Home Equity Loan Calculator
70% (Conservative)
80% (Standard)
85% (Aggressive)
90% (Credit Union Typical Max)
Estimated Maximum Loan Amount
$0.00
Understanding Your Home Equity Loan Potential
A Home Equity Loan, often referred to as a "second mortgage," allows homeowners to borrow against the value of their property. Unlike a Home Equity Line of Credit (HELOC), a home equity loan typically provides a lump sum with a fixed interest rate and a set repayment schedule.
How This Calculator Works
Lenders don't just look at how much your house is worth; they look at the Combined Loan-to-Value (CLTV) ratio. This is the ratio of all loans on the property (your current mortgage plus the new loan) compared to the home's appraised value.
Most traditional banks limit the CLTV to 80%, meaning you can borrow up to 80% of your home's value minus what you still owe on your primary mortgage. Some credit unions or specialized lenders may go up to 85% or 90% depending on your credit score.
Real-World Example:
If your home is worth $500,000 and you owe $300,000 on your mortgage:
1. At 80% CLTV, the total allowed debt is $400,000 ($500k x 0.80).
2. Subtract your current $300,000 balance.
3. Your maximum Home Equity Loan would be $100,000.
If your home is worth $500,000 and you owe $300,000 on your mortgage:
1. At 80% CLTV, the total allowed debt is $400,000 ($500k x 0.80).
2. Subtract your current $300,000 balance.
3. Your maximum Home Equity Loan would be $100,000.
Key Factors Influencing Your Loan Amount
- Appraised Value: Professional appraisals determine the official value, which might differ from your Zestimate or tax assessment.
- Credit Score: Higher scores (720+) often unlock higher CLTV limits and lower interest rates.
- Debt-to-Income (DTI) Ratio: Lenders evaluate your monthly income against your total debt payments to ensure you can afford the new loan.
- Current Market Conditions: In a rising market, your equity grows automatically. In a declining market, your borrowing power may shrink.
Why Use a Home Equity Loan?
Common uses include high-ROI home renovations, debt consolidation (replacing high-interest credit card debt with lower-interest mortgage debt), or funding major life events like education. Because the loan is secured by your home, the interest rates are generally much lower than personal loans or credit cards.