Home Equity Loan Calculator

Borrowing against the equity in your home

Equity is the slice of your home you actually own — its market value minus everything you still owe on it. A home equity loan lets you convert part of that equity into cash, taken as a single lump sum at a fixed rate and repaid in equal monthly installments over a set term. Because the loan sits behind your primary mortgage, it is often called a second mortgage. This calculator models exactly that: a fully amortizing fixed-rate loan, so you can see the monthly payment and the true lifetime cost before you sign anything.

The defining feature — and the catch — is that your house is the collateral. That security is why fixed home equity rates are usually lower than rates on unsecured personal loans or credit cards. It is also why the stakes are higher: if you stop paying, the lender can ultimately foreclose, even though it is a second-position loan. Treat the money as you would your primary mortgage, not as easy cash.

How to use this calculator

Enter three things: the amount you want to borrow against your equity, the fixed interest rate the lender is offering, and the term in years. The tool returns your fixed monthly payment, the total interest you will pay over the life of the loan, and a full month-by-month amortization schedule you can download. To compare offers, change the rate or term and watch how both the payment and the total interest move — the term usually swings the total cost far more than a fraction of a point on the rate.

One number worth working out before you start is your combined loan-to-value (CLTV). Add your remaining first-mortgage balance to the amount you want to borrow, then divide by your home's value. Lenders typically cap CLTV somewhere in the 80–90% range, so a high CLTV may limit how much you can take out. Verify the exact limit with your own lender, since it varies by program and credit profile.

How it's calculated

A home equity loan amortizes the same way a first mortgage does. Each month, interest is charged on the remaining balance, and whatever is left of your fixed payment reduces the principal. Because the balance is largest at the beginning, early payments are mostly interest; as the balance shrinks, more of each payment chips away at principal. The fixed payment itself is derived from three inputs only — the amount borrowed, the periodic interest rate (the annual rate divided by twelve), and the number of monthly payments — so once those are set, your payment never changes.

A worked example

Suppose your home is worth $400,000 and you still owe $250,000 on your first mortgage. You have $150,000 of equity on paper. If a lender allows an 85% CLTV, your combined balances can reach $340,000, leaving roughly $90,000 you could borrow. Say you take a $60,000 home equity loan at a hypothetical 8% fixed rate over 15 years. The monthly payment lands near $573, and over the full term you would repay about $103,200 — meaning roughly $43,200 of that is interest. Stretching the same loan to 20 years lowers the payment but raises total interest, which is the trade-off the comparison table below makes concrete.

Term comparison

Using that same hypothetical $60,000 loan at 8%, here is how the term reshapes the cost:

Fixed loan vs. variable HELOC

The main alternative is a HELOC — a revolving line of credit you draw on as needed, usually at a variable rate. A HELOC suits open-ended or staged spending (a multi-phase remodel, an emergency cushion) and you only pay interest on what you draw, but the payment can rise if rates climb. A fixed home equity loan suits a known, one-time need — debt consolidation, a single large project, a defined purchase — because the rate and payment are locked from day one. If predictability matters more than flexibility, the fixed lump sum modeled here is usually the better fit.

Tips and common mistakes

Remember closing costs: home equity loans can carry appraisal, origination, title, and other fees that this calculator does not include, so add them when comparing offers. Avoid the classic trap of consolidating credit-card debt into your home and then running the cards back up — you have now secured unsecured debt against your house and doubled the balance. Don't borrow against equity for a depreciating want when the term outlasts the benefit. Finally, keep a margin: if your income is uneven, a longer term with a lower required payment plus voluntary extra payments can be safer than committing to a tight short-term payment.