

Replacing high-interest credit card debt (18–25% APR) with a home equity loan (7–10%) can save thousands. Use our Loan Calculator to compare.

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Education Expenses

Home equity rates often beat private student loans. A HELOC with draw-period flexibility suits phased tuition payments well.

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Medical / Emergency

Large unexpected costs can be financed at lower rates than personal loans or credit cards. Always compare total cost including closing fees.

Frequently Asked Questions

Common questions about home equity loans, HELOCs, and how this calculator works

Most lenders allow you to borrow up to 80% of your home's value combined across your first mortgage and the equity loan (Combined Loan-to-Value ratio of 80%). The formula: Max Borrow = (Home Value × 0.80) − Mortgage Balance. For a $400,000 home with a $220,000 mortgage: $400,000 × 0.80 = $320,000 minus $220,000 = $100,000 available. Some lenders allow up to 85% or 90% CLTV with higher rates. Factors that affect how much you can borrow include your credit score (typically 620+ required, 680+ for best rates), income and debt-to-income ratio, and the lender's specific policies. This calculator shows your available equity and CLTV ratio automatically based on your inputs. For mortgage balance details, see our Amortization Calculator.
A Home Equity Loan (HEL) gives you a lump sum at a fixed interest rate with equal monthly payments over a fixed term. It's predictable and ideal for one-time large expenses. A HELOC (Home Equity Line of Credit) works like a credit card — you have a credit limit and draw money as needed during the draw period (typically 5–10 years), paying only interest on the amount drawn. After the draw period ends, you enter the repayment period (10–20 years) where you can no longer draw and must repay principal plus interest. HELOCs typically have variable rates tied to the prime rate, so payments can fluctuate. The interest-only draw period makes HELOCs initially cheaper but can cause payment shock when repayment begins. Switch between HEL and HELOC tabs above to compare both scenarios. See also our Loan Calculator for fixed-rate alternatives.
CLTV (Combined Loan-to-Value) is the ratio of all loans secured by your home to the home's value: CLTV = (Mortgage Balance + Equity Loan) / Home Value × 100. For example, $220,000 mortgage + $50,000 equity loan on a $400,000 home = CLTV of $270,000 / $400,000 = 67.5%. Lenders use CLTV to assess risk — higher CLTV means less equity cushion if home values fall. Most lenders cap home equity lending at 80% CLTV. Going above 80% CLTV may require PMI or carry higher rates. The CLTV gauge in this calculator shows you where you stand and whether your requested loan amount is within typical lending limits. For your first mortgage's LTV, use our Mortgage Calculator.
Under the US Tax Cuts and Jobs Act of 2017, home equity loan interest is deductible only if the funds are used to "buy, build, or substantially improve" the home that secures the loan. If you use the funds for debt consolidation, vacation, education, or other non-home purposes, the interest is not deductible. The deduction applies to combined mortgage debt up to $750,000 for married filing jointly ($375,000 for married filing separately). Prior to 2018, interest was deductible for any purpose up to $100,000. Always consult a tax professional for your specific situation, as the rules are complex and depend on how you use the funds. Our Income Tax Calculator can help you estimate your overall tax situation.
The primary risk is that your home is collateral — if you fail to make payments, the lender can foreclose. This makes home equity loans fundamentally different from unsecured credit. Additional risks include: market risk — if home values decline, you could owe more than the home is worth (underwater); rate risk for HELOCs — variable rates can rise significantly, especially during inflationary periods; payment shock — HELOC payments jump substantially when the draw period ends and repayment begins; over-leveraging — tapping equity for non-investment spending (vacations, consumer goods) reduces your financial cushion. Best practices: only borrow what you need, ensure the payment fits your budget with margin, use funds for value-adding purposes, and have an emergency fund separate from your home equity. Use our Salary Calculator to check payment affordability relative to your income.
A home equity loan is a second mortgage — you keep your existing first mortgage and add a new loan on top. A cash-out refinance replaces your existing mortgage with a new, larger mortgage and gives you the difference in cash. Key differences: Cash-out refinance involves only one loan with one payment; home equity loan adds a second payment. If your first mortgage rate is low (e.g. 3% from 2021), a cash-out refi at today's higher rates would increase your total interest cost on the full mortgage balance — often making a home equity loan cheaper overall. Cash-out refis typically have lower rates than home equity loans since they're first-lien. Closing costs are similar (2–5%) but apply to the full refinanced amount for cash-out. The right choice depends on your current mortgage rate, loan size, and how long you plan to stay in the home. Use our Mortgage Calculator to compare both scenarios.
Most lenders require a minimum credit score of 620 for a home equity loan, though some accept lower scores with compensating factors. For the best interest rates, you typically need a score of 740+. The range roughly breaks down as: 620–639 = possible approval, likely higher rate; 640–699 = standard qualification; 700–739 = competitive rates; 740+ = best available rates. Other qualification factors include: debt-to-income ratio (typically required below 43–50%); sufficient equity (at least 15–20% remaining after the loan); verified income; and a positive mortgage payment history. If your credit score is lower than desired, improving it before applying — by paying down revolving debt and ensuring no late payments — can meaningfully reduce your rate. Check your debt-to-income ratio using our Salary Calculator and Loan Calculator.