Home Equity Loan Calculator 🏡

Calculate your **maximum available equity**, the fixed monthly payment for a **Home Equity Loan**, or payments on a **HELOC** draw.

Home Equity Calculation

Property & Debt Information

Home Appraised Value ($):

1st Mortgage Balance ($):

Maximum LTV allowed (%):

Existing HELOC/Equity Balance ($):

New Loan/Draw Details (for Payment Calculation)

Desired Loan/Draw Amount ($):

Annual Interest Rate (%):

Loan/Draw Term (Years):

Key Features of This Calculator

**Dual Calculation:** Estimates both maximum borrowing power (equity) and the monthly payment.
**LTV Constraint:** Automatically applies the maximum Loan-to-Value ratio (LTV) to determine the loan limit.
**Considers Existing HELOC:** Includes any outstanding balance from existing home equity lines in the total debt calculation.

Calculation Methods

This calculator relies on two primary formulas: the Maximum Borrowing Amount based on LTV, and the standard Amortization Payment formula.

1. Maximum Borrowing Power ($P_{Max}$)

P_{Max} = (Appraised Value × Max LTV %) - Existing Debt

Where:
Existing Debt = 1st Mortgage Balance + Existing HELOC/Equity Balance

This result shows the maximum principal you can borrow while staying within the lender's LTV limit.

2. Fixed Monthly Payment ($M$)

Calculated for the Desired Loan/Draw Amount ($P_{Desired}$) over the Loan Term ($T$).

M = P_{Desired} [ i(1 + i)ⁿ / ( (1 + i)ⁿ - 1 ) ]

Where $i$ is the monthly rate and $n$ is the total number of payments.

Home Equity Loans vs. HELOCs: What's the Difference?

**Home Equity** is the difference between your home's market value and the amount you owe on your mortgage. Both Home Equity Loans (HELs) and Home Equity Lines of Credit (HELOCs) allow you to borrow against this value, but they function differently.

Home Equity Loan (HEL) (H4 for fixed-term loan)

A HEL is a **second mortgage** that provides a **lump sum** of cash upfront, has a **fixed interest rate**, and features a standard, fixed-term amortization schedule (like a car loan). It's ideal for a one-time major expense, like a large renovation.

Home Equity Line of Credit (HELOC) (H4 for revolving credit)

A HELOC acts like a **credit card** secured by your home. You are given a maximum credit limit (the Max Loan Amount calculated above), but you only draw funds as needed. It typically has a **variable interest rate** and often features an interest-only repayment period during the draw phase, followed by a principal and interest repayment phase.

Understanding Loan-to-Value (LTV)

The **LTV ratio** is critical; most lenders cap the **Combined LTV (CLTV)** at 80% to 90% to protect against falling home values. By keeping your total debt (1st mortgage + home equity loan) below this threshold, you ensure you maintain a safe buffer of equity.