How It Works
Equity = value − outstanding mortgage.
Equity = Home Value − Mortgage Balance | Max loan = Home Value × 0.85 − Mortgage
- Most lenders allow up to 85% combined LTV.
- Monthly payment uses standard amortization.
Finance calculator
Home Equity Loan Calculator
Calculate how much home equity you can borrow against and what your home equity loan payments would be.
Enter Your Numbers
$
Current appraised or market value.
$
Amount you still owe on your primary mortgage.
$
Amount you want to borrow.
%
Home equity loan rate is typically fixed.
years
Repayment period for the equity loan.
Monthly Payment
$619.93
Formula verified 9 September 2026
Current Home Equity
$150,000
Combined LTV After Loan
75.0%
Max Borrowable (85% LTV)
$90,000
Total Interest Paid
$24,391.41
Estimate only — not financial advice; lender terms, fees, and taxes vary. Read the full disclaimer ↓
Loan Amount vs Total Interest
Add your numbers to see the visual breakdown.
Yearly Amortization Schedule
Yearly summary for the home equity loan. Each row totals the principal and interest paid that year and the balance remaining at year-end.
| Period | Principal paid | Interest paid | Ending balance |
|---|---|---|---|
| Year 1 | 3,316 | 4,123 | 46,684 |
| Year 2 | 3,610 | 3,830 | 43,074 |
| Year 3 | 3,929 | 3,511 | 39,146 |
| Year 4 | 4,276 | 3,163 | 34,870 |
| Year 5 | 4,654 | 2,785 | 30,216 |
| Year 6 | 5,065 | 2,374 | 25,151 |
| Year 7 | 5,513 | 1,926 | 19,638 |
| Year 8 | 6,000 | 1,439 | 13,638 |
| Year 9 | 6,530 | 909 | 7,108 |
| Year 10 | 7,108 | 331 | 0 |
Estimates only — not financial, tax, or professional advice.
100% private — every number you enter is calculated in your browser and never sent to our servers.
What it calculates: Monthly Payment, Current Home Equity, Combined LTV After Loan, Max Borrowable (85% LTV).
Updated 5 June 2026 · Transparent assumptions
Worked Example
$400K home, $250K mortgage, $50K equity loan at 8.5% for 10 years.
Home Equity
$150,000
Combined LTV After
75%
Max Borrowable (85% LTV)
$90,000
Monthly Payment
$619.93
Total Interest
$24,391
Borrowing $50,000 costs about $620/month. A combined LTV of 75% is well within the 85% most lenders allow, and you could borrow up to about $90,000 at that limit.
Home Equity Loans Explained
What equity is and how much you can borrow
Home equity is the share of your property you own outright: its market value minus the balance left on your mortgage. It builds as you pay down the mortgage and as the home gains value.
Lenders decide how much you can borrow using combined loan-to-value, which adds your existing mortgage to the new loan and compares the total to the home value. Many cap this around 85%, so your limit is roughly the home value times that cap, less what you still owe.
Lump-sum loan versus a line of credit
A home equity loan hands you a single lump sum at a fixed rate, repaid in equal installments over a set term. You know the payment and the payoff date from the start.
A HELOC is a revolving line you draw from as needed, usually at a variable rate. It is more flexible, but the payment can move as the rate changes. The right choice depends on whether you need a fixed amount now or ongoing access.
Rates and the collateral risk
Because the loan is secured by your home, rates are typically lower than unsecured options like personal loans or credit cards. That lower rate is the main appeal.
The trade-off is serious: your home is the collateral. Falling behind on payments can put the property at risk, so it is wise to borrow only what fits comfortably within your budget.
Common uses
Home equity loans are often used for renovations, consolidating higher-interest debt into one lower-rate payment, or covering a large one-time cost such as a medical bill or tuition.
These uses share a theme: a defined amount with a clear purpose. Using home equity for routine spending is generally discouraged, since it converts everyday costs into debt secured by your home.
Costs to expect
Beyond interest, a home equity loan can carry appraisal fees, origination or application fees, and other closing costs. These add to the true price of borrowing.
This calculator models principal and interest only. Ask your lender for a full breakdown so you can compare offers on total cost, not just the rate.
When to be cautious
Take extra care if your income is uncertain, if a high combined LTV leaves little equity cushion, or if home values in your area could fall. Less equity means less room to maneuver if you need to sell.
Above all, remember that this debt is tied to your home. Borrowing within your means and keeping a margin of safety protects the most important asset on the line.
Assumptions & Best Uses
- Fixed rate home equity loan.
- Lender maximum of 85% combined LTV.
Limitations
- Does not include fees or closing costs.
Frequently Asked Questions
What is the difference between a home equity loan and a HELOC?
A home equity loan gives you a single lump sum at a fixed rate, repaid in equal monthly installments. A HELOC (home equity line of credit) is revolving credit with a variable rate that you draw from as needed. The loan is predictable; the line is flexible but its payments can change.
How much can I borrow against my home?
Lenders look at your combined loan-to-value (CLTV): your existing mortgage plus the new loan, divided by the home value. Many cap CLTV around 85%, so your borrowing limit is roughly the home value times that cap, minus what you still owe. This calculator shows that limit as the max borrowable figure.
What is home equity?
Equity is the part of your home you truly own: the current market value minus the balance you still owe on your mortgage. It grows as you pay down the mortgage and as the home appreciates. A home equity loan lets you borrow against that equity.
What can a home equity loan be used for?
Common uses include home improvements, consolidating higher-interest debt, or large one-time expenses. Because the loan is secured by your home, rates are usually lower than unsecured borrowing, but the stakes are higher since the home is the collateral.
What are the risks of borrowing against my home?
The main risk is that your home secures the loan, so falling behind on payments can put the property at risk. Borrowing also reduces your equity, which matters if home values fall or you need to sell. Borrow only what you can comfortably repay.
What costs come with a home equity loan?
Beyond interest, you may face appraisal fees, origination or application fees, and other closing costs. This calculator models principal and interest only, so ask your lender for a full cost breakdown before you commit.
When should I be cautious about a home equity loan?
Be careful if your income is unstable, if you would be borrowing for everyday expenses, or if a high combined LTV leaves little cushion. Turning unsecured debt into debt secured by your home raises the consequences of missing payments. Consider the trade-off carefully.
Sources & References
Figures on this page are checked against primary, authoritative sources. Links open in a new tab.
- What is a home equity loan? — borrow against your home equity (value minus mortgage balance) as a lump sumConsumer Financial Protection Bureau · verified 2026-06-04
- What does APR mean? — the annual cost of the loan, including feesConsumer Financial Protection Bureau · verified 2026-06-04
Finance disclaimer
Results are estimates based on the figures you enter and standard formulas. Rates, fees, taxes, and lender terms vary and change over time, so confirm important numbers with your lender or a qualified professional. This is educational information, not financial advice.
How we calculate · Found an error? email us
What's changed (2 updates)
Published 9 September 2026
- Published the calculator with its formula, worked example, assumptions, limitations and FAQs, and added an automated formula test suite covering it.
- Property-tested that borrowing the stated maximum lands exactly on the 85% combined loan-to-value cap the page quotes.