How to use this calculator
The page answers two separate questions. The top part tells you what a home equity loan would cost. The bottom part tells you how much you can borrow.
- Enter the loan amount. Use the lump sum you want to borrow, not your total equity.
- Set the rate and term. Ten to fifteen years is common; shorter terms raise the payment and cut total interest.
- Add closing costs. Enter a dollar amount or a percentage, then choose whether the lender deducts them from your proceeds or you pay them at closing.
- Read the APR, not just the rate. Cash received, total payments, total interest, and cost of loan are shown side by side.
- Check your borrowing limit. Enter the home value, mortgage balance, and the lender's LTV cap.
Understanding the true cost
The interest rate is only part of the price. Closing costs arrive before you receive any money, and they change the effective cost of borrowing. The APR folds those upfront fees into one comparable number, so two offers with different rates and fees can be judged on equal footing.
A loan at 8% with modest fees can be cheaper than one at 7.5% with heavy fees. Watch for "no-closing-cost" offers as well: the lender usually recovers those costs through a higher rate, which can cost more over a 15-year term than paying the fees upfront.
If the fees are deducted from the loan, your cash received drops but the repayment schedule stays the same. If you pay them at closing, you keep the full loan amount. Either way, the calculator shows both cash received and the loan's true cost.
Home equity loan vs. HELOC
- Home equity loan - One lump sum, fixed rate, equal monthly payments. Best for a single expense with a known price, like a kitchen remodel or consolidating high-interest debt.
- HELOC - A revolving credit line, usually variable rate, drawn as needed during the draw period. Best for staged projects or costs you cannot predict exactly, but payments can rise.
If predictability matters and you know the amount, the fixed loan is the simpler choice. If flexibility matters more, a line of credit may fit better, provided you can absorb rate changes.
What lenders look at before approving
- Loan-to-value ratio - The combined mortgage and new loan typically cannot exceed 80% to 90% of the appraised value, depending on the lender.
- Credit score - Many programs start near 630; better scores bring better pricing and sometimes a higher LTV allowance.
- Debt-to-income ratio - Lenders add the new payment to your existing debts and generally want the total below 43% of gross monthly income.
- Property condition - An appraisal confirms the value and flags issues. Deferred maintenance can lower the appraisal and shrink how much you can borrow.
Frequently asked questions
How much can I borrow with a home equity loan?
Most lenders cap the combined mortgage and new loan at 80% of your home value, though some allow 85% or 90% for strong applicants. Subtract your current mortgage balance from that cap and you have the maximum. On a $500,000 home with $250,000 owed, an 80% cap leaves $150,000.
What are typical closing costs on a home equity loan?
Expect 2% to 5% of the loan amount. Appraisal, origination, title search, credit report, and recording fees are the usual line items. On a $150,000 loan that is roughly $3,000 to $7,500, which is why comparing APR rather than rate alone matters.
Is a home equity loan better than a HELOC?
A home equity loan gives you one lump sum at a fixed rate with equal payments, which suits a known expense like a remodel or debt consolidation. A HELOC is a credit line with a variable rate that you draw from over time, which suits phased or uncertain costs. Predictability favors the loan; flexibility favors the line.
What credit score do I need for a home equity loan?
Many lenders start around 630, but the best pricing usually goes to scores above 700. A higher score can lower your rate and may unlock a higher loan-to-value limit. Below the minimum, some lenders will still approve with compensating factors such as substantial equity.
Can I get a home equity loan if I have little equity?
You need enough equity to cover the new loan plus the existing mortgage under the lender cap. If the combined balance would exceed that cap, the loan is not available. Paying down the mortgage or a rising home value increases the room you have to borrow.
Is home equity loan interest tax deductible?
Interest may be deductible when the funds are used to buy, build, or substantially improve the home that secures the loan. Using the money for debt consolidation or living expenses usually does not qualify. Confirm with a tax professional before counting on the deduction.
This calculator is an estimate for planning only. Actual loan terms, LTV caps, fees, and approval depend on the lender, your credit profile, and the property appraisal. Confirm numbers with a loan officer before applying.
