Home Equity Loan Calculator

What is a Home Equity Loan?

A home equity loan (also called a second mortgage) is a one-time installment loan that lets you borrow using your home as collateral. The borrower receives a lump sum upfront and repays it over a fixed term with fixed monthly payments. Because the loan is backed by your home, its interest rate is typically lower than that of many other types of debt, such as credit cards or personal loans. Compare this with our HELOC Calculator and Mortgage Payment Calculator to choose the right option.

Since a home equity loan uses your home as collateral, lenders usually limit how much you can borrow based on the value of the property. Most lenders set the borrowing limit at no more than 80% of the home's value, including your existing mortgage balance.

How to Use This Calculator

Enter your desired loan amount, interest rate, and loan term to calculate your monthly payments. You can optionally include closing costs (as a percentage or fixed amount) to see a more accurate picture of your total borrowing costs. The calculator also estimates the maximum loan amount you may qualify for based on your home value, outstanding mortgage balance, and the lender's loan-to-value (LTV) ratio.

Understanding Closing Costs

Home equity loans come with upfront costs including origination fees, appraisal fees, document fees, and title search costs. These can amount to 2-5% of the loan amount. You can either pay these costs upfront or have them deducted from the loan proceeds. The Annual Percentage Rate (APR) reflects both the interest rate and closing costs, giving you a more accurate comparison between different loan offers.

Maximum Loan Amount

Lenders typically allow you to borrow up to 80% of your home's value, minus your existing mortgage balance. For example, if your home is valued at $500,000 and you owe $230,000 on your mortgage, the maximum home equity loan at 80% LTV would be $170,000. Some lenders may offer higher or lower LTV ratios depending on your credit profile.