Home equity loan calculator guide
A home equity loan is typically a closed-end second mortgage with a fixed amount, rate and repayment schedule. The existing mortgage and new loan are both secured by the home.
Available equity is not the same as borrowable equity. Lenders may limit combined loan-to-value and apply credit, income, appraisal and minimum-equity requirements.
How to use this home equity loan calculator
- Enter current value: Use a reasonable estimate; the lender may require an appraisal.
- Enter mortgage balance: Use the current unpaid first-mortgage principal.
- Enter a CLTV limit: Use a lender-provided limit when available.
- Enter loan terms: Add the requested amount, fixed note rate, term and costs.
- Review the warning: A request above estimated borrowing room may not fit the entered CLTV limit.
Formula and variables
Estimated borrowing room equals the entered maximum combined-LTV amount minus the current mortgage balance. The new loan payment uses the fixed amortization formula.
Combined LTV = (mortgage balance + equity loan) ÷ home value × 100- CLTV — Combined loan-to-value
- Total entered debt secured by the home divided by value. (percent)
- Borrowing room — Estimated additional secured debt
- Maximum combined balance minus current mortgage. (USD)
Worked example: $50,000 home equity loan
A $400,000 home has a $220,000 first mortgage. The homeowner requests $50,000 at 8.5% for 15 years under an 80% CLTV limit.
- Current equity
- $180,000
- Maximum combined balance
- $320,000
- Estimated borrowing room
- $100,000
- Add the $50,000 request to the $220,000 mortgage.
- Divide $270,000 by $400,000 to obtain 67.5% CLTV.
- Amortize the new $50,000 fixed-rate second mortgage.
Result: The request is within the modeled CLTV limit
Approval still depends on lender valuation, underwriting, lien position and product terms.
Understanding your results
Monthly payment
Fixed principal and interest for the requested home equity loan only.
Borrowing room
An estimate based solely on value, mortgage balance and entered CLTV limit.
Total interest
Interest across the selected term if held to payoff without extra payments.
Assumptions
- The home value and current mortgage balance are accurate.
- The equity loan is fixed-rate and fully amortizing.
- Closing costs are paid separately and do not increase principal.
Limitations
- The calculator does not determine approval, credit capacity or appraisal value.
- It does not model a variable-rate HELOC or interest-only draw period.
- Tax deductibility depends on current law and use of proceeds.
- Foreclosure risk and opportunity costs are not quantified.
Common mistakes
- Treating all home equity as available to borrow.
- Comparing a fixed loan directly with a variable HELOC without rate scenarios.
- Ignoring closing costs and the risk of securing debt with a home.
Practical use cases
Estimate a second-mortgage payment
Model a fixed amount, rate and repayment term.
Check combined LTV
Compare the requested balance with a lender-provided CLTV threshold.
Planning and decision guide
Equity is not the same as borrowable equity
Current equity is value minus debt. A lender may require a remaining equity cushion and calculate value through an appraisal. The CLTV field models one constraint only; income, credit, lien position and property rules also affect approval.
Compare a fixed home equity loan, HELOC and cash-out refinance
A fixed home equity loan can preserve the existing first mortgage and provide predictable payments. A HELOC offers reusable credit but commonly has a variable rate. A cash-out refinance replaces the first mortgage, which can be costly when the existing rate is favorable. Compare the rate applied to every borrowed dollar, fees, payment risk and intended use.
Protect the equity cushion
Borrowing near the maximum CLTV leaves less protection against price declines and selling costs. Because the home secures the debt, missed payments can put the property at risk. Borrowing room is a ceiling estimate, not a recommended amount.
Plan for sale or early payoff
A home equity loan normally must be paid when the property is sold. Review payoff procedures, closing costs and any early-termination or prepayment terms before borrowing for a short holding period.
Frequently asked questions
How much home equity can I borrow?
It depends on lender CLTV limits, appraised value, mortgage balance and underwriting. This tool estimates only the CLTV-based amount.
What is the difference between equity and borrowing room?
Equity is value minus debt. Borrowing room also reserves the portion required by the entered maximum CLTV.
Is a home equity loan the same as a HELOC?
No. A home equity loan generally advances a fixed lump sum with scheduled payments; a HELOC is a revolving line that commonly has a variable rate.
What is combined loan-to-value?
CLTV divides the total balances secured by the home by its value.
Sources and review
- What is a home equity loan? — Consumer Financial Protection Bureau. Accessed 2026-07-09.
- HMDA combined loan-to-value guidance — Consumer Financial Protection Bureau. Accessed 2026-07-09.
Reviewed 2026-07-09.