What is a home equity loan?
A home equity loan lets you borrow against the part of your home you own outright — its value minus what you still owe on the mortgage. You receive the money as one lump sum and repay it in fixed monthly payments at a fixed rate, so it is often called a second mortgage. Homeowners use it for renovations, large purchases or to pay off debt with a higher interest rate.
This home equity loan calculator has two parts. Monthly payment shows the payment, the total interest and, with closing costs turned on, how much cash you actually receive, the full cost of the loan and its APR. How much can you borrow estimates the largest loan your equity allows. To see the payment on your first mortgage, use the mortgage calculator.
How the payment and APR are calculated
- Monthly payment M = P × r × (1 + r)n / ((1 + r)n − 1), where P is the loan amount, r the monthly rate and n the number of payments;
- Total interest = M × n − P;
- Cost of loan = total interest + closing costs;
- APR = the yearly rate at which the same payments repay only the money you receive, P minus the closing costs.
Example: a $150,000 home equity loan at 8.78% for 15 years costs $1,501.83 a month. With $7,500 of closing costs deducted from the loan, you receive $142,500. Over 15 years you pay $120,330 in interest, so the loan costs $127,830 in total, and its APR is 9.660%. The APR calculator explains the method in detail.
How much home equity can you borrow?
Lenders cap the combined loan-to-value (CLTV) ratio: everything you owe on the home, the new loan included, divided by its value. Most allow 80% to 85%, some up to 90%.
Maximum loan = home value × maximum CLTV − mortgage balance
For a $600,000 home with $250,000 left on the mortgage:
| Maximum CLTV | All loans up to | Home equity loan up to |
|---|---|---|
| 80% | $480,000 | $230,000 |
| 85% | $510,000 | $260,000 |
| 90% | $540,000 | $290,000 |
Your credit score and debt-to-income ratio also decide how much you can borrow and at what rate.
Home equity loan payment by amount and term
Monthly payments at 8.78%:
| Loan amount | 10 years | 15 years | 20 years |
|---|---|---|---|
| $25,000 | $314 | $250 | $221 |
| $50,000 | $627 | $501 | $443 |
| $75,000 | $941 | $751 | $664 |
| $100,000 | $1,255 | $1,001 | $886 |
| $150,000 | $1,882 | $1,502 | $1,328 |
A longer term lowers the payment but costs more in interest. On $100,000 at 8.78%, the total interest is $50,586 over 10 years, $80,220 over 15 years and $112,550 over 20 years.
Home equity loan vs. HELOC vs. cash-out refinance
- Home equity loan: a lump sum at a fixed rate with fixed payments; your first mortgage stays as it is.
- HELOC: a credit line you draw from as needed, usually at a variable rate, with interest only on what you use. See the HELOC calculator.
- Cash-out refinance: a new, larger first mortgage that replaces the old one. It can make sense when current rates are lower than your mortgage rate; the refinance calculator compares the two loans.
Before you borrow against your home
- the loan is secured by your home, so missed payments can lead to foreclosure;
- closing costs are often 2% to 5% of the loan — compare offers by APR, not only by rate;
- if you use it to pay off credit cards, avoid running the balances up again — the debt consolidation calculator checks whether it saves money;
- if home prices fall, you can owe more than the home is worth.
Is home equity loan interest tax deductible?
In the U.S., only when the money is used to buy, build or substantially improve the home that secures the loan, and only if you itemize. All mortgage debt on the home counts toward the $750,000 limit for the mortgage interest deduction. Interest on money used for other things, such as paying off credit cards or buying a car, is not deductible. The One Big Beautiful Bill Act of 2025 made these rules permanent.