Estimate the cost of borrowing against your home equity with a fixed-rate home equity loan.
How the Home Equity Loan Calculator works
A home equity loan calculator turns four inputs - your loan amount, the fixed APR, the term in years, and (optionally) your home value and first-mortgage balance - into your fixed monthly payment, total interest, and how much you are actually allowed to borrow. Because a home equity loan is a fixed-rate, lump-sum second mortgage, the math is straightforward amortization, the same level-payment formula a primary mortgage uses, but applied to a smaller second-position loan.
The payment formula is M = P x r / (1 - (1 + r)-n), where P is the amount borrowed, r is the monthly rate (annual APR divided by 12), and n is the number of monthly payments (years x 12). Multiply that monthly payment by n to get the total of payments, then subtract P to get lifetime interest. A $50,000 home equity loan at a fixed 8% over 15 years works out to $477.83 per month, $86,008.69 repaid in total, and $36,008.69 in interest.
What makes this calculator different from a generic loan tool is the second step: combined loan-to-value (CLTV). Lenders cap how much of your home you can borrow against, usually at 80% to 85% of the home value across all liens combined. The borrowing limit is (home value x CLTV cap) minus your current first-mortgage balance. On a $400,000 home with $250,000 still owed, an 85% cap allows about $90,000 ($340,000 - $250,000), while a stricter 80% cap allows $70,000. You may hold $150,000 of raw equity, but the lender will never let you tap all of it, because the same house secures both loans and they need a cushion if values fall.
The calculator also clarifies the choice between a fixed home equity loan and a HELOC. A home equity loan hands you the full amount up front at a fixed rate and amortizes on a set schedule. A HELOC is a revolving line at a variable rate with an interest-only draw period followed by a repayment period - cheaper at the start but exposed to rate increases and a payment jump later. Both are second mortgages secured by your home, so both carry foreclosure risk; the calculator helps you see the real cost of each before you sign.
Example calculation
Example: you own a $400,000 home, still owe $250,000 on your first mortgage, and want $90,000 for a kitchen-and-bath remodel. First check whether you qualify. At an 85% CLTV cap, your ceiling is $400,000 x 0.85 - $250,000 = $90,000, so the remodel fits exactly at the edge of what most lenders allow. At a more conservative 80% cap you could borrow only $70,000 and would need to trim the project or add cash.
Now price the $90,000 as a fixed home equity loan. At 8% over 15 years, plug P = $90,000, r = 0.08/12 = 0.006667, and n = 180 into M = P x r / (1 - (1 + r)-n). That returns a fixed payment of $860.10 per month. Over 180 payments you repay $154,817, so total interest is about $64,817. That payment never changes for the life of the loan, which is the whole appeal of the fixed product.
Compare that to financing the same $90,000 through a HELOC at a 9% variable rate. During the draw period you might pay interest only - roughly $90,000 x 0.09 / 12 = $675 per month - which feels cheaper. But you are paying down zero principal, the rate can rise, and once the draw period ends the payment jumps to cover principal plus interest over a shorter remaining term. The fixed loan costs more each month today but eliminates that payment shock and rate risk.
One more layer: because this $90,000 substantially improves the home that secures the loan, the interest may be tax-deductible if you itemize, under the post-2017 TCJA rules. If instead you spent the $90,000 on a car or to pay off cards, none of the interest would qualify. Always run your own figures in the home equity loan calculator and confirm any deduction with a tax professional.
Tips for using the Home Equity Loan Calculator
- Calculate your CLTV ceiling before you fall in love with a project: (home value x 0.85) minus your first-mortgage balance is the most you can likely borrow, and many lenders cap at 0.80, not 0.85. Borrowing right up to the edge leaves you with thin equity if home values dip.
- Remember a home equity loan is a second lien, not a do-over on your first mortgage. Your original mortgage rate and payment stay untouched - the home equity loan is a separate, additional monthly payment recorded behind it.
- Choose the fixed home equity loan over a HELOC when you need a known lump sum and a payment that never moves; choose a HELOC only if you want to draw funds in stages and can stomach a variable rate plus a payment jump when the draw period ends.
- Match the term to the purpose. A 5-year term on $25,000 at 7% costs $495 a month but only $4,702 in interest; stretching to 15 or 20 years cuts the payment but can more than double or triple lifetime interest. Borrow short if your budget can take it.
- Only count on the interest deduction if the money substantially improves the home that secures the loan - a remodel or addition can qualify under TCJA rules, but debt consolidation, a car, or tuition do not, and you must itemize.
- When consolidating credit cards, compare total interest, not just the monthly payment. Moving $30,000 of 22% card debt to an 8% home equity loan can save roughly $30,000 in interest, but you convert unsecured debt into debt your house secures - a missed payment now risks foreclosure.
- Budget for closing costs and an appraisal. Unlike an unsecured personal loan, a home equity loan is a recorded second mortgage, so expect origination, title, and appraisal fees that raise the true cost beyond the quoted rate.
- Stress-test the payment against your income, not your hopes. Because the loan is secured by your home, the downside of overborrowing is not a dinged credit score - it is foreclosure. Keep the new payment plus your first mortgage well inside what you can cover if income drops.
- Verify the rate is truly fixed for the full term. A genuine home equity loan locks one rate for all 120, 180, or 240 payments; if a quote shows an introductory rate or a variable index, you are likely looking at a HELOC, not a fixed loan.
- Run the same loan at two or three terms side by side before signing. Seeing $50,000 at 8% cost $606.64 a month for 10 years versus $477.83 for 15 versus $418.22 for 20 - with interest climbing from $22,797 to $36,009 to $50,373 - makes the tradeoff concrete.
How a home equity loan differs from a HELOC, a primary mortgage, and a personal loan
A home equity loan is a fixed-rate, lump-sum second mortgage; the products it is most confused with each behave differently in payment, rate, and risk. Knowing which one you are actually signing changes both your monthly cost and your exposure.
| Feature | Home equity loan | HELOC | Primary mortgage | Unsecured personal loan |
|---|---|---|---|---|
| Disbursement | One lump sum up front | Revolving line, draw as needed | One lump sum (purchase/refi) | One lump sum |
| Rate | Fixed for full term | Variable (index-based) | Fixed or adjustable | Fixed, usually higher |
| Lien position | Second | Second | First | None (no collateral) |
| Collateral | Your home | Your home | Your home | None |
| Default risk | Foreclosure | Foreclosure | Foreclosure | Credit damage, collections |
| Closing costs | Yes (appraisal, title) | Often lower/none | Yes | Usually none |
The key takeaway: a home equity loan trades a higher rate than your first mortgage for the certainty of a fixed payment, and trades the higher rate of a personal loan for the lower cost of putting your home on the line. A HELOC starts cheaper but is variable and back-loads its risk into the repayment period.
How much can you borrow? Understanding CLTV limits
Most lenders let you borrow up to 80% to 85% of your home value across all liens combined, then subtract what you still owe on your first mortgage. This combined loan-to-value (CLTV) cap is the single biggest constraint on a home equity loan, and it is why you can never tap all of your equity.
The formula is: borrowing limit = (home value x CLTV cap) - first-mortgage balance. Work through three cases:
| Home value | First mortgage owed | Raw equity | At 80% CLTV | At 85% CLTV |
|---|---|---|---|---|
| $400,000 | $250,000 | $150,000 | $70,000 | $90,000 |
| $300,000 | $150,000 | $150,000 | $90,000 | $105,000 |
| $350,000 | $200,000 | $150,000 | $80,000 | $97,500 |
Notice that all three homeowners hold the same $150,000 in raw equity, yet their borrowing limits differ sharply because the cap is applied to home value, not to equity. The more you already owe relative to value, the smaller the gap the lender will let you fill - and the lender keeps the rest as a cushion in case home prices fall, since the same house secures both loans.
Is the interest tax-deductible? The post-TCJA rule
Home equity loan interest is deductible only when the borrowed funds are used to buy, build, or substantially improve the home that secures the loan, under the Tax Cuts and Jobs Act rules in effect since 2018. This is the single most misunderstood point about home equity borrowing.
What this means in practice:
- May qualify: a kitchen remodel, a room addition, a new roof, or other capital improvements to the home that secures the loan.
- Does not qualify: paying off credit cards, buying a car, covering tuition, taking a vacation, or improving a different property.
Two more conditions apply. First, the deduction counts only if you itemize - with the large standard deduction, many homeowners no longer do, which makes the deduction worth nothing to them. Second, the deductible interest falls under the combined home-acquisition debt cap that limits total mortgage debt eligible for the deduction. Because the rules turn on exactly how you spend the money and on your full tax picture, treat any quoted tax savings as an estimate and confirm with a tax professional before counting on it.
One of the most common improvement projects that both helps qualify the interest for the deduction and cuts your monthly bills is an energy upgrade. If you are borrowing against your equity to install solar panels, a heat pump, or new insulation, estimate the payback on the energy upgrade first at GreenCalcs so you can weigh the long-term savings against the loan cost before you borrow.
Common mistakes that make a home equity loan cost more than it should
The most expensive home equity mistakes come from treating a secured second mortgage like cheap, consequence-free cash. Avoid these and you keep both your money and your home safer.
- Borrowing to the CLTV ceiling. Maxing out at 85% leaves almost no equity buffer; one dip in home values and you are underwater across two loans.
- Stretching the term to shrink the payment. Going from a 10-year to a 20-year term on $50,000 at 8% drops the payment from $606.64 to $418.22 but raises total interest from $22,797 to $50,373 - you pay more than double to interest for a lower monthly number.
- Assuming the interest is deductible. It is not, unless the funds substantially improve the securing home and you itemize. Budgeting around a deduction you do not get inflates your true savings.
- Consolidating cards, then running them back up. Moving $30,000 of card debt to a home equity loan saves interest only if you do not recharge the cards; otherwise you owe both, and your home is now on the line.
- Ignoring closing costs. A home equity loan carries appraisal and title fees a personal loan does not, so a slightly lower rate can be a worse deal once costs are counted.
- Confusing a HELOC quote with a fixed loan. An attractive intro rate often signals a variable HELOC whose payment will jump in the repayment period - not the fixed payment a home equity loan locks in.
Calculating your home equity loan payment by hand and in Excel
You can reproduce any home equity loan payment with the amortization formula on paper or with one PMT function in Excel or Google Sheets. Both give the same answer; the spreadsheet is just faster for testing scenarios.
By hand: use M = P x r / (1 - (1 + r)-n). For a $50,000 loan at 8% over 15 years, r = 0.08 / 12 = 0.0066667 and n = 15 x 12 = 180. The numerator is $50,000 x 0.0066667 = $333.33. The denominator is 1 - (1.0066667)-180 = 1 - 0.30238 = 0.69762. Divide: $333.33 / 0.69762 = $477.83 per month.
In Excel: the function is =PMT(rate/12, years*12, -loan). For the same loan, enter =PMT(0.08/12, 180, -50000), which returns $477.83. Keep the loan amount negative so the result comes back positive. To get total interest, take the payment times the number of months minus the principal: 477.83 x 180 - 50000 = about $36,009. Change any one input - say the term to 120 or the rate to 0.075 - and the sheet instantly reprices the loan so you can compare terms before you commit.
Benchmarks: typical rates, terms, and equity requirements
Home equity loans are fixed-rate second mortgages that price above first-mortgage rates, run 5 to 20 years, and generally require you to keep 15% to 20% equity after the loan. Use these benchmarks as a sanity check, not as a quote - actual rates depend on your credit, CLTV, and the lender.
- Rate: typically a few points higher than prevailing first-mortgage rates, because the lender sits in second lien position and gets paid only after the first mortgage in a default.
- Term: commonly 5, 10, 15, or 20 years. Shorter terms mean a higher payment but far less interest; longer terms do the reverse.
- Equity required: most lenders want 15% to 20% equity remaining, i.e. a CLTV cap of 80% to 85% across all liens.
- Credit and DTI: stronger scores and a lower debt-to-income ratio earn lower rates; check yours with the debt-to-income ratio calculator before applying.
- Closing costs: expect appraisal, title, and origination fees, unlike an unsecured loan, which is why the fixed loan's true cost runs above the headline rate.
If your numbers do not roughly match these ranges, ask why: a rate far below first-mortgage levels usually signals a variable HELOC, and a quoted limit above 85% CLTV is unusual for most lenders.
Home Equity Loan Quick-Reference: Monthly Payment and Total Interest by Amount, Rate, and Term
A home equity loan is a fixed-rate second mortgage paid in level monthly installments, so your payment depends on the amount borrowed, the rate, and the term. The table below shows recomputed monthly payments and total interest for common scenarios. Longer terms lower the monthly payment but sharply raise lifetime interest, and every dollar is secured by your home. Plug your own numbers into the home equity loan calculator.
| Loan amount | Rate (APR) | Term | Monthly payment | Total interest |
|---|---|---|---|---|
| $25,000 | 7.0% | 5 years | $495.03 | $4,702 |
| $30,000 | 8.5% | 10 years | $371.96 | $14,635 |
| $40,000 | 9.0% | 10 years | $506.70 | $20,804 |
| $50,000 | 8.0% | 10 years | $606.64 | $22,797 |
| $50,000 | 8.0% | 15 years | $477.83 | $36,009 |
| $50,000 | 8.0% | 20 years | $418.22 | $50,373 |
| $60,000 | 8.25% | 15 years | $582.08 | $44,775 |
| $75,000 | 7.5% | 15 years | $695.26 | $50,147 |
| $100,000 | 8.0% | 20 years | $836.44 | $100,746 |
Related on this site
mortgage calculator · debt-to-income ratio calculator · debt payoff calculator · mortgage refinance calculator · loan calculator · home equity loan calculator
For a related deep dive, see IRS Publication 936, Home Mortgage Interest Deduction.
Home Equity Loan Calculator — frequently asked questions
- Is my home at risk?
- Yes — a home equity loan is secured by your house, so missed payments can lead to foreclosure.
- Tax deductible?
- Interest may be deductible if funds improve the home. Check current tax rules with a professional.
- Home equity loan vs HELOC?
- An equity loan is a fixed lump sum at a fixed rate; a HELOC is a revolving line, usually variable-rate.
- How much can I borrow?
- Lenders typically allow total mortgage debt up to 80–85% of your home's value.
- How much does a $50,000 home equity loan cost per month at 8% for 15 years?
- A $50,000 home equity loan at a fixed 8% APR over 15 years costs about <strong>$477.83 per month</strong>. Because a home equity loan is a fixed-rate second mortgage, that payment never changes. Over the full 180 months you would pay roughly $86,009 total, meaning about <strong>$36,009 in interest</strong> on top of the $50,000 you borrowed. Run your own figures in the <a href="/home-equity-loan-calculator/">home equity loan calculator</a>.
- What is the monthly payment on a $30,000 home equity loan at 8.5% over 10 years?
- A $30,000 home equity loan at a fixed 8.5% APR for 10 years runs about <strong>$371.96 per month</strong>. Total of payments is roughly $44,635, so you pay around <strong>$14,635 in interest</strong> over the 120 months. A shorter term raises the monthly payment but cuts total interest sharply, since this lump-sum loan amortizes like a primary <a href="/mortgage-calculator/">mortgage</a> but in second position.
- How much can I borrow on a home equity loan if my house is worth $400,000 and I owe $250,000?
- With an 85% combined loan-to-value (CLTV) limit, you could borrow about <strong>$90,000</strong>. Multiply the home value by 0.85 ($340,000), then subtract your $250,000 first-mortgage balance. At a stricter 80% CLTV the figure drops to <strong>$70,000</strong> ($320,000 minus $250,000). You hold $150,000 in raw equity, but lenders never let you tap all of it because the house secures both loans.
- Is a home equity loan a second mortgage?
- Yes, a home equity loan is a second mortgage. It is a separate lien recorded behind your primary <a href="/mortgage-calculator/">mortgage</a>, so if you sell or default the first mortgage gets paid first and the home equity lender second. Because it is secured by your home, missing payments can lead to <strong>foreclosure</strong>, the same risk as your primary loan, even though the balance is usually smaller.
- Home equity loan vs HELOC: which has the lower payment?
- A HELOC usually has a lower payment at first, but a home equity loan is more predictable. A home equity loan is a <strong>fixed-rate lump sum</strong> amortized over a set term. A HELOC is a <strong>revolving line with a variable rate</strong>, an interest-only draw period, then a repayment period. On $50,000 at 8.5%, interest-only HELOC payments run about $354/month early on, but rise later and can climb if rates move.
- What is the total interest on a $75,000 home equity loan at 7.5% for 15 years?
- A $75,000 home equity loan at a fixed 7.5% APR over 15 years generates about <strong>$50,147 in total interest</strong>. The monthly payment is roughly $695.26, and across 180 payments you repay about $125,147. Interest nearly equals two-thirds of the principal because the term is long, so shortening to 10 years would cut total interest substantially while raising the monthly payment.
- Is home equity loan interest tax-deductible?
- Home equity loan interest is deductible <strong>only when the funds substantially improve the home that secures the loan</strong>, under the post-2017 TCJA rules. Using the money for a kitchen remodel or addition can qualify; using it for credit cards, a car, or tuition does not. The combined deductible mortgage debt is also capped, and you must itemize. Confirm specifics with a tax professional for your situation.
- Should I use a $30,000 home equity loan to pay off credit card debt?
- It can save money if your card rates are far higher, but you trade unsecured debt for debt secured by your home. Paying $30,000 of 22% card debt over 10 years costs about $620/month and roughly <strong>$44,411 in interest</strong>. The same $30,000 as a home equity loan at 8% costs about $363.98/month and around <strong>$13,678 in interest</strong>, a savings near $30,000, but a missed payment now risks foreclosure. Map a full payoff in the <a href="/debt-payoff-calculator/">debt payoff calculator</a>.
- What is the monthly payment on a $100,000 home equity loan at 8% for 20 years?
- A $100,000 home equity loan at a fixed 8% APR over 20 years costs about <strong>$836.44 per month</strong>. Across 240 payments you repay roughly $200,746, so total interest is about <strong>$100,746</strong>, slightly more than the amount borrowed. Stretching a large balance to 20 years lowers the monthly cost but more than doubles lifetime interest versus a 10-year term, so weigh both numbers.
- How is a home equity loan different from an unsecured personal loan?
- A home equity loan is backed by your house, so it typically carries a lower rate but adds <strong>foreclosure risk</strong>; an unsecured personal loan has no collateral, higher rates, and shorter terms. A home equity loan also involves closing costs and an appraisal because it is a recorded second lien. The cheaper rate is the tradeoff for putting your home on the line, which a personal loan never requires.
- What is the payment and interest on a $25,000 home equity loan at 7% for 5 years?
- A $25,000 home equity loan at a fixed 7% APR over 5 years costs about <strong>$495.03 per month</strong>. Over 60 payments you repay roughly $29,702, so total interest is only about <strong>$4,702</strong>. A short 5-year term keeps lifetime interest low but demands a high monthly payment, the opposite tradeoff of a 15- or 20-year term where payments shrink but interest balloons.
- Is a home equity loan worth it for a $60,000 renovation?
- It can be worth it if the project adds value and the interest may be tax-deductible, since renovation funds that substantially improve the home can qualify under TCJA rules. A $60,000 home equity loan at 8.25% over 15 years costs about <strong>$582.08/month</strong> with roughly <strong>$44,775 in total interest</strong>. Compare that cost against the renovation's added value and your ability to handle a 15-year fixed payment secured by the home.
- How much equity do I need to qualify for a home equity loan?
- Most lenders require you to keep <strong>15% to 20% equity</strong> after the new loan, which means a CLTV cap of 80% to 85%. On a $300,000 home with a $150,000 first mortgage at 80% CLTV, you could borrow about <strong>$90,000</strong> ($240,000 minus $150,000). At 85% CLTV on a $350,000 home owing $200,000, the limit is about $97,500. The more you owe, the less you can tap.
- What happens in a HELOC draw period vs repayment period?
- During the draw period you can borrow and repay repeatedly, often making interest-only payments at a variable rate; in the repayment period you can no longer draw and must pay down principal plus interest. On a $50,000 HELOC at 9.5%, interest-only is about <strong>$395.83/month</strong> during the draw, but the payment jumps sharply once repayment begins. A fixed home equity loan avoids this <strong>payment shock</strong> entirely.
- How do I calculate a home equity loan payment in Excel?
- Use Excel's PMT function: <strong>=PMT(rate/12, years*12, -loan)</strong>. For a $50,000 loan at 8% over 15 years, enter <strong>=PMT(0.08/12, 180, -50000)</strong>, which returns about $477.83. Keep the loan amount negative so the result is positive. For total interest, multiply the payment by the number of months and subtract the principal: 477.83 x 180 - 50000 is about $36,009.
Guides & articles
- Home Equity Loan vs HELOC vs Cash-Out Refinance: Which Is Right for You?
- Should You Use a Home Equity Loan to Pay Off Credit Card Debt?
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