A home equity loan is the plainest way to borrow against your house: one lump sum, one fixed rate, one payment that never changes until the loan is gone. Take the home this calculator opens with — worth $450,000, with $260,000 still owed on the mortgage. The equity is $190,000. Borrow $50,000 of it at 8% for 15 years and the payment is $477.83 a month, every month, for 180 months. The loan costs $86,008.69 in total, of which $36,008.69 is interest. This page shows where each of those numbers comes from — the equity, the lender's combined LTV cap, and the amortization math that turns a rate and a term into a payment — so you can judge any offer a lender puts in front of you.

Your equity is not your borrowing limit.

The gap between your home's value and your mortgage balance is your equity, but no mainstream lender will let you borrow all of it. The binding rule is combined loan-to-value, CLTV: your mortgage balance plus the new loan, divided by the home's value. On the example home, adding a $50,000 loan gives ($260,000 + $50,000) ÷ $450,000 = 68.89% CLTV — comfortably inside every common cap. The caps themselves are what set your ceiling. At an 80% CLTV cap the largest loan on this home is $100,000; at 85% it is $122,500; at 90% it is $145,000 — all well short of the $190,000 of paper equity. That is why the calculator shows all three caps: the same house supports very different loan sizes depending on the lender's rule, and the highest caps usually come with higher rates, because the lender is leaving itself a thinner cushion if prices fall. One more caution hides in the word "value": the number that counts is the lender's appraisal, not your estimate. If the appraisal comes in at $400,000 instead of $450,000, the 80% cap drops your maximum loan from $100,000 to $60,000 — the ceiling falls dollar for dollar with the valuation.

The worked example, dollar by dollar.

Start with the $50,000 loan at 8% over 15 years. The monthly rate is 8% ÷ 12 = 0.6667%, so the first month's interest is $50,000 × 0.6667% = $333.33. Of the $477.83 payment, that leaves $144.49 for principal in month one. The split feels discouraging, but it reverses relentlessly: every payment shrinks the balance, which shrinks the next month's interest, which sends more of the fixed payment to principal. By the final year almost the whole payment is principal. Add the payments up — 180 × $477.83 — and you get the $86,008.69 total cost and the $36,008.69 of interest. The same math at other sizes: $100,000 at 7.25% for 20 years on a $600,000 home with $300,000 owed is $790.38 a month and $89,690.24 of interest at a 66.67% CLTV; a smaller $25,000 loan at 8.75% for 10 years is $313.32 a month and $12,598.03 of interest. In every case the pattern is the same — the interest is not a fee added on top, it is the rent on a balance that falls a little more each month.

The term is the most expensive choice you make.

Rate shopping gets the attention, but the term quietly decides what the loan really costs. On $50,000 at 8%, stretching from 5 years to 20 years cuts the payment from $1,013.82 to $418.22 — yet the interest climbs from $10,829.18 to $50,372.81, more than the amount borrowed. Even the middle step is pricey: moving from 15 years to 20 years lowers the payment by just $59.61 a month while adding $14,364.12 of interest. The reason is the slow start above — a longer term spends more years in the phase where most of the payment is interest and the balance barely moves. The practical rule: choose the shortest term whose payment you can sustain comfortably, not the longest term whose payment you can barely notice. If your budget genuinely needs the 20-year payment, consider making the 15-year payment anyway whenever you can — extra principal on a fixed-rate loan simply shortens the road, and the interest saved is calculated by this same formula, in reverse.

Home equity loan or HELOC?

The two products borrow against the same equity and are constantly confused. A home equity loan pays out once, at a fixed rate, with a fixed payment — what this calculator models. A HELOC is a revolving credit line, usually at a variable rate, where you draw what you need during a draw period and pay interest only on the amount drawn. The loan suits a known cost — a roof, a remodel with a signed contract, a debt consolidation with a fixed total — because the payment and the end date are certain. The line suits expenses that arrive in stages or at unknown sizes, at the price of rate uncertainty and a payment shock when the draw period ends and repayment begins. If you are weighing the two, run the same amount through the HELOC calculator on this site and compare the draw-period payment against the fixed payment here — then ask which risk you would rather hold: paying interest on money you have not spent yet, or a rate that can climb after you have spent it.

Paying extra is the one lever that always works.

A fixed-rate loan fixes your minimum payment, not your maximum. On the example loan, paying $600 a month instead of the required $477.83 ends the debt in 123 months instead of 180 — 57 months early — and cuts the interest from $36,008.69 to $23,800, a saving of $12,208.69. The mechanism is the first-month split running in your favor: every extra dollar skips the interest queue and reduces the balance immediately, which reduces every future month's interest charge. Two practical cautions. First, tell the lender to apply extra payments to principal — most do automatically, but some apply them to the next month's payment unless instructed, which only moves your due date. Second, keep the discipline honest: an extra payment you can sustain for ten years beats a heroic one you abandon by spring. And whether the interest on a home equity loan is tax-deductible depends on how the money is used and on current tax law — in general it has only qualified when the loan buys, builds, or substantially improves the home securing it — so ask a tax professional about your situation rather than assuming the rate is quietly lower than it looks.

What this calculator leaves out — read this before you sign.

Two honest omissions. First, closing costs: home equity loans commonly carry them — often 2% to 5% of the loan amount, $1,000 to $2,500 on $50,000 — and this calculator does not add them, because lenders quote them individually. A loan at 7.75% with $2,500 of costs can be more expensive over a short holding period than a loan at 8% with none, so compare offers on the Loan Estimate, not the headline rate. Second, the risk itself: this loan is secured by your home, which means missed payments can end in foreclosure, and the debt survives a sale — if you sell, both the mortgage and this loan are paid from the proceeds before you see a dollar. That is precisely why the rate is lower than a credit card's: the lender's risk is smaller because yours is larger. Borrow the amount the project needs at the shortest term the budget holds, and a home equity loan is a disciplined tool. Borrow the maximum the CLTV cap allows because it is available, and the arithmetic on this page stops being your friend.

With the pre-filled defaults — Home Value $450,000, Current Mortgage Balance $260,000, Home Equity Loan Amount $50,000, Interest Rate (APR) 8%, Loan Term 15 years — the Home Equity Loan Calculator returns Monthly Payment $477.83, Total Cost of the Loan $86,008.69, Total Interest Paid $36,008.69, Your Current Home Equity $190,000.00, Combined LTV After This Loan 68.89%, Max Loan at 80% CLTV $100,000.00, Max Loan at 85% CLTV $122,500.00, Max Loan at 90% CLTV $145,000.00. Change any input and those results update instantly, so you can see exactly how each number you enter moves the answer.