Home Equity Loan Calculator
Estimate how much you can borrow against your home's value.
Current Home Equity:
$0
Max Borrowing Limit (based on LTV):
$0
Estimated Monthly Payment:
$0
Warning: Your current mortgage balance exceeds the selected LTV limit. Borrowing may not be possible.
Understanding Home Equity Loans
A home equity loan, often referred to as a "second mortgage," allows homeowners to borrow a lump sum of money using the equity in their home as collateral. Equity is the difference between the current market value of your property and the remaining balance on your mortgage.
How to Calculate Your Equity Borrowing Power
Lenders typically allow you to borrow up to a specific Loan-to-Value (LTV) ratio, usually between 80% and 85% of your home's total value, including your existing mortgage. To find your maximum loan amount, use this formula:
(Home Value × Max LTV %) – Current Mortgage Balance = Maximum Loan Amount
Example Calculation
If your home is worth $500,000 and your lender allows an 80% LTV, the total allowable debt is $400,000. If you still owe $300,000 on your primary mortgage, you could potentially qualify for a home equity loan of up to $100,000.
Factors That Affect Your Loan
- Credit Score: Higher scores usually unlock lower interest rates and higher LTV limits.
- Debt-to-Income (DTI) Ratio: Lenders look at your monthly income versus your monthly debt obligations.
- Appraisal: A professional appraisal is usually required to confirm the home's current market value.