Home Equity Loan Calculator: Monthly Payment & Total Interest
Work out the monthly payment and total interest on a fixed-rate home equity loan — a lump sum borrowed against the equity you have built in your home.
Adjust the inputs and select Calculate for a full breakdown.
Year-by-year amortization schedule
Compare Common Scenarios
How the numbers shift across typical situations for this calculator:
| Scenario | Monthly payment | Total interest | Total of payments |
|---|---|---|---|
| $40k · 8.5% · 15-year | $393.90 | $30,901.25 | $70,901.25 |
| $25k · 9.0% · 10-year | $316.69 | $13,002.73 | $38,002.73 |
| $75k · 8.0% · 20-year | $627.33 | $75,559.21 | $150,559.21 |
| $60k · 7.5% · 15-year | $556.21 | $40,117.33 | $100,117.33 |
How This Calculator Works
Enter the amount you want to borrow against your home equity, the fixed APR, and the repayment term. A home equity loan is a second mortgage: you receive the full amount up front and repay it in equal monthly installments. The calculator turns the APR into a monthly rate and applies the amortization formula to find one constant payment, then shows how the balance falls year by year.
The Formula
Fixed-Rate Amortization
P = loan amount, r = monthly rate (APR ÷ 12), n = number of monthly payments
Worked Example
Borrowing $40,000 of home equity at 8.5% APR over 15 years gives a monthly payment of about $394. Across the full term you repay roughly $70,900, so interest adds close to $30,900 to the amount you originally drew.
Key Insight
A home equity loan is secured by your house, so the rate is far lower than unsecured borrowing — but missed payments put the home itself at risk. Borrow only what a renovation or consolidation genuinely requires, not the full equity available.
Home equity loan vs HELOC: fixed vs revolving credit
Two ways to tap home equity. HOME EQUITY LOAN (HEL): one-time lump sum at fixed rate (7-10% APR in 2026), fixed monthly payment, fixed 5-30 year term. Like a second mortgage. Best for known one-time expenses (major renovation, debt consolidation, large medical bill).
HELOC (Home Equity Line of Credit): revolving credit line at variable rate (8-11% APR), like a credit card secured by your house. Draw what you need when you need it during 'draw period' (typically 10 years), then convert to amortizing payment for 10-20 years. Best for ongoing needs (multi-stage renovation, college tuition over years, business cash flow).
Rate comparison context: both are dramatically cheaper than unsecured options. Credit cards 22%+, personal loans 12-25%. Using home equity (8-10%) instead can save 10-15 percentage points of interest annually — meaningful on $20k+ balances. But the trade-off is significant: defaulting on home equity debt can trigger FORECLOSURE. The collateral risk fundamentally changes the consideration.
LTV and CLTV: how much you can actually borrow
Lenders cap home equity borrowing using Combined Loan-to-Value (CLTV) ratio = (Primary mortgage balance + Home equity loan/HELOC) / Home appraised value. Most lenders cap CLTV at 80-85% (a few at 90% for excellent credit).
Worked example: home worth $500,000, primary mortgage balance $300,000 (LTV 60%). At 80% CLTV cap: max total debt = $400,000. Available for HEL/HELOC: $400,000 − $300,000 = $100,000. At 85% CLTV: $125,000 available. At 90% CLTV: $150,000.
Implications: in 2022-2024 home value declines, many borrowers found themselves with LESS available equity than expected because appraisals came in low. Some HELOCs were even FROZEN by lenders during the 2008 crisis when home values fell — a callable feature most homeowners didn't know existed. Read the fine print: most HELOCs allow the lender to reduce or freeze your line if home value declines. For critical needs (medical, education), establish HELOC BEFORE you need it while equity is comfortable.
Tax deductibility: only specific uses qualify
Home equity loan interest is tax-deductible ONLY if proceeds are used to 'buy, build, or substantially improve' the home that secures the loan (per Tax Cuts and Jobs Act of 2017, in effect through 2025+). Interest is deductible on combined acquisition debt (primary mortgage + home equity debt) up to $750k.
What qualifies: kitchen/bathroom remodel, addition, new roof, HVAC replacement, swimming pool, deck — anything that improves the property. Cosmetic painting and minor repairs are debatable; major capital improvements clearly qualify.
What does NOT qualify: debt consolidation (paying off credit cards), college tuition, medical bills, vacation, car purchase, business investment. Even though the loan is secured by your home, the interest isn't deductible because the USE wasn't home-related. This makes home equity for debt consolidation less attractive than commonly believed — the rate is low, but you lose the deductibility advantage that 'mortgage' suggests.
Home equity available at various property values and primary mortgage levels
Maximum home equity loan/HELOC at 80% CLTV cap (common lender limit). Higher CLTV (85-90%) available with strong credit but with rate premium.
| Home value | Primary mortgage balance | Total debt cap (80% CLTV) | Available HEL/HELOC |
|---|---|---|---|
| $300,000 | $200,000 | $240,000 | $40,000 |
| $500,000 | $300,000 | $400,000 | $100,000 |
| $500,000 | $150,000 | $400,000 | $250,000 |
| $800,000 | $400,000 | $640,000 | $240,000 |
| $1,200,000 | $600,000 | $960,000 | $360,000 |
85% CLTV: add 5% of home value. 90% CLTV: add 10% (with 0.5-1% rate premium typically). Properties in HCOL areas (coastal CA, NYC, Boston, Seattle) may have HELOC caps regardless of CLTV (lender risk-management at portfolio level).
Frequently Asked Questions
What is a home equity loan?
It is a loan secured by the equity in your home — the difference between the home's value and your remaining mortgage. You receive a lump sum and repay it at a fixed rate over a set term.
How is it different from a HELOC?
A home equity loan pays out a fixed lump sum repaid on a set schedule. A HELOC is a revolving credit line you draw on as needed, usually at a variable rate. This calculator models the fixed-loan version.
How much equity can I borrow?
Lenders typically allow your mortgage plus the home equity loan to reach around 80 to 85 percent of the home's value. The exact limit depends on the lender, your credit, and your income.
Is the interest tax deductible?
Interest may be deductible when the loan is used to buy, build, or substantially improve the home that secures it. The rules change, so confirm your situation with a tax professional.
What happens if I cannot repay?
Because the loan is secured by your home, sustained non-payment can lead to foreclosure. Contact the lender early if you expect difficulty, as many offer hardship arrangements.
References & Authoritative Sources
- CFPB — Consumer Financial Protection Bureau — Home equity loans and HELOC guide · consulted May 31, 2026 · Federal consumer protection — HEL vs HELOC differences, fees, foreclosure risks
- IRS — Tax Topic 504 (Home Mortgage Points and Interest) — Home equity interest deductibility rules · consulted May 31, 2026 · Tax authority — when home equity interest is and isn't deductible
- Federal Reserve — Senior Loan Officer Opinion Survey — HELOC origination trends · consulted May 31, 2026 · Authoritative source — HELOC market trends, lender policy changes
Related Calculators
Data Sources & Benchmarks
This calculator draws on 3 independent, dated sources. The starting values for interest rate are taken from the benchmarks below and refresh whenever the snapshots are updated.
Methodology & Review
Payments use the standard fixed-rate amortization formula. The calculator assumes a fixed APR with no closing costs financed into the balance; results are checked against lender disclosures.
Updated