About the Home Equity Loan
Unlike a HELOC, a home equity loan hands you a lump sum upfront with a fixed rate and a fixed monthly payment for the life of the loan, functioning much like a second mortgage. Our Home Equity Loan Calculator estimates that monthly payment and checks it against typical lender limits on how much equity you can actually borrow against.
How It Works
You enter your home's value, remaining mortgage balance, the home equity loan amount you want, its interest rate, and the term. The calculator subtracts your mortgage balance from home value to find your available equity, applies an 85% combined loan-to-value cap to estimate a typical maximum loan amount, and calculates a standard fixed monthly payment for your requested loan amount and term. It also reports your combined loan-to-value ratio across both loans.
Examples
Within typical limits
On a $400,000 home with a $220,000 mortgage balance, the typical 85% CLTV cap allows up to about $120,000 in home equity borrowing, well above a $50,000 loan request.
Monthly payment
That same $50,000 loan at 8.5% over 15 years carries a fixed monthly payment of roughly $492, with combined loan-to-value landing at 67.5% once both loans are counted.
Advantages
- Fixed payment and fixed rate make budgeting predictable for the full loan term
- Shows a realistic estimate of how much you could typically borrow, not just what you requested
- Reports combined loan-to-value so you can see your total leverage against the home at a glance
- Useful for comparing a lump-sum loan against a revolving HELOC for the same purpose
Common Mistakes
- Borrowing near the maximum available equity without leaving a buffer for a market downturn
- Forgetting that a home equity loan is secured by your house, putting it at risk of foreclosure on missed payments
- Not comparing the fixed loan's total interest cost against a HELOC's variable, and potentially lower, initial payments
- Using the loan for expenses that don't build value or reduce other high-interest debt, eroding equity without a clear payoff
Edge Cases to Watch For
- The 85% combined loan-to-value cap used here is a common lender threshold, but actual limits range roughly from 80% to 90% depending on the lender, your credit profile, and loan type.
- If your requested loan amount exceeds the typical max loan the calculator estimates, that's a signal you may not qualify for the full amount without a stronger credit profile or the lender's own higher limit.
- A declining home value after the loan is taken out can push combined loan-to-value higher than shown here, which matters if you need to refinance or sell later.
- This calculator assumes a fixed rate for the full term; some home equity loans offer adjustable rates instead.
Common Use Cases
- Estimating monthly payments before applying for a home equity loan
- Checking whether a desired loan amount fits within typical lender equity limits
- Comparing a fixed-payment home equity loan against a variable-rate HELOC
- Planning a major renovation, debt consolidation, or large expense funded by home equity