Home Equity Loan Calculator
Calculate payments for a fixed-rate home equity loan (second mortgage) and compare its costs to a HELOC.
Enter Your Loan Details
Monthly Payment
Total Interest
Total Paid
How the Home Equity Loan Calculator Works
A home equity loan, often referred to as a **second mortgage**, is a straightforward way for homeowners to borrow against the equity they've built in their property. Unlike a Home Equity Line of Credit (HELOC), which functions like a variable-rate credit card, a home equity loan is a simple, **fixed-rate installment loan**. You receive a lump-sum payment upfront and repay it with equal, predictable monthly payments over a set term.
Our Home Equity Loan Calculator is designed to provide clarity and predictability for this type of financing. It operates on the same standard amortization principles as any other fixed-rate loan, such as an auto loan or a personal loan. The calculation is transparent and easy to understand.
Here’s how it works:
- Loan Amount: You input the amount of equity you wish to borrow. Lenders typically allow you to borrow up to 80-85% of your home's value, minus your outstanding mortgage balance.
- Fixed Interest Rate: You enter the fixed annual interest rate offered by the lender. This rate will not change for the entire life of the loan.
- Loan Term: You select the repayment period, which typically ranges from 5 to 20 years.
Using these three inputs, the calculator uses the standard loan amortization formula to determine your **fixed monthly payment**. Each payment is composed of both principal (reducing your loan balance) and interest (the cost of borrowing). The calculator also provides a full amortization schedule, allowing you to see exactly how your loan is paid down over time and the total interest you will pay over the life of the loan. This predictability is the primary advantage of a home equity loan over a variable-rate HELOC.
Home Equity Loan Scenarios
Scenario 1: Funding a Major Home Renovation
A homeowner needs **$50,000** for a kitchen remodel. They secure a 15-year home equity loan at a fixed interest rate of **8.5%**.
- The calculator shows their consistent monthly payment will be approximately **$492**.
- Over the 15-year term, they will repay a total of about $88,560.
- The total interest paid will be **$38,560**.
This fixed payment allows them to budget precisely for the renovation without worrying about fluctuating interest rates, which would be a risk with a HELOC.
Scenario 2: Debt Consolidation with Predictable Payments
A borrower has $30,000 in high-interest credit card debt with an average APR of 22%. They decide to use a 10-year, **$30,000 home equity loan** at **9.0%** to pay it off.
- Their new, single monthly payment is **$380**. This is significantly lower and more predictable than making multiple credit card payments.
- By converting high-interest, revolving debt into a lower-interest, fixed-term loan, they save thousands in interest and establish a clear date for when they will be debt-free.
Tips for Using a Home Equity Loan
Home Equity Loan vs. HELOC: Know the Difference
Choose a **home equity loan** if you need a specific, one-time lump sum of money and value predictable, fixed monthly payments. It's ideal for large, planned expenses like a major renovation or debt consolidation. Choose a **HELOC** if you need ongoing, flexible access to funds for unpredictable costs over several years, and you are comfortable with the risk of a variable interest rate.
Shop for Rates and Terms
Just like with a primary mortgage, interest rates for home equity loans can vary between lenders. Get quotes from your current bank, local credit unions, and online lenders to find the most competitive offer. Pay attention to both the interest rate and any origination fees or closing costs.
Understand the Risks
A home equity loan is a "second mortgage." This means it is secured by your property. While it can be a powerful financial tool, it also adds risk. If you are unable to make the payments, the lender can initiate foreclosure proceedings. Never borrow more than you can comfortably afford to repay.
Home Equity Loan Glossary
Second Mortgage
A loan taken out on a property that already has a primary mortgage. A home equity loan is a type of second mortgage.
Fixed Interest Rate
An interest rate that does not change over the entire life of the loan, resulting in stable and predictable monthly payments. This is the key feature of a home equity loan.
Loan-to-Value (LTV)
The ratio of all loans on a property to the property's appraised value. Lenders use the "Combined LTV" (CLTV), including your first mortgage and the new home equity loan, to determine how much you can borrow.