How to use the home equity loan calculator
- Enter the home equity loan amount, the fixed interest rate and the term in years from your lender quote.
- Enter your home value and your first mortgage balance (enter 0 if you have none). If you have a HELOC or another loan against the home, add it under More options.
- Enter the combined loan-to-value limit your lender quoted. The page does not assume one, because lenders set their own.
- Read the monthly payment, total interest and the loan-to-value check. The page shows the largest loan that fits under your limit and the payment on it.
- Download the CSV or PDF for the month-by-month schedule.
Formula
Payment = L x r / (1 - (1 + r)^-n), with r = APR / 12 and n = years x 12
CLTV = (first mortgage + other loans + new loan) / home value
Highest total debt = home value x lender limit
Largest new loan = highest total debt - first mortgage - other loans (never below zero)
Equity left = home value - total debt
The check passes when the total debt is no more than the highest total debt, compared to the cent. Cost of borrowing is total interest plus any fees you enter, which are paid at closing and are not part of the payment.
Worked examples
The payment: a $50,000 home equity loan at a fixed 8.5% for 15 years has a payment of $492.37. Over 180 payments you pay $88,626.48, of which $38,626.48 is interest. In the first year, payments total $5,908.44, with $4,183.85 of interest and $1,724.59 of principal, leaving $48,275.41.
The CLTV check: a home worth $450,000 with a $280,000 first mortgage has $170,000 of equity and a CLTV of 62.22%. With the $50,000 loan, CLTV is 73.33% and $120,000 of equity remains. At an 85% limit, total debt can reach $382,500, so the largest new loan is $102,500, with a payment of $1,009.36.
Over the limit: a $110,000 loan would bring CLTV to 86.67%, which is $7,500.00 over the 85% limit. A $102,500.00 loan is exactly at the limit and passes. A loan one cent larger fails.
Other loans count: with a $20,000 HELOC balance already against the home, the largest new loan at the same limit drops to $82,500. With a 90% limit and no other loans it rises to $125,000.
What combined loan-to-value means
Combined loan-to-value, or CLTV, adds every loan secured by the home, divided by the home's value. Lenders use it to decide how much of your equity they will lend against and to keep a cushion if prices fall. A home equity loan is a second lien, so the first mortgage and any other lien both count.
Each lender sets its own limit, and it can depend on your credit, income and the loan type. That is why you enter the limit yourself instead of relying on a number from this page.
Home equity loan versus a line of credit
A home equity loan usually pays out one lump sum at a fixed rate, repaid in equal monthly installments, which is what this calculator models. A home equity line of credit (HELOC) usually works like a revolving account and often has a variable rate, so its payment can change. Do not use this page for a variable-rate line.
Both are secured by your home. If you cannot make the payments, the lender can take steps to collect through the property, so borrow only an amount you can repay with room to spare.
Value estimates and what lenders actually use
Your own estimate of the home value is only a starting point. A lender typically orders its own valuation, and a lower value reduces how much it will lend. Try a few values to see how sensitive the largest loan is. A 5% drop on a $450,000 home removes $22,500 of value, and at an 85% limit that cuts about $19,125 from the amount you could borrow.
Comparing with other ways to borrow
If you want to replace your first mortgage and borrow more in one loan, compare a refinance. For a quick look at an unsecured loan of the same size, use the loan calculator, which has no loan-to-value test. Tax treatment of interest depends on how you use the money and your own situation, so ask a tax professional. It is not modeled here.
Assumptions and limits
- A fixed-rate loan with equal monthly payments and a term of 1 to 50 years.
- Interest is the balance times APR / 12, rounded to the cent each month. The last payment clears any rounding difference.
- The lender limit is whatever you enter. The page does not know any lender's rules, and the limit you are offered can differ from the example value shown.
- Home value, mortgage balance and other loans are the figures you enter. Nothing is looked up or appraised.
- Not modeled: variable-rate lines of credit, credit and income requirements, appraisal costs, taxes, insurance and the tax treatment of interest.
- Fees are shown in the total cost but are not added to the loan or the payment. This is an estimate, not a loan offer or financial advice.
Frequently asked questions
How much home equity loan can I get?
Multiply your home value by the lender limit and subtract everything you owe against the home. With a $450,000 home, an 85% limit and a $280,000 mortgage that is $102,500. Your lender decides the real limit after reviewing your application.
What is CLTV?
CLTV is combined loan-to-value: all loans secured by the home added together and divided by its value. A first mortgage of $280,000 plus a new $50,000 loan on a $450,000 home is 73.33%.
Why do I enter the lender limit myself?
Limits vary by lender, borrower and loan type, and they change over time. Typing in the figure from your quote keeps the check accurate and avoids a number that may not apply to you.
Are closing costs in the monthly payment?
No. Fees you enter are treated as paid out of pocket at closing. They raise the total cost of borrowing but do not change the payment or the loan balance. If your lender rolls fees into the loan, add them to the loan amount.
Can I leave the home value blank?
Yes. The page then shows only the payment, interest and schedule. Enter the home value and first mortgage balance to switch on the loan-to-value check.
What if my home value changes?
Try several values. The highest total debt moves in step with the value, so a lower value can turn a passing loan into one that is over the limit. A lender's valuation may differ from yours.