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Home Equity Loan Calculator

Calculate how much you can borrow against your home equity. See monthly payments, CLTV ratio, and total cost for a fixed-rate second mortgage.

Calculation Inputs

Results computed instantly — your data never leaves your device.

Live Results

Real-Time

Monthly Payment

$619.93

Current Home Equity

$170,000 (37.8%)

Max Loan Available

$102,500

Loan Amount

$50,000

CLTV After Loan

73.3%

Total Interest

$24,391.41

Total Cost

$74,391.41

100% Client-SidePrivate & Secure

Home Value Breakdown

First Mortgage
$280,000
Equity Loan
$50,000
Remaining Equity
$120,000

How to Use the Home Equity Loan Calculator

  1. 1

    Enter your current home value (use a recent appraisal or Zillow/Redfin estimate).

  2. 2

    Enter your current outstanding first mortgage balance.

  3. 3

    Enter the loan amount you want to borrow and set the interest rate and term.

  4. 4

    The calculator shows your maximum available equity, CLTV ratio, monthly payment, and total cost.

Formula & Mathematical Basis

Current Equity = Home Value − First Mortgage Balance Max CLTV = Home Value × CLTV% Max Equity Loan = Max CLTV − First Mortgage Balance CLTV After Loan = (First Mortgage + Equity Loan) ÷ Home Value Monthly Payment = Loan × [r(1+r)^n] ÷ [(1+r)^n − 1] Total Interest = (Monthly Payment × n) − Loan Amount

Variable Key

CLTV

Combined Loan-to-Value — (first mortgage + equity loan) ÷ home value. Most lenders cap at 85%.

Equity

Home market value minus the outstanding first mortgage balance

Max Equity Loan

Maximum borrowable amount: (Home Value × CLTV Limit%) − First Mortgage Balance

r

Monthly interest rate = Annual Rate ÷ 12 ÷ 100

n

Total number of monthly payments = Loan Term × 12

📝 Home equity loan rates are typically 0.5–2% higher than first mortgage rates because they are second-lien debt (lender is second in line in a foreclosure). Some lenders cap CLTV at 80% in declining markets. The calculator defaults to 85% but this is adjustable.

Step-by-Step Examples

1

Kitchen renovation — $50,000 loan

Scenario: $450,000 home value, $280,000 first mortgage balance, $50,000 loan requested, 8.5% rate, 10-year term.

  1. 1.Current equity: $450,000 − $280,000 = $170,000 (37.8% equity).
  2. 2.Max CLTV (85%): $450,000 × 0.85 = $382,500.
  3. 3.Max loan available: $382,500 − $280,000 = $102,500.
  4. 4.$50,000 < $102,500 — within limit.
  5. 5.CLTV after loan: ($280,000 + $50,000) ÷ $450,000 = 73.3%.
  6. 6.Monthly payment: $50,000 at 8.5% / 10 yr = $620/mo.
  7. 7.Total interest: $620 × 120 − $50,000 = $24,400.
✅ Monthly payment: $620 | Total interest: $24,400 | CLTV: 73.3% (safely under 85%)
2

Debt consolidation — maximum borrowing

Scenario: $500,000 home, $350,000 first mortgage, want maximum loan at 8.0%, 15-year term.

  1. 1.Max CLTV (85%): $500,000 × 0.85 = $425,000.
  2. 2.Max loan: $425,000 − $350,000 = $75,000.
  3. 3.CLTV after loan: $425,000 ÷ $500,000 = 85% (at limit).
  4. 4.Monthly payment: $75,000 at 8.0% / 15 yr ≈ $717/mo.
  5. 5.Total interest: $717 × 180 − $75,000 = $54,060.
✅ Monthly payment: $717 | Max loan: $75,000 | Total interest: $54,060 | CLTV: 85.0%

Practical Use Cases

  • Funding a major home renovation (kitchen, bathroom, addition)
  • Consolidating high-interest credit card debt into a lower fixed-rate loan
  • Paying for education expenses without touching retirement accounts
  • Funding a large medical expense or emergency
  • Financing a rental property down payment using equity from a primary residence
  • Comparing the cost of a home equity loan vs cash-out refinance for accessing equity

Common Mistakes to Avoid

  • Treating home equity as "free money" — defaulting on a home equity loan puts your house at risk of foreclosure.
  • Borrowing to the 85% CLTV limit leaves no buffer if home values decline.
  • Using a home equity loan for depreciating assets (cars, vacations) rather than value-adding investments.
  • Not comparing to a cash-out refinance — if rates have dropped since your first mortgage, a refi might be cheaper than a second lien.
  • Ignoring closing costs — home equity loans typically carry $500–$3,000 in origination fees, appraisal, and title costs.

Glossary of Terms

CLTV (Combined Loan-to-Value)
The ratio of all loans secured by a property (first mortgage + equity loan) to the home's current value. Lenders typically cap at 85%.
Second Lien
A loan secured by a property that is subordinate to the first mortgage. In foreclosure, the first mortgage is paid before the second lien.
HELOC (Home Equity Line of Credit)
A revolving line of credit secured by home equity, typically variable-rate. Different from a home equity loan, which is a fixed-rate lump sum.
Cash-Out Refinance
Replacing the existing first mortgage with a larger one and taking the difference as cash. Alternative to a home equity loan; may offer lower rates but restarts the amortization clock.
Equity
The market value of the owner's stake in the property: current value minus all secured debts.
Loan-to-Value (LTV)
For a home equity loan in isolation: equity loan ÷ home value. Distinct from CLTV which stacks all loans.

Frequently Asked Questions

How much can I borrow with a home equity loan?

▾
Most lenders allow a Combined Loan-to-Value (CLTV) ratio of up to 85%, meaning your first mortgage plus the equity loan cannot exceed 85% of your home's value. On a $450,000 home with a $280,000 mortgage: max combined debt = $382,500; max equity loan = $102,500.

What is the difference between a home equity loan and a HELOC?

▾
A home equity loan is a fixed-rate, fixed-term loan — a lump sum you repay in equal monthly payments over 5–30 years. A HELOC (Home Equity Line of Credit) is a revolving credit line with a variable rate. Home equity loans are better for one-time large expenses (renovation, debt consolidation); HELOCs are better for ongoing or unpredictable costs.

Is home equity loan interest tax-deductible?

▾
Since the 2018 Tax Cuts and Jobs Act, home equity loan interest is only deductible if the funds are used to "buy, build, or substantially improve" the home that secures the loan. Interest used for debt consolidation, vacations, or other purposes is generally not deductible. Consult a CPA.

What credit score do I need for a home equity loan?

▾
Most lenders require a minimum credit score of 620–680, with the best rates reserved for scores above 720. Lenders also look at DTI (typically ≤43%), income verification, and LTV ratio.

Sources & References

  1. [1]
    Home Equity Loan and HELOC Basics— Consumer Financial Protection Bureau, 2024
  2. [2]
  3. [3]
    Home Equity Products — Supervisory Highlights— Consumer Financial Protection Bureau, 2023

CalculatorFree Mortgage & Lending TeamHome Equity Lending & Consumer Finance Review

CLTV limits and product mechanics verified against CFPB consumer disclosures and major lender underwriting guidelines.

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