Estimate your borrowing power and monthly payments
Typically 80% to 85%
5 Years
10 Years
15 Years
20 Years
30 Years
Max Loan Amount$0.00
Est. Monthly Payment$0.00
Warning: Current mortgage balance exceeds the specified LTV limit.
How Home Equity Loans Work
A home equity loan, often called a "second mortgage," allows you to borrow against the value of your home minus what you still owe on your primary mortgage. Lenders typically allow you to borrow up to a specific Loan-to-Value (LTV) ratio, usually 80% to 85% of the home's appraised value.
The Calculation Formula
To determine your maximum borrowing power, use this formula:
(Market Value × Max LTV %) – Current Mortgage Balance = Maximum Equity Loan
Example Scenario
Home Value: $500,000
LTV Limit (80%): $400,000
Current Mortgage Balance: $250,000
Potential Loan Amount: $150,000
Why Use a Home Equity Loan?
These loans are popular for debt consolidation, home improvements, or major expenses like education because they often offer lower interest rates than credit cards or personal loans. However, remember that your home serves as collateral; failure to repay could lead to foreclosure.
function calculateEquityLoan() {
var homeValue = parseFloat(document.getElementById("homeValue").value);
var mortgageBalance = parseFloat(document.getElementById("mortgageBalance").value) || 0;
var ltvLimit = parseFloat(document.getElementById("ltvLimit").value) / 100;
var interestRate = parseFloat(document.getElementById("interestRate").value) / 100 / 12;
var loanTermYears = parseFloat(document.getElementById("loanTerm").value);
var loanTermMonths = loanTermYears * 12;
var resultDiv = document.getElementById("results");
var warningDiv = document.getElementById("ltvWarning");
var maxLoanDisplay = document.getElementById("maxLoanDisplay");
var monthlyPaymentDisplay = document.getElementById("monthlyPaymentDisplay");
if (!homeValue || homeValue <= 0) {
alert("Please enter a valid home value.");
return;
}
// Calculate Max Borrowing Power
var totalAvailableValue = homeValue * ltvLimit;
var maxLoanAmount = totalAvailableValue – mortgageBalance;
resultDiv.style.display = "block";
if (maxLoanAmount 0) {
var x = Math.pow(1 + interestRate, loanTermMonths);
var monthlyPayment = (maxLoanAmount * x * interestRate) / (x – 1);
monthlyPaymentDisplay.innerText = "$" + monthlyPayment.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
} else {
var monthlyPayment = maxLoanAmount / loanTermMonths;
monthlyPaymentDisplay.innerText = "$" + monthlyPayment.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
}
}
}