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Home Equity Loan Calculator

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Max Borrowing Limit $0

Current Equity Amount $0

Remaining Equity Stake 0%

function calculateHomeEquity() { var homeValue = parseFloat(document.getElementById('homeValue').value); var mortgageBalance = parseFloat(document.getElementById('mortgageBalance').value); var cltvLimit = parseFloat(document.getElementById('cltvLimit').value) / 100; var resultArea = document.getElementById('equityResultArea'); if (isNaN(homeValue) || isNaN(mortgageBalance) || homeValue <= 0) { alert('Please enter valid numerical values for home value and mortgage balance.'); return; } var totalEquity = homeValue – mortgageBalance; var maxCombinedLoan = homeValue * cltvLimit; var maxBorrowable = maxCombinedLoan – mortgageBalance; var equityPercentage = ((totalEquity / homeValue) * 100).toFixed(1); if (maxBorrowable 0) { message = "Based on an LTV (Loan-to-Value) limit of " + (cltvLimit * 100) + "%, you may qualify for a home equity loan or HELOC of up to " + formatter.format(maxBorrowable) + ". Lenders typically require you to keep 15-20% equity in your home."; } else { message = "Your current mortgage balance is close to or exceeds the standard borrowing limits for your home's value. You may need to wait until you have paid down more of your principal or your home value increases."; } document.getElementById('equityMessage').innerText = message; resultArea.style.display = 'block'; }

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Understanding Your Home Equity

Home equity is the difference between your property's current market value and the remaining balance on your mortgage. As you make monthly payments and property values in your area rise, your equity grows. This calculator helps you determine how much of that wealth you can actually "tap into" through a home equity loan or a Home Equity Line of Credit (HELOC).

How Much Can I Borrow?

While you might have $200,000 in equity, lenders rarely allow you to borrow the full amount. Most financial institutions use a metric called CLTV (Combined Loan-to-Value). A standard CLTV limit is 80%, meaning your total debt (existing mortgage + new home equity loan) cannot exceed 80% of the home's appraised value.

Example Calculation:
Home Value: $500,000
Mortgage Balance: $300,000
Max LTV (80%): $400,000
Available Borrowing Amount: $100,000 ($400,000 – $300,000)

Key Factors Lenders Consider

• Credit Score: A higher score (740+) typically unlocks lower interest rates and higher LTV limits (up to 85% or 90% in some cases).
• Debt-to-Income (DTI) Ratio: Lenders evaluate your monthly income against your total debt payments to ensure you can afford the new loan.
• Appraisal: Your "Home Value" is ultimately determined by a professional appraisal, not just online estimates.

Home Equity Loan vs. HELOC

A Home Equity Loan provides a lump sum with a fixed interest rate, making it ideal for one-time costs like a roof replacement. A HELOC works more like a credit card, allowing you to draw funds as needed with a variable interest rate, which is often preferred for ongoing renovations or as an emergency fund.

Disclaimer: This calculator is for illustrative purposes only. Actual loan approval and terms depend on your lender's specific criteria, your credit history, and a formal property appraisal.