Calculate your monthly payment, total interest, total cost, and APR of a home equity loan. Also estimate the maximum amount you may borrow based on your home value, mortgage balance, and LTV ratio.
| Total of loan payments | $0.00 |
| Total interest | $0.00 |
| APR (with closing costs) | — |
| Current loan-to-value ratio | 41.7% |
| Maximum additional borrowing | $230,000 |
Other factors may affect your final qualified amount, such as credit history, debt-to-income ratio, and the condition of the property. Lenders typically require a credit score of at least 630 and a DTI below 43–50%.
A home equity loan (also called a second mortgage) is a one-time installment loan that lets you borrow money using your home as collateral. The borrower receives a lump sum upfront and repays it over a fixed term, usually with a fixed interest rate and predictable monthly payments.
Because the loan is secured by your home, the interest rate is typically lower than that of unsecured debt such as credit cards or personal loans. This makes a home equity loan an attractive option for homeowners who need a large sum of cash for a major expense and want a stable, predictable repayment schedule.
Lenders usually limit how much you can borrow based on the value of the property and your existing mortgage balance. Most lenders set the combined loan-to-value (CLTV) limit at no more than 80% of the home's appraised value, including your existing mortgage. Some lenders accept 70%, 85%, or even 90%, depending on the borrower's credit profile.
Example: If your home is worth $500,000 and your outstanding mortgage is $230,000, the maximum additional borrowing at an 80% LTV would be:
$500,000 × 80% − $230,000 = $170,000
In addition to LTV limits, most lenders impose an absolute cap on home equity loans, commonly $1,000,000. The final amount also depends on your credit score, debt-to-income ratio, employment history, and the condition of the property.
Home equity loans come with two main types of costs: upfront/closing costs and ongoing costs.
Many lenders offer no-closing-cost home equity loans, where the closing costs are rolled into the loan balance or absorbed by the lender in exchange for a higher interest rate. Our calculator lets you include closing costs in the calculation so you can compare the true cost of different loan offers using the APR.
The interest rate is the cost of borrowing the principal only. The APR (Annual Percentage Rate) includes both the interest rate and the closing costs, annualized over the life of the loan. Because it reflects the total cost of borrowing, the APR is a more accurate number for comparing different loan offers.
Because a home equity loan is secured by your home, failing to repay it can result in foreclosure. Before borrowing, make sure the monthly payment fits comfortably into your budget, that you have an emergency fund, and that the purpose of the loan justifies the long-term commitment. A home equity loan should be used for a clear need — not for speculative investments or discretionary spending.
No. A home equity loan is a one-time lump sum with a fixed rate and fixed monthly payments. A HELOC (home equity line of credit) is a revolving line of credit that you can draw from as needed during a draw period, usually with a variable interest rate. Both are secured by your home, but they serve different purposes.
Most lenders require a credit score of at least 630, though some prefer 680 or higher for the best rates. A higher score can help you qualify for a larger loan, a lower interest rate, and better terms. Borrowers with scores below 630 may have difficulty qualifying or may face significantly higher rates.
DTI is the percentage of your gross monthly income that goes toward debt payments. Lenders typically want to see a DTI below 43%, and many prefer below 36%. A high DTI signals that you may struggle to repay the loan, which can cause your application to be denied or result in a smaller loan amount.
In the U.S., interest on a home equity loan may be tax-deductible if the funds are used to buy, build, or substantially improve the home that secures the loan. Interest on funds used for other purposes (such as paying off credit cards) is generally not deductible. Consult a tax professional for your specific situation.
Approval usually takes 1–2 weeks, and closing can take another 2–4 weeks. The full process — from application to receiving funds — typically takes 2 to 6 weeks, depending on the lender, the appraisal, and the complexity of your financial situation.
Yes, most home equity loans allow early repayment. However, some lenders charge a prepayment penalty if you pay off the loan within the first few years. Always check your loan agreement for prepayment terms before signing.
Because the loan is secured by your home, failing to repay it can result in foreclosure. The lender can seize and sell your home to recover the outstanding balance. If you're struggling, contact your lender immediately — many offer hardship programs, forbearance, or modification options.
This calculator is designed primarily for U.S. residents. The formulas for monthly payment, amortization, and APR are standard and apply globally, but lending practices, LTV limits, tax treatment, and regulations vary by country. Use the results as a general guide and confirm details with a local lender.