How to use the Home Equity Loan Calculator
- Enter the amount of equity you intend to borrow.
- Enter the fixed rate quoted — home equity loans price above first mortgages but well below unsecured credit.
- Choose a term, commonly 5 to 20 years.
- Check the payment stacks acceptably on top of your existing first mortgage.
How the calculation works
Lenders normally cap combined loan-to-value at 80–85%, so borrowing capacity is your home's value multiplied by that cap, minus the first mortgage balance. Running a loan-to-value check first avoids applying for an amount that cannot be approved.
A home equity loan differs from a HELOC in two ways that matter: the rate is fixed and the money arrives as one lump sum. That makes it the right instrument for a known, one-time cost such as a defined renovation, while a HELOC suits phased or uncertain spending.
The debt is secured by your home, which is what buys the low rate and what makes the risk real. Consolidating unsecured balances into home equity converts debt that could be discharged into debt that can cost you the property.
Payment = E × r ÷ [1 − (1 + r)⁻ⁿ]; Available equity = value × CLTV cap − first mortgage balanceSource: Federal Reserve Board consumer guide 'What You Should Know About Home Equity Lines of Credit'; IRS Publication 936 for interest deductibility.
Worked example
$60,000 borrowed at 8.4% fixed over 15 years.
- 180 payments at a 0.70% monthly rate.
- Payment is about $587.
- Total repaid is roughly $105,700.
Around $45,700 of interest, so the term choice matters as much as the rate.
Frequently asked questions
Is the interest tax deductible?+
In the US, only when the proceeds substantially improve the home securing the loan, and only within overall mortgage interest limits.
Home equity loan or HELOC?+
Fixed lump sum for a known cost; HELOC for phased spending where you want to draw only what you use.
How much equity must I keep?+
Most lenders require at least 15–20% remaining after the new loan.
Last reviewed September 1, 2026. We review this page whenever the underlying formula, tax year, published rate or standard changes.