Mortgage Rates April 2025 Calculator

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Home Equity Loan Calculator

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Results Summary

Total Equity in Home:

Max Borrowing Capacity:

New Total LTV Ratio:

Estimated Monthly Payment:

Understanding Home Equity Loans

A Home Equity Loan, often referred to as a "second mortgage," allows you to borrow against the value of your home. Unlike a Home Equity Line of Credit (HELOC), a home equity loan provides a lump sum of cash that is repaid over a fixed term with a fixed interest rate. This makes it an ideal choice for large, one-time expenses like home renovations, debt consolidation, or major life events.

How to Use This Home Equity Calculator

To get an accurate estimate of your borrowing power, you need to input four key variables:

  • Current Home Value: An estimate of what your home would sell for in the current market.
  • Existing Mortgage Balance: The remaining principal amount you owe on your primary mortgage.
  • Max LTV Limit: Most lenders allow you to borrow up to 80% or 85% of your home's total value (Combined Loan-to-Value).
  • Interest Rate & Term: The specific terms offered by your lender for the second mortgage.

What is LTV and Why Does it Matter?

Loan-to-Value (LTV) is a ratio used by lenders to determine risk. In the context of home equity, lenders look at CLTV (Combined Loan-to-Value). This is the sum of your current mortgage plus your desired home equity loan, divided by your home's value. For example, if your home is worth $400,000 and you have a $250,000 mortgage, an 80% LTV limit means your total debt cannot exceed $320,000. This leaves you with $70,000 in maximum borrowable equity.

Example Calculation

Suppose your home is valued at $500,000 and you owe $300,000. If a lender allows an 85% LTV:

  1. Maximum Total Debt: $500,000 x 0.85 = $425,000.
  2. Current Debt: $300,000.
  3. Available Equity Loan: $425,000 – $300,000 = $125,000.

If you take a $50,000 loan at 7% interest for 15 years, your monthly payment would be approximately $449.41.

function calculateHomeEquity() { var homeValue = parseFloat(document.getElementById('homeValue').value); var mortgageBalance = parseFloat(document.getElementById('mortgageBalance').value); var ltvLimit = parseFloat(document.getElementById('ltvLimit').value) / 100; var interestRate = parseFloat(document.getElementById('interestRate').value) / 100 / 12; var loanTermMonths = parseFloat(document.getElementById('loanTerm').value) * 12; var desiredLoan = parseFloat(document.getElementById('desiredLoan').value); if (isNaN(homeValue) || isNaN(mortgageBalance) || isNaN(ltvLimit) || isNaN(interestRate) || isNaN(desiredLoan)) { alert("Please enter valid numerical values."); return; } // 1. Total Equity var totalEquity = homeValue – mortgageBalance; // 2. Max Borrowing Capacity var maxTotalDebt = homeValue * ltvLimit; var maxBorrow = maxTotalDebt – mortgageBalance; if (maxBorrow 0) { var x = Math.pow(1 + interestRate, loanTermMonths); monthlyPayment = (desiredLoan * x * interestRate) / (x – 1); } else { monthlyPayment = desiredLoan / loanTermMonths; } // Formatting var formatter = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD', }); document.getElementById('totalEquity').innerText = formatter.format(totalEquity); document.getElementById('maxBorrow').innerText = formatter.format(maxBorrow); document.getElementById('newLtv').innerText = newLtv.toFixed(2) + "%"; document.getElementById('monthlyPayment').innerText = formatter.format(monthlyPayment); // Warning logic var warning = document.getElementById('warning-msg'); if (desiredLoan > maxBorrow) { warning.innerText = "Warning: Desired loan exceeds the maximum " + (ltvLimit * 100) + "% LTV limit!"; warning.style.display = "block"; } else { warning.style.display = "none"; } document.getElementById('results-area').style.display = "block"; }

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