Home Equity Loan Calculator

Maximum borrowable = home value × CLTV cap − first-mortgage balance. The loan itself is a standard fixed amortizing loan at the equity-loan rate; the combined LTV (first mortgage + this loan ÷ value) is the limit a lender applies.

How much you can borrow — the CLTV cap

A home equity loan lets you turn part of your home’s value into cash, secured by the property and repaid in fixed instalments like a second mortgage. The amount you can borrow is not your full equity — lenders cap the combined loan-to-value (CLTV), the first mortgage plus the new loan as a share of the home’s value, usually at 80–85%. So the maximum is the home value times that cap, minus what you still owe on your first mortgage. This calculator computes that ceiling, and you can either enter a specific amount or simply borrow the max.

It then treats the loan as a standard fixed-rate amortising loan: enter the rate and term and it returns the monthly payment, the total interest and the full schedule. It also shows your combined LTV after borrowing, so you can see how close to the cap you are — and flags it if a requested amount would push you over.

Worked example — a $500,000 home with a $250,000 first mortgage, borrowing at 8.5% over 15 years: At an 85% CLTV cap, the most you can borrow is $500,000 × 85% − $250,000 = $175,000. Borrow $100,000 of that and the payment is about $985 a month, the combined LTV sits at 70%, and total interest over the term is around $77,000.

Equity loan, HELOC or cash-out refinance?

A home equity loan is one of three common ways to tap equity, and they suit different needs. A home equity loan gives a lump sum at a fixed rate with predictable payments — best when you know the amount you need, such as for a renovation or to consolidate debt. A HELOC is a revolving line you draw on as needed, usually at a variable rate — more flexible but less predictable. A cash-out refinance replaces your whole first mortgage with a larger one — worth it mainly when you can also improve the rate on the original balance. This calculator models the fixed-lump-sum equity loan; for the refinance route, the refinance calculator compares replacing the first mortgage.

Because the loan is secured by your home, the rate is far lower than unsecured borrowing — but the risk is real: miss payments and the lender can foreclose. Borrow against equity for things that build value or genuinely need doing, not routine spending.

Fees, tax and paying it down

Equity loans carry closing costs much like a first mortgage, though often smaller. Enter them as an amount or a percentage and the calculator folds them into an effective APR, so you can compare offers on a fee-inclusive basis. If you are in the US and using the loan to buy, build or substantially improve the home, the interest may be tax-deductible when you itemise — enter your marginal rate and toggle the deduction on for an indicative first-year saving. (Used for other purposes, the interest is generally not deductible.)

As with any amortising loan, extra payments go straight to principal and cut both the term and the interest. Add an extra monthly amount to see how much sooner you clear the loan and how much interest you save. The chart shows the balance falling alongside the cumulative principal and interest, and the home-value split — first mortgage, this loan, and the equity you keep — so you can see exactly how much of your home you are borrowing against.