Home Equity Loan Calculator
Our calculator estimates your maximum borrowing limit, along with your monthly payments.
Some or all of the mortgage lenders featured on our site are advertising partners of NerdWallet, but this does not influence our evaluations, lender star ratings or the order in which lenders are listed on the page. Our opinions are our own. Here is a list of our partners.
Use this calculator to find out how much money you might be able to borrow with a home equity loan and what it might cost.
» MORE: Learn about home equity rates
What is a home equity loan, and how does it work?
A home equity loan is a kind of second mortgage secured by your home. The amount that you can borrow is determined by your home equity, which is the amount of your house you’ve “paid off.” Every time you make a mortgage payment or the value of your home rises, your equity increases. The more equity you build, the more you could be eligible to borrow with a home equity loan.
Most lenders have a maximum borrowing limit of 85% CLTV (combined loan-to-value). This means that the home equity loan plus any remaining balance on your primary mortgage can’t be more than 85% of the value of your home.
An example: Let’s say your home is worth $200,000 and you still owe $100,000. If you divide $100,000 by $200,000, you have 0.50, which means you have a 50% loan-to-value ratio and 50% equity.
Lenders that allow a combined loan-to-value ratio of 85% may let you borrow up to $70,000 with a home equity loan. That would bring the amount you owe to $170,000, which is 85% of the $200,000 home value.
When you get a home equity loan, you receive the money all at once and pay it back at a fixed interest rate. You’ll usually have up to 30 years to repay the loan.
» MORE: How a home equity loan works
What does a home equity loan cost?
Since a home equity loan is backed by an asset (your home), lenders are able to offer better rates than with unsecured products, like credit cards and personal loans.
However, these low rates come with a tradeoff. If you can’t keep up with your monthly payments, the lender could foreclose on your home, just like with your primary mortgage.
Your home equity loan payments are determined by three things:
The amount you borrow.
Your interest rate.
Your repayment term.
For example, if you have a $100,000 home equity loan with a 8% interest rate and a 30-year term, your monthly payments would be about $734.
Nerdy Perspective
How do I know which home equity loan is right for me?
In the right circumstances, a home equity loan can be a great financial tool — especially if you plan to leverage your equity to build wealth.
Lenders can design their own home equity products, so you'll definitely want to shop around. There’s more to it than just finding the lowest rate.
I’d recommend starting with NerdWallet’s roundup of the best home equity loan lenders. We get into the pros and cons of each option, and call out the best fit for different kinds of borrowers — whether you need to borrow a large amount of equity, want flexible terms or prefer a fast closing.
In the right circumstances, a home equity loan can be a great financial tool — especially if you plan to leverage your equity to build wealth.
Lenders can design their own home equity products, so you'll definitely want to shop around. There’s more to it than just finding the lowest rate.
I’d recommend starting with NerdWallet’s roundup of the best home equity loan lenders. We get into the pros and cons of each option, and call out the best fit for different kinds of borrowers — whether you need to borrow a large amount of equity, want flexible terms or prefer a fast closing.
Reasons to get a home equity loan
Home equity loans aren’t for everyone, but can be very useful in the right circumstances.
Since you’re getting a lump sum, a home equity loan can make sense when you know exactly how much you’ll need to borrow. For instance, if you’re getting your roof replaced or paying for another big-ticket renovation, a home equity loan could be a smart financing solution.
Home equity loans can also be used for consolidating high-interest debt. This would combine your existing debts into one monthly payment, likely at a lower rate.
Since home equity loans are closed-end (meaning you can’t keep borrowing), this could be a better option for debt consolidation than an open line of credit. A credit line, such as a HELOC, could put you at greater risk of overspending by having access to a line that you could draw from again and again.
How to apply for a home equity loan
You’ll generally be eligible for a home equity loan or HELOC if:
You have at least 15% equity in your home, as determined by an appraisal.
Your debt-to-income ratio is 43% or lower, though some lenders allow for higher amounts of debt.
Your credit score is at least 640.
Your credit history shows that you pay your bills on time.
If you meet these requirements and know how much you need to borrow, you’re ready to start reaching out to lenders.
If the lender that financed your primary mortgage offers home equity loans, that can be a good place to start your search; however, comparing offers from at least three lenders will help you get the best available rate and terms.
Home equity loan pros and cons
Lower rates compared to unsecured financing, such as credit cards and personal loans.
Fixed rates mean that your monthly payments will stay consistent and predictable.
Long repayment windows (usually up to 30 years) allow you to spread payments out.
You could lose your home to foreclosure if you can’t keep up with monthly payments.
The balance is fixed when you take out the loan. If you need more money, you’ll have to borrow again.
You’re extending the time that you’ll have a mortgage. If you have 20 years left on your primary mortgage when you take out a 30 year loan, you’re adding 10 years to the time it will take to own your home outright with no liens.
Should I choose a home equity loan or a HELOC?
A home equity line of credit, or HELOC, is another way to borrow from your home equity.
HELOCs are similar to credit cards, in that you can borrow what you need as you need it, up to a certain limit. Unlike credit cards, you should only use a HELOC for major expenses instead of everyday purchases — remember, this line of credit is secured by your house. HELOCs usually have a variable interest rate, meaning that it moves up and down with the market.
Choosing between a home equity loan or HELOC comes down to your preferences: when you’d like to receive the money and whether you’re comfortable with a variable rate.
Features of the loan | HELOC | Home equity loan |
|---|---|---|
Loan funding | You can draw funds as needed, up to a certain limit (typically a percentage of your equity). | You receive a lump sum at closing (typically a percentage of your equity). |
Terms | Begins with a draw period (typically 10 years) with interest-only minimum payments. This is followed by a repayment period (often up to 20 years) that requires you to pay back principal and interest. | Repayment periods are often up to 30 years. Minimum payments include both interest and principal. |
Rates | Variable (though some lenders offer a fixed-rate option) | Fixed |
Borrowing limits | You can typically borrow up to 85% of the equity in your home. Some lenders allow for more. Use NerdWallet’s HELOC calculator for personalized details. | You can typically borrow up to 85% of the equity in your home. Some lenders allow for more. |
Lenders |