Home Equity Loan Calculator
Calculate maximum home equity loan borrowing capacity (CLTV up to 85%), fixed monthly payments, and total loan interest.
Borrowing Capacity
How Home Equity Loans Work
A home equity loan (often termed a second mortgage) allows homeowners to borrow a fixed lump sum against the accumulated equity in their primary residence. Unlike credit cards or personal loans, home equity debt is secured by your property, typically resulting in lower, fixed interest rates.
Understanding Combined Loan-to-Value (CLTV): Most mortgage lenders enforce a strict maximum CLTV ratio, generally between 80% and 85%. To calculate your maximum borrowing power, multiply your home's current appraised market value by your lender's CLTV ceiling, then subtract your outstanding primary mortgage balance.
Home Equity Loan vs. HELOC: A home equity loan distributes funds upfront with a fixed repayment term and fixed monthly payment. If you prefer revolving credit that lets you draw and repay funds as needed with interest-only options, explore our HELOC Calculator. Alternatively, if mortgage rates have declined overall, a Cash-Out Refinance may provide a single unified loan.
Frequently asked questions
How much home equity can I borrow?
Lenders typically allow borrowing up to 80% or 85% Combined Loan-to-Value (CLTV) of your home's appraised value.
What is a home equity loan?
A second mortgage: a fixed lump sum at a fixed rate repaid over a set term, secured against the equity in your home. Rates are lower than unsecured borrowing because the lender has collateral, which is precisely why the risk to you is higher.
Is the interest tax-deductible?
In the US, only if the proceeds are used to buy, build or substantially improve the home securing the loan, under rules from the 2017 Tax Cuts and Jobs Act, and only within the overall mortgage interest limits. Using the money for a car or to consolidate cards makes the interest non-deductible. Confirm with a tax professional.
What happens if I cannot repay?
The lender can foreclose, just as with a first mortgage - the second lien is behind the first in priority but still secured against the property. This is the critical difference from credit card debt, and the reason converting unsecured debt to secured debt should never be done casually.