Home Equity Loan Calculator
5 Years
10 Years
15 Years
20 Years
30 Years
Available Equity:
$0.00
Maximum Loan Possible (at LTV limit):
$0.00
Estimated Monthly Payment:
$0.00
Total Interest Over Term:
$0.00
Combined Loan-to-Value (CLTV):
0%
How to Use the Home Equity Loan Calculator
A Home Equity Loan, often called a second mortgage, allows you to borrow against the value of your home. To use this calculator, you need to know your home's current market value and what you still owe on your primary mortgage. Most lenders allow a Maximum Combined Loan-to-Value (CLTV) ratio of 80% to 90%.
Understanding the Math
The calculation follows three primary steps:
- Maximum Borrowing Capacity: (Home Value × LTV Limit) – Current Mortgage Balance.
- Monthly Payment: Calculated using the standard amortization formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ], where P is the loan amount, i is the monthly interest rate, and n is the number of months.
- CLTV: The sum of all loans divided by the home's value.
Example Calculation
Imagine your home is worth $500,000 and you owe $300,000. If a lender allows an 80% LTV, they will permit a total debt of $400,000. Subtracting your $300,000 existing mortgage leaves you with $100,000 in potential home equity loan funds.
Is a Home Equity Loan Right for You?
Home equity loans offer fixed interest rates and predictable monthly payments, making them ideal for large, one-time expenses like home renovations, debt consolidation, or medical bills. However, because your home serves as collateral, failure to repay the loan could result in foreclosure. Always ensure the monthly payment fits comfortably within your budget before proceeding.