How to use this home equity loan calculator
- Enter your home’s value and mortgage balance. Use a recent appraisal or your best estimate, and include every loan secured by the home.
- Set your lender’s maximum CLTV. Ask your lender; the 80% shown is only an example, and every lender sets its own limit.
- Choose an amount or “Borrow the maximum,” then enter the interest rate and term from your offer.
- Open “Closing costs & points” to add your lender’s fees and see the effective APR and total cost.
How much can you borrow against your home?
Equity is what your home is worth minus what you owe on it. You can’t borrow all of it. According to the CFPB, the amount for a home equity loan is generally a percentage of the home’s appraised value, minus the amount you owe on your mortgage. Lenders usually express that percentage as a combined loan-to-value ratio (CLTV): your mortgage balance plus the new loan, divided by the home’s value.
With a CLTV limit of 80%, a $400,000 home supports $320,000 of total debt. Subtract the $250,000 you already owe and $70,000 is left to borrow. The limit is only the ceiling. A lender also looks at your income, debts and credit, and the payment has to fit your budget. If you are weighing a larger line you can draw on over time, see the HELOC calculator.
Home equity loan formulas
The most you can borrow, with V = home value, C = the lender’s maximum CLTV and B = what you owe on your mortgage:
Maximum loan = max(0, V × C − B)
- V
- home value
- C
- maximum combined loan-to-value, as a decimal (80% = 0.80)
- B
- current mortgage balance
The fixed monthly payment on a loan of P dollars is the standard amortization formula:
M = P × r / (1 − (1 + r)^−n)
- M
- fixed monthly payment (principal and interest)
- P
- amount borrowed
- r
- monthly interest rate = annual rate ÷ 12
- n
- number of monthly payments = years × 12
Worked example
Borrowing P = $50,000 at 8% for 10 years gives r = 8% ÷ 12 = 0.006667 and n = 120. Then M = $50,000 × 0.006667 ÷ (1 − (1 + 0.006667)−120) = $606.64 a month. Over 120 payments you repay $72,797, of which $22,797 is interest. Your combined loan-to-value rises to ($250,000 + $50,000) ÷ $400,000 = 75%.
How much equity can you borrow? Reference tables
Most you could borrow with a CLTV limit of 80%, by home value and mortgage balance:
| Home value | Owe $0 | Owe $100,000 | Owe $200,000 | Owe $300,000 | Owe $400,000 |
|---|---|---|---|---|---|
| $250,000 | $200,000 | $100,000 | $0 | $0 | $0 |
| $350,000 | $280,000 | $180,000 | $80,000 | $0 | $0 |
| $450,000 | $360,000 | $260,000 | $160,000 | $60,000 | $0 |
| $600,000 | $480,000 | $380,000 | $280,000 | $180,000 | $80,000 |
| $800,000 | $640,000 | $540,000 | $440,000 | $340,000 | $240,000 |
The same $400,000 home with $250,000 owed, under different lender limits. The payment is for borrowing the maximum at 8% for 10 years:
| Lender’s CLTV limit | Most you could borrow | Monthly payment |
|---|---|---|
| 70% | $30,000 | $363.98 |
| 75% | $50,000 | $606.64 |
| 80% | $70,000 | $849.29 |
| 85% | $90,000 | $1,091.95 |
| 90% | $110,000 | $1,334.60 |
Monthly payment for every $10,000 borrowed, by interest rate and loan term. Multiply by your loan amount ÷ $10,000:
| Rate | 5 years | 10 years | 15 years | 20 years | 30 years |
|---|---|---|---|---|---|
| 6% | $193.33 | $111.02 | $84.39 | $71.64 | $59.96 |
| 7% | $198.01 | $116.11 | $89.88 | $77.53 | $66.53 |
| 8% | $202.76 | $121.33 | $95.57 | $83.64 | $73.38 |
| 9% | $207.58 | $126.68 | $101.43 | $89.97 | $80.46 |
| 10% | $212.47 | $132.15 | $107.46 | $96.50 | $87.76 |
| 11% | $217.42 | $137.75 | $113.66 | $103.22 | $95.23 |
How closing costs change the effective APR on the example loan (fees shown as a share of the amount borrowed, for illustration):
| Fees | Cost | Effective APR | Interest + fees |
|---|---|---|---|
| 0% | $0 | 8.00% | $22,797 |
| 1% | $500 | 8.23% | $23,297 |
| 2% | $1,000 | 8.47% | $23,797 |
| 3% | $1,500 | 8.70% | $24,297 |
| 4% | $2,000 | 8.95% | $24,797 |
| 5% | $2,500 | 9.19% | $25,297 |
Home equity loan vs. HELOC vs. cash-out refinance
All three let you borrow against your equity, and all three put your home at risk if you can’t repay. Based on the CFPB’s comparison of these options, the differences are roughly these:
| Feature | Home equity loan | HELOC | Cash-out refinance |
|---|---|---|---|
| How you get the money | One lump sum | Borrow as you go, up to a limit | Your old mortgage is replaced by a bigger one; you get the difference in cash |
| Interest rate | Usually fixed | Typically variable | Fixed or variable |
| How much you can borrow | Generally a percentage of the appraised value minus what you owe on your mortgage | Generally a percentage of the appraised value minus what you owe on your mortgage | Generally a percentage of the appraised value; your existing loan plus the cash you want out |
| Your home at risk? | Yes | Yes | Yes |
| Main advantage | Equal payments that pay off the entire loan | Keep repaying and borrowing for several years without new approvals | Just one mortgage payment |
| Main drawback | To borrow more you must apply for a new loan | The repayment amount varies | Closing costs are generally higher; the rate may be higher than your current mortgage |
Choose a home equity loan when you know the amount you need and want a predictable payment. Choose a line of credit when the cost will arrive in pieces and you can live with a payment that changes; model it with the HELOC calculator. If your current mortgage rate is higher than today’s rates, replacing the whole mortgage may cost less than adding a second loan; the refinance calculator shows the break-even. To see how the new payment sits alongside your first mortgage, use the mortgage calculator.
Is home equity loan interest tax deductible?
Sometimes, but the rule depends on how you spend the money, not on the type of loan. IRS Publication 936 says interest on home equity loans and lines of credit is deductible only if the borrowed funds are used to buy, build or substantially improve the home that secures the loan. The loan must be secured by your main home or a second home, and you can deduct home mortgage interest only if you itemize deductions on Schedule A (Form 1040).
The Publication adds that, no matter when the debt was taken on, you can no longer deduct interest on a loan secured by your home to the extent the proceeds were not used to buy, build or substantially improve it. Its own example splits a $200,000 second mortgage: the part spent on substantial improvements counts as home acquisition debt, and the part spent on a car does not. Deductible mortgage debt is also capped: interest counts on the first $750,000 of mortgage debt ($375,000 if married filing separately) taken on after December 15, 2017, with higher limits for older debt.
That is the rule for the 2025 tax year in the current edition of the Publication. The statute, 26 U.S.C. § 163(h)(3)(F), disallows interest on home equity indebtedness for tax years beginning after December 31, 2017, and the text we reviewed on September 30, 2026 shows no end date. Tax rules change, so check the current Publication 936 at IRS.gov and talk to a tax professional before you count on a deduction.
Home equity loan requirements
Each lender sets its own standards. In general:
- Equity. Your mortgage balance plus the new loan has to fit under the lender’s CLTV limit, which the calculator checks for you.
- Ability to repay. Federal rules (Regulation Z, 12 CFR 1026.43) generally require a lender making a closed-end loan secured by a dwelling to make a reasonable, good-faith determination that you can repay. The lender must consider your income or assets, employment status, the new monthly payment, payments on any simultaneous loan and mortgage-related obligations, your other debts, alimony and child support, your monthly debt-to-income ratio or residual income, and your credit history. Estimate your ratio with the debt-to-income calculator.
- An appraisal or valuation, since the limit is based on the home’s appraised value.
How home equity builds (and shrinks)
Equity is your home’s value minus what you owe on it, so it grows two ways: you pay down the mortgage principal, and the home’s value rises. It shrinks when the value falls or when you borrow against it, because the new loan is another debt against the same home. Use the amortization calculator to see how fast a mortgage’s principal falls, and the mortgage payoff calculator to see how extra payments speed it up.
Costs and risks to weigh
- Your home is the collateral. The CFPB warns that if you can’t pay back a home equity loan, the lender could foreclose.
- Fees. The CFPB says home equity loans may have upfront fees and costs, so compare more than the monthly payment when you shop.
- Debt consolidation and investing. The CFPB advises talking to a qualified credit counselor before using a home equity loan to consolidate debt, and cautions that borrowing against your home to invest puts your home at risk if the investment loses value.
- A cooling-off period. In most cases, when a loan puts a lien on your principal dwelling, Regulation Z gives you until midnight of the third business day after closing, or after you receive the required notice and disclosures, whichever is last, to cancel (12 CFR 1026.23).
What this calculator does not model
It assumes a fixed rate and equal monthly payments for the whole term. It doesn’t include your first mortgage payment, property taxes, insurance or any tax deduction, and it doesn’t model prepayment penalties, interest-only or balloon loans, or loans whose rate can change. The effective APR counts every fee you enter as a cost of credit taken out of the loan; your lender’s official APR follows federal disclosure rules and can differ, so use your lender’s written estimate to compare offers.
Frequently asked questions
How much can I borrow with a home equity loan?
Lenders generally set the limit as a percentage of your home’s appraised value, minus what you still owe on your mortgage. In the example above, $400,000 × 80% − $250,000 leaves $70,000. Each lender picks its own percentage and also weighs your income, debts and credit, so your actual limit may be lower.
What is combined loan-to-value (CLTV)?
CLTV compares all the loans secured by your home with its value. Add your mortgage balance and the new loan, then divide by the home’s value. In the example, ($250,000 + $50,000) ÷ $400,000 = 75%. Lenders set a maximum CLTV, and this calculator uses the one you enter as the borrowing limit.
Is home equity loan interest tax deductible?
Only in limited cases. IRS Publication 936 says interest on a home equity loan is deductible only if you used the money to buy, build or substantially improve the home that secures the loan, and only if you itemize deductions. Interest on money spent on something else, such as a car or credit card debt, is not deductible. Ask a tax professional about your situation.
What is the difference between a home equity loan and a HELOC?
A home equity loan pays you a lump sum, usually at a fixed rate, and you repay it in equal payments. A HELOC is a credit line you can borrow from repeatedly, usually at a variable rate, so the payment varies, according to the CFPB. To see how a line’s draw and repayment periods change the payment, try the HELOC calculator.
Is a home equity loan better than a cash-out refinance?
It depends on your current mortgage rate and the costs. A home equity loan adds a second loan and leaves your first mortgage alone. A cash-out refinance replaces your mortgage with a larger one and pays you the difference. The CFPB notes that refinancing means one payment, but closing costs are generally higher and the new rate may be higher than your current one. Compare both with the refinance calculator.
What do lenders look for before approving a home equity loan?
Beyond the equity in your home, federal rules generally require lenders to make a reasonable, good-faith determination that you can repay a closed-end loan secured by your home. They must consider items such as your income or assets, employment status, the new payment, payments on other loans, other debts, your debt-to-income ratio or residual income, and your credit history. Check yours with the debt-to-income calculator.
Can I lose my home if I cannot repay a home equity loan?
Yes. A home equity loan uses your home as collateral, and the CFPB warns that if you cannot pay it back, the lender could foreclose on your home. Think twice before borrowing against your home to pay off other debts; the CFPB suggests talking to a nonprofit credit counselor about alternatives that do not put your home at risk.
Are there closing costs on a home equity loan?
Often, yes. The CFPB says home equity loans may have upfront fees and costs, so compare more than the monthly payment. Add your lender’s figures under “Closing costs & points” to see the effective APR. On the example loan, fees equal to 2% of the amount ($1,000) lift the effective APR from 8.00% to 8.47%.