Home Equity Loan Calculator
Calculate your estimated borrowing power and monthly payments based on your home's current value.
75% (Conservative)
80% (Standard)
85% (Maximum)
90% (High LTV)
5 Years
10 Years
15 Years
20 Years
30 Years
Your Estimation Results
Total Home Equity:
$0
Max Loan Amount (at LTV Limit):
$0
Estimated Monthly Payment:
$0
New Total Debt (LTV):
0%
Understanding Home Equity Loans
A home equity loan, often called a "second mortgage," allows you to borrow against the difference between your home's current market value and your remaining mortgage balance. Unlike a HELOC, a home equity loan typically provides a lump sum with a fixed interest rate and fixed monthly payments.
How to Calculate Your Equity
Calculating your equity is the first step in determining how much you can borrow. Use the formula below:
(Home Value × LTV Limit) – Current Mortgage Balance = Max Loan Amount
Example Calculation
Suppose your home is worth $500,000 and you owe $300,000. Most lenders allow a Loan-to-Value (LTV) ratio of up to 80%.
- 80% of $500,000 = $400,000
- $400,000 – $300,000 (Current Balance) = $100,000 Maximum Loan
Key Factors Lenders Consider
- Credit Score: Higher scores usually unlock lower interest rates and higher LTV limits.
- Debt-to-Income (DTI) Ratio: Lenders want to ensure your total monthly debts (including the new loan) don't exceed 43-50% of your gross monthly income.
- Appraisal: A professional appraisal will be required to verify the actual market value of the property.
Pros and Cons
While home equity loans offer lower interest rates than credit cards or personal loans, your home serves as collateral. Failure to make payments could result in foreclosure. Always consult with a financial advisor before tapping into your home's equity for major expenses like renovations, debt consolidation, or education.