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Home Equity Loan Calculator

Calculate monthly payments and costs for a home equity loan (second mortgage)

Home Equity Loan Details

$

Current estimated market value of your home

$

Outstanding balance on your first mortgage

$

Amount you want to borrow

Available Equity: $200,000 • Combined LTV: 62.50% (✓ Good LTV ratio)

%

Annual percentage rate

Length of the loan

Quick Scenarios:

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Enter your home equity loan details to calculate your monthly payment

About Home Equity Loans

A home equity loan (often called a "second mortgage") allows you to borrow against the equity in your home. You receive the loan as a lump sum and repay it with fixed monthly payments over a set term. Key features include:

  • Fixed interest rate for predictable monthly payments
  • Lump sum payment at closing (unlike a HELOC)
  • Typical loan terms of 5 to 30 years
  • Interest may be tax-deductible if used for home improvements (consult tax advisor)
  • Your home serves as collateral - risk of foreclosure if you default

Combined Loan-to-Value (CLTV) Ratio

Lenders use the CLTV ratio to determine how much you can borrow:

  • CLTV Formula: (First Mortgage + Home Equity Loan) ÷ Home Value × 100
  • Most Lenders' Limit: 80-85% CLTV (some go up to 90%)
  • Example: $400K home with $200K mortgage = max $140K equity loan (85% CLTV)
  • Better Rates: Lower CLTV ratios typically qualify for better interest rates

Frequently Asked Questions

What's the difference between a home equity loan and a HELOC?

A home equity loan provides a lump sum with fixed monthly payments, while a HELOC (Home Equity Line of Credit) works like a credit card with a revolving credit line and variable interest rates. Home equity loans are better for one-time expenses, while HELOCs are better for ongoing costs.

How much can I borrow with a home equity loan?

Most lenders allow you to borrow up to 85% of your home's value minus your existing mortgage balance. For example, on a $400,000 home with a $200,000 mortgage, you could borrow up to $140,000 (85% of $400K = $340K - $200K mortgage = $140K available).

What credit score do I need for a home equity loan?

Most lenders require a minimum credit score of 620-680 for approval, though better rates are typically available with scores above 700. Higher credit scores, lower CLTV ratios, and stable income improve your chances of approval and better interest rates.

Is home equity loan interest tax-deductible?

Under current tax law, interest on home equity loans is tax-deductible only if the funds are used to "buy, build, or substantially improve" your home. Interest is not deductible if used for debt consolidation, education, or other purposes. Consult a tax professional for your specific situation.