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Calculator Answers

Home Equity Loan Calculator

Blake Boege
Written by Blake Boege · Founder, Calculator Answers

A home equity loan calculator is a debt-planning utility that estimates the maximum borrowing capacity and monthly payments for a fixed-rate second mortgage. It calculates the available equity by subtracting the current mortgage balance from the property's estimated market value. It then applies a lender-defined Combined Loan-to-Value (CLTV) limit (typically 80% to 85%) to calculate the maximum borrowable equity loan. Finally, it uses the standard amortization formula to estimate monthly payments and total interest. Homeowners use this tool to determine how much equity they can convert to cash for home renovations or debt consolidation.

Estimate your home equity borrowing capacity and fixed-rate second mortgage payments. Enter your home value, outstanding mortgage, and target loan terms.

See also: Loan Payment Calculator – Amortization Tool, Mortgage Calculator, and Amortization Calculator.

Quick Answer

Calculate your available home equity and the maximum amount you can borrow. Enter your home value, mortgage balance, combined LTV limit, rate, and term to see your estimated loan terms.

Home and Equity Details

$

Current market value of your property.

$

Outstanding balances on all primary mortgages.

%

Combined LTV limit (usually 80-85%).

%

Fixed interest rate.

years

Repayment term (e.g. 15 or 30 yrs).

How Equity Loan Limits Work

  • LTV (Loan-to-Value): Combined LTV includes both your first mortgage and the new equity loan. Lenders restrict the total debt to a fraction of the home's value.
  • Second Mortgage: A home equity loan sits behind your first mortgage. If the home is sold, the first mortgage is paid off first, which makes second mortgages slightly riskier for lenders (hence higher rates).
  • Fixed Rate: Unlike HELOCs, standard home equity loans offer a fixed rate and monthly payment, shielding you from interest rate volatility.
Borrowing limit & payment

Max Borrowable Loan Payment

$808.95/mo

Max loan amount: $90,000.00 (85% CLTV)

Home Value$400,000.00
Current Mortgage Balance$250,000.00
Total Available Equity$150,000.00
LTV Limit85%
Max Borrowable Amount$90,000.00
Interest Rate (APR)7%
Loan Term15 years
Monthly Payment (Max Loan)$808.95
Total Interest Cost$55,610.18

This calculation is an estimate. Lender approvals depend on credit scores, debt-to-income (DTI) ratios, stable employment history, and professional home appraisals.

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Examples

Value=$400k, Mortgage=$250k, 85% LTV, 7% APR, 15 yrs

Max Loan: $90,000 · Payment: $808.95/mo

Value=$300k, Mortgage=$180k, 80% LTV, 7.5% APR, 10 yrs

Max Loan: $60,000 · Payment: $712.99/mo

Value=$500k, Mortgage=$300k, 85% LTV, 6.8% APR, 20 yrs

Max Loan: $125,000 · Payment: $954.21/mo

How it works

The calculator determines your available equity and borrowing limits based on your home value, outstanding debt, and lender loan-to-value (LTV) limits. It amortizes the resulting maximum loan amount to calculate payments.

Max Loan Amount · Max Loan = (Home Value × Max LTV%) − Mortgage Balance

Amortized Payment · Payment = Loan × i / (1 − (1 + i)^−(12 × t))

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Frequently asked questions

A home equity loan is a fixed-rate second mortgage. It allows you to borrow a lump sum against the equity in your home and repay it in fixed monthly payments over a set term (typically 5 to 30 years).

Available equity is calculated by subtracting your current outstanding mortgage balance from the current market value of your home: Available Equity = Home Value − Mortgage Balance.

CLTV (Combined Loan-to-Value) is the ratio of all mortgage debt on a home (first mortgage + home equity loan) to its market value. Most lenders limit CLTV to 80% or 85% of your home value. The maximum loan amount is: (Home Value × Max CLTV%) − Mortgage Balance.

Payments are calculated using the standard amortized loan payment formula: Payment = Loan Amount × i / (1 − (1 + i)^−N), where i is the monthly interest rate (APR / 12 / 100) and N is the total payment months.

A home equity loan is a fixed-rate loan with a lump-sum payout and fixed monthly payments from day one. A HELOC is a variable-rate line of credit that lets you draw funds as needed and initially requires only interest payments.