Home Equity Loan Calculator
Compare the fixed monthly payment and total interest on any home equity loan against a HELOC or cash-out refinance to find the lowest lifetime cost for the same need.
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Enter your values above to see the results.
Tips & Notes
- ✓Preserve a low-rate primary mortgage by using a home equity loan instead of cash-out refinancing — replacing a 3.5% rate with 7% on the full balance is almost always worse.
- ✓The combined LTV (primary mortgage plus home equity loan divided by home value) determines your rate — below 80% gets the best rates at most lenders.
- ✓Shop credit unions alongside banks for home equity loans — credit unions often offer meaningfully lower rates for well-qualified borrowers on second mortgages.
- ✓Interest on home equity loan funds used for home improvement may be tax-deductible — keep receipts and consult a tax advisor before claiming.
- ✓A 10-year term versus 15-year reduces total interest significantly at the cost of higher monthly payments — model both before deciding on term length.
- ✓Home equity loans typically have $500-$2,000 in closing costs — factor these into the effective rate comparison against other financing options.
Common Mistakes
- ✗Using a home equity loan to consolidate unsecured debt without changing the spending behavior that created it — you convert unsecured risk to a secured obligation backed by your home.
- ✗Choosing the longest term to minimize monthly payment without calculating total interest — $75,000 at 8% over 20 years pays $75,720 in interest versus $54,060 over 15 years.
- ✗Not comparing a home equity loan to a HELOC — for phased or ongoing expenses, a HELOC may cost significantly less because you borrow only what you need.
- ✗Not checking combined LTV before applying — lenders typically cap combined LTV at 80-85%, and homes that have declined in value may not qualify at all.
- ✗Taking a home equity loan on a home with declining value — if value falls below combined debt, you become underwater with no refinancing options.
- ✗Treating home equity as disposable savings — it must be repaid with interest regardless of what the borrowed funds purchase or whether those purchases hold value.
Home Equity Loan Calculator Overview
A home equity loan is a fixed-rate, lump-sum loan secured by your home equity — effectively a second mortgage. You receive the full amount upfront, make fixed monthly payments from day one, and pay it off on a defined schedule. Unlike a HELOC, there is no variable rate, no draw period, and no payment shock at conversion.
What each field means:
- Loan Amount — the lump sum you receive at closing; interest starts on the full amount immediately
- Interest Rate — fixed annual rate for the entire loan term; locked at origination
- Loan Term — repayment period; 5-20 years is typical; shorter = higher payment, much less interest
- Down Payment — not applicable; this is a second mortgage on existing equity
What your results mean:
- Monthly Payment — fixed amount due every month for the full term; never changes
- Total Paid — monthly payment times number of payments
- Total Interest — what borrowing your equity costs; compare across terms carefully
- Interest-to-Principal — cents of each dollar paid that go to interest vs debt reduction
Example — $75,000 home equity loan at 8.0%, 15-year term:
Monthly payment: $717 Total paid over 15 years: $129,060 Total interest: $54,060 (72% of the original loan added on top) Combined LTV check: existing mortgage + $75,000 must stay below 80-85% of home value On a $400,000 home with $220,000 mortgage: combined LTV = ($220,000 + $75,000) / $400,000 = 73.75% — qualifies
EX: $75,000 needed — which is cheaper? Home equity loan (8.0% fixed, 15yr): $717/month, total interest $54,060 — certain HELOC (8.5% variable, 10yr draw + 15yr repay): $531 draw, then ~$738 repay — uncertain Cash-out refinance ($300k at 5.5% to new $375k at 6.75%, 30yr): adds $730/month more If current mortgage is at 5.5% or below: home equity loan preserves the low rate, cash-out destroys it.
Monthly payment by loan amount and rate:
| Loan Amount | 7.5% / 10yr | 8.0% / 15yr | 9.0% / 15yr |
|---|---|---|---|
| $25,000 | $297 | $239 | $253 |
| $50,000 | $594 | $478 | $507 |
| $75,000 | $891 | $717 | $760 |
| $100,000 | $1,188 | $956 | $1,014 |
Total interest by term — $75,000 at 8.0%:
| Term | Monthly Payment | Total Interest | Total Paid |
|---|---|---|---|
| 5 years | $1,521 | $16,260 | $91,260 |
| 10 years | $909 | $34,080 | $109,080 |
| 15 years | $717 | $54,060 | $129,060 |
| 20 years | $628 | $75,720 | $150,720 |
Never use a home equity loan to fund consumption — vacations, vehicles, or depreciating purchases. The collateral is your home, and defaulting leads to foreclosure, not just credit damage. Use home equity financing for renovations that increase value, high-rate debt consolidation with a clear repayment discipline, or investments with expected returns that exceed the loan rate. The equity you are borrowing against took years of mortgage payments and market appreciation to build — treat it accordingly.
Frequently Asked Questions
A home equity loan is a fixed-rate, lump-sum loan secured by the equity in your home — effectively a second mortgage. You receive the full amount upfront, make fixed monthly payments throughout the term, and the loan is paid off on a defined schedule. This is the primary distinction from a HELOC, which provides revolving access to a credit line with variable payments. Home equity loans are ideal when you need a specific amount for a defined purpose and want the certainty of a fixed payment.
Most lenders cap combined loan-to-value at 80-85% of home value. If your home is worth $400,000 and you owe $240,000 on the primary mortgage (60% LTV), you might borrow up to $80,000-$120,000 (reaching 80-90% combined LTV). Your actual limit depends on income, credit score, and the lender maximum. A 740+ credit score typically accesses the highest LTV limits and best rates. Borrowing above 80% combined LTV typically triggers higher rates at most lenders.
There are no legal restrictions on use — you can apply proceeds to any purpose. However, tax deductibility of interest depends on use: interest is potentially deductible only for funds used to buy, build, or substantially improve the home securing the loan. Interest on funds used for debt consolidation, education, or consumer spending is not deductible. Common uses include home renovations that increase value and consolidating high-rate debt at a lower fixed rate.
Most lenders require a minimum credit score of 620-640 for approval, but scores below 680 typically face higher rates and lower maximum LTV limits. Scores of 720 and above generally access the best rates. Combined LTV also matters significantly — a borrower with a 680 score at 70% combined LTV may receive a better rate than a borrower with a 720 score at 88% combined LTV. Beyond credit score, lenders evaluate debt-to-income ratio, employment history, and income stability.
A home equity loan almost always offers a lower rate than a personal loan because it is secured by your property. On $50,000, the rate difference between a personal loan (often 10-18%) and a home equity loan (often 7-9%) represents roughly $15,000-$25,000 in interest savings over 10 years. However, the home equity loan puts your home at risk — defaulting has consequences personal loan default does not. Use a home equity loan for larger amounts where savings are significant and you have high confidence in repayment.
A home equity loan becomes a second lien on your property, behind the primary mortgage in priority. Your primary mortgage payments, rate, and terms are completely unchanged — you simply add a second monthly payment. The combined debt service affects your debt-to-income ratio. If you default specifically on the home equity loan, the second lienholder can still initiate foreclosure — though this is relatively rare because the second lender typically has less to gain after the first mortgage is satisfied from any sale proceeds.