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Home Equity Loan Calculator

Estimate the monthly payment, total interest, closing costs, and combined loan-to-value on a fixed-rate home equity loan (second mortgage). Checks the loan against an 80 to 85 percent CLTV cap, shows the first five years of principal-versus-interest amortization, and flags when a HELOC would fit better.

Home and loan details

Monthly payment

$783

Combined loan-to-value after funding: 65.0%

Home equity

$250,000

Max available

$150,000

Total interest

$65,970

Closing costs

$1,500

Total cost

$142,470

Feasible

Yes

YearPrincipalInterestBalance
1$2,375$7,023$72,625
2$2,610$6,788$70,015
3$2,869$6,529$67,146
4$3,154$6,244$63,991
5$3,467$5,931$60,524

HELoan vs HELOC

A home equity loan delivers a lump sum at a fixed rate, so payments stay flat for the life of the loan. A HELOC is a revolving line of credit with a variable rate; you draw what you need during the draw period and payments fluctuate with prime rate moves.

Suggested fit

A home equity loan is typically the better fit here. The lump sum and fixed rate work well for one-time expenses like a single renovation, debt consolidation, or a known purchase, where rate certainty matters more than draw flexibility.

Tax deductibility

Per the Tax Cuts and Jobs Act of 2017, home equity loan interest is only deductible when the proceeds are used to buy, build, or substantially improve the home that secures the loan. Using the funds for debt consolidation, tuition, or other personal expenses removes the deduction. Consult a tax professional.

Frequently Asked Questions about the Home Equity Loan Calculator

How is a home equity loan different from a HELOC?
A home equity loan (HELoan) is a one-time lump sum at a fixed interest rate, repaid in equal monthly installments over 5 to 30 years. You get the full amount at closing, the rate never changes, and the payment is predictable for the life of the loan. A HELOC is a revolving line of credit at a variable rate tied to the prime rate. During the draw period (usually 10 years) you borrow what you need and pay interest only; after that, the balance amortizes over the repayment period (usually 20 years). If you need a known amount for a one-time expense, the HELoan wins on certainty. If you need flexible access for rolling costs or want to pay nothing when you are not drawing, the HELOC wins on flexibility.
What is the combined loan-to-value (CLTV) limit on a home equity loan?
Most US lenders cap combined loan-to-value at 80 to 85 percent of the home's appraised value. CLTV adds your first mortgage balance and the new home equity loan together, then divides by home value. On a $500,000 home with a $250,000 first mortgage, an 80 percent cap leaves $150,000 in available equity ($500,000 times 0.80 minus $250,000). Some specialty lenders go to 90 or even 100 percent CLTV but charge higher rates and tighter credit requirements to offset the risk. The cap exists because the lender holds a second lien: in a foreclosure they get paid only after the first mortgage is satisfied, so they need a thicker equity cushion to absorb a price drop.
Is home equity loan interest still tax deductible?
Under current federal rules, interest may qualify as home-mortgage interest when the proceeds are used to buy, build, or substantially improve the home that secures the debt and the other deduction requirements are met. Personal uses such as debt consolidation generally do not qualify. Debt limits, acquisition dates, filing status, itemizing, and state rules can change the result, so review the current IRS instructions or a tax professional.
Why are home equity loan rates higher than first mortgage rates?
A home equity loan is a second lien, meaning the HELoan lender stands behind the first mortgage holder in any foreclosure or sale. If the home sells for less than the combined debt, the first mortgage is paid in full before the HELoan sees a dollar. That subordinate position is riskier, and lenders charge a higher rate to compensate. In 2026 a first-mortgage rate might sit around 6.5 to 7 percent, while a comparable home equity loan typically prices in the 8 to 12 percent range. The gap also reflects the smaller market: home equity loans are not securitized as efficiently as conforming first mortgages, so lenders cannot offload the risk as cheaply.
What do people actually use home equity loans for?
The three biggest categories are home improvement, debt consolidation, and major life expenses (medical bills, education, a wedding). Home improvement is the most defensible use because it can rebuild the equity you just borrowed against and keeps the interest tax-deductible. Debt consolidation can make sense when you swap 22 percent credit card debt for a 9.5 percent HELoan, but the savings only stick if you do not run the cards back up; if you do, you have converted unsecured debt into debt secured by your home. Education and weddings are the riskiest uses because the borrowed money does not produce a return that helps repay the loan, and the interest is not deductible under TCJA. Treat a HELoan as a tool with consequences: a missed payment can put your home into foreclosure, exactly like a first mortgage.

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