About the Home Equity Loan Calculator
A home equity loan calculator works out how much you could borrow against the value you have built up in your home, and what the repayments would be. It is a second mortgage: a lump sum at a fixed rate, repaid over a fixed term, secured against the property.
The formula
Available equity = (home value · 0.85) − amount still owedMost lenders permit total borrowing up to 85 percent of the home's value across all mortgages combined. Subtracting your existing balance leaves what a home equity loan could provide.
How to use this calculator
- 1Enter your Home Value ($). The field starts at
500000, which you can overwrite. - 2Enter your Amount Still Owed ($). The field starts at
200000, which you can overwrite. - 3Enter your Loan Interest Rate (%). The field starts at
8.5, which you can overwrite. - 4Enter your Loan Term (Years). The field starts at
10, which you can overwrite. - 5Read the result straight away — it recalculates as you type, so there is no button to press. Use Share to copy a link that reopens the page with your exact numbers filled in.
Worked example
| Input | Value |
|---|---|
| Home Value ($) | 500000 |
| Amount Still Owed ($) | 200000 |
| Loan Interest Rate (%) | 8.5 |
| Loan Term (Years) | 10 |
Result
Available Equity: $300,000
Max Loan (85% LTV): $255,000
Monthly Payment: $3161.64
Those are the values the page loads with, so you can reproduce this result yourself and then change one field at a time to see what drives the outcome.
Understanding your result
Because the debt is secured against your home, rates are far lower than on credit cards or personal loans — typically a few points above mortgage rates. That is the appeal, and it is also the risk: you have converted unsecured obligations into ones that can cost you the house if you cannot pay.
A home equity loan differs from a HELOC in structure. The loan gives you the whole amount at once at a fixed rate with predictable payments, which suits a known expense such as a renovation with a quoted price. A HELOC is a revolving line at a variable rate, better suited to spending that arrives in unpredictable instalments.
Things worth knowing
- Interest may be tax-deductible when the funds are used to buy, build, or substantially improve the home securing the loan. It is not deductible for other spending. Confirm with an accountant.
- Expect closing costs of roughly 2 to 5 percent, though some lenders waive them in exchange for a minimum holding period.
- Using home equity to clear credit cards lowers your rate but puts your home behind debt that previously was not secured.
- Lenders look at your combined loan-to-value across both mortgages, not just the new one.
- A falling market can leave you owing more than the property is worth, which blocks selling or refinancing.
Frequently asked questions
How much equity can I borrow against?+
Most lenders allow combined borrowing up to 80 to 85 percent of your home's appraised value. With a 500,000 dollar home and 200,000 owed, that is roughly 225,000 available at the 85 percent limit.
Home equity loan or HELOC?+
Choose the loan for a known one-off cost where fixed payments matter. Choose a HELOC when you need flexible access over time and can tolerate a variable rate that may rise.
What credit score do I need?+
Most lenders want 620 as a floor and reserve their best pricing for 700 and above. They will also check debt-to-income ratio and require an appraisal or automated valuation.
Can I lose my home if I default?+
Yes. A home equity loan is secured against the property, so the lender can foreclose. This is the fundamental difference from unsecured borrowing and the reason to be conservative about the amount.