Estimate how much you can borrow against your home's value.
Available Home Equity:
Max Borrowing Amount (at LTV limit):
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. The amount you can borrow is based on the difference between your home's current market value and the remaining balance on your mortgage.
How to Calculate Your Equity
To determine your borrowing power, lenders look at your Loan-to-Value (LTV) ratio. Most lenders allow a maximum LTV of 80% to 85%. The formula used in this calculator is:
(Home Value × LTV Limit) – Current Mortgage Balance = Maximum Borrowing Amount
Example Calculation
If your home is worth $500,000 and you owe $300,000 on your mortgage, and the lender allows an 85% LTV:
85% of $500,000 = $425,000
$425,000 – $300,000 (Current Balance) = $125,000
In this scenario, you could potentially borrow up to $125,000 in a lump sum or through a Home Equity Line of Credit (HELOC).
Key Benefits of Home Equity Loans
Fixed Interest Rates: Unlike credit cards, most home equity loans offer fixed rates and predictable monthly payments.
Lower Rates: Because the loan is secured by your property, interest rates are typically much lower than personal loans or credit cards.
Tax Deductibility: In some cases, interest may be tax-deductible if the funds are used for substantial home improvements (consult a tax professional).
function calculateHomeEquity() {
var homeValue = parseFloat(document.getElementById("homeValue").value);
var mortgageBalance = parseFloat(document.getElementById("mortgageBalance").value);
var ltvLimit = parseFloat(document.getElementById("ltvLimit").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTerm = parseFloat(document.getElementById("loanTerm").value);
var desiredLoan = parseFloat(document.getElementById("desiredLoan").value);
if (isNaN(homeValue) || isNaN(mortgageBalance) || isNaN(ltvLimit) || isNaN(interestRate) || isNaN(loanTerm) || isNaN(desiredLoan)) {
alert("Please enter valid numeric values in all fields.");
return;
}
// Calculation 1: Total Home Equity
var totalEquity = homeValue – mortgageBalance;
// Calculation 2: Max Borrowing based on LTV
var maxLtvAmount = homeValue * (ltvLimit / 100);
var maxBorrowing = maxLtvAmount – mortgageBalance;
if (maxBorrowing 0) {
monthlyPayment = (desiredLoan * monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
} else {
monthlyPayment = desiredLoan / numberOfPayments;
}
// Display Results
document.getElementById("resultArea").style.display = "block";
document.getElementById("availableEquity").innerText = "$" + totalEquity.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("maxBorrowing").innerText = "$" + maxBorrowing.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("monthlyPayment").innerText = "$" + monthlyPayment.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
// Warning logic
var warningRow = document.getElementById("warningRow");
var warningText = document.getElementById("loanWarning");
if (desiredLoan > maxBorrowing) {
warningRow.style.display = "block";
warningText.innerText = "Warning: Your desired loan of $" + desiredLoan.toLocaleString() + " exceeds the estimated maximum borrowing limit of $" + maxBorrowing.toLocaleString() + ".";
} else {
warningRow.style.display = "none";
}
}