Equity Loan Calculator

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Equity Loan Calculator
Calculate Monthly PaymentCalculate Max Borrowing Power (LTV)
Results:
Enter values to see results
function toggleInputs(){var type=document.getElementById('calc_type').value;if(type==='maxloan'){document.getElementById('row_loan_amount').style.display='none';document.getElementById('row_interest').style.display='none';document.getElementById('row_term').style.display='none';document.getElementById('row_home_value').style.display='table-row';document.getElementById('row_mortgage_balance').style.display='table-row';document.getElementById('row_ltv_limit').style.display='table-row';}else{document.getElementById('row_loan_amount').style.display='table-row';document.getElementById('row_interest').style.display='table-row';document.getElementById('row_term').style.display='table-row';document.getElementById('row_home_value').style.display='table-row';document.getElementById('row_mortgage_balance').style.display='table-row';document.getElementById('row_ltv_limit').style.display='table-row';}}function calculateEquity(){var type=document.getElementById('calc_type').value;var homeValue=parseFloat(document.getElementById('home_value').value);var balance=parseFloat(document.getElementById('mortgage_balance').value);var ltvLimit=parseFloat(document.getElementById('ltv_limit').value)/100;var showSteps=document.getElementById('show_steps').checked;if(isNaN(homeValue)||isNaN(balance)||isNaN(ltvLimit)){alert('Please enter valid numeric values');return;}var maxLTVAmount=homeValue*ltvLimit;var maxLoan=maxLTVAmount-balance;if(maxLoan<0)maxLoan=0;var resultHTML='';var stepsHTML='';if(type==='maxloan'){resultHTML='Maximum Estimated Equity Loan: $'+maxLoan.toLocaleString(undefined,{minimumFractionDigits:2,maximumFractionDigits:2});if(showSteps){stepsHTML='Calculation:
1. Max LTV Value ('+(ltvLimit*100)+'% of $'+homeValue.toLocaleString()+') = $'+maxLTVAmount.toLocaleString()+'
2. Subtract Current Mortgage ($'+balance.toLocaleString()+')
3. Available Equity Loan = $'+maxLoan.toLocaleString();}}else{var loanAmt=parseFloat(document.getElementById('loan_amount').value);var rate=parseFloat(document.getElementById('interest').value)/100/12;var term=parseFloat(document.getElementById('term').value)*12;if(isNaN(loanAmt)||isNaN(rate)||isNaN(term)){alert('Please enter loan amount, rate and term');return;}var monthlyPayment=(loanAmt*rate)/(1-Math.pow(1+rate,-term));var totalInterest=(monthlyPayment*term)-loanAmt;var newTotalLTV=((balance+loanAmt)/homeValue)*100;resultHTML='Monthly Equity Loan Payment: $'+monthlyPayment.toLocaleString(undefined,{minimumFractionDigits:2,maximumFractionDigits:2});if(showSteps){stepsHTML='Financial Snapshot:
Total Debt (Mortgage + New Loan): $'+(balance+loanAmt).toLocaleString()+'
Combined Loan-to-Value (CLTV): '+newTotalLTV.toFixed(2)+'%
Total Interest Paid: $'+totalInterest.toLocaleString();}}document.getElementById('resultOutput').innerHTML=resultHTML;if(showSteps){document.getElementById('stepsOutput').innerHTML=stepsHTML;document.getElementById('stepsOutput').style.display='block';}else{document.getElementById('stepsOutput').style.display='none';}}

Using the Equity Loan Calculator

An equity loan calculator is a vital tool for homeowners who wish to leverage the value they have built in their property. Whether you are planning a major home renovation, consolidating high-interest debt, or funding a significant life event, this calculator helps you determine how much you can borrow and what your future monthly obligations might look like.

The equity loan calculator operates by analyzing the relationship between your home's current market value, your outstanding mortgage balance, and the lender's loan-to-value (LTV) restrictions.

Current Home Value
The estimated price your home would sell for in today's real estate market.
Current Mortgage Balance
The remaining principal amount you owe on your primary mortgage and any other existing liens.
Interest Rate
The annual percentage rate (APR) charged by the lender for the equity loan.
Max LTV Limit
The maximum percentage of the home's value a lender is willing to finance. Most lenders cap this at 80% to 85%.

How Equity Loan Calculations Work

The math behind an equity loan involves two primary calculations: your maximum borrowing capacity and the standard amortization of the loan payment. The formula used for the monthly payment is the same as a standard fixed-rate mortgage:

M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]

  • M: Total monthly payment.
  • P: The loan principal (the amount you borrow).
  • i: Monthly interest rate (Annual Rate / 12).
  • n: Total number of months (Years x 12).

Example: Calculating Borrowing Power

Scenario: You own a home valued at $500,000. You still owe $300,000 on your primary mortgage. Your lender allows for a maximum Combined Loan-to-Value (CLTV) ratio of 85%. You want a 15-year fixed equity loan at 7% interest.

Step-by-step solution:

  1. Calculate Max LTV Value: $500,000 x 0.85 = $425,000.
  2. Subtract Existing Debt: $425,000 – $300,000 = $125,000 (Max Loan Amount).
  3. Convert Rate to Monthly: 0.07 / 12 = 0.005833.
  4. Convert Term to Months: 15 x 12 = 180 months.
  5. Resulting Payment: Based on the formula, the monthly payment for a $125,000 loan would be approximately $1,123.54.

Common Questions

What is the difference between a home equity loan and a HELOC?

A home equity loan is a "closed-end" loan that provides a lump sum of cash with a fixed interest rate and fixed monthly payments. A Home Equity Line of Credit (HELOC) is an "open-end" credit line that works like a credit card, where you borrow only what you need and usually pay a variable interest rate.

How much equity do I need to get a loan?

Most lenders require you to maintain at least 15% to 20% equity in your home after the new loan is added. Using our equity loan calculator, you can see how different LTV limits affect your ability to borrow.

Does an equity loan affect my primary mortgage?

No, an equity loan is a "second mortgage." It is a separate debt with its own interest rate and term. However, if you fail to make payments on either loan, the lender can foreclose on the property.

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