What Is a Home Equity Loan Calculator?
A home equity loan lets you borrow against the value you've built up in your home. This calculator estimates two key numbers: how much equity you can actually tap into, and what your fixed monthly payment would be once you borrow it. Enter your home value, current mortgage balance, the lender's maximum loan-to-value (LTV) ratio, the interest rate, and the loan term to get an instant breakdown.
How to Use It
Start with your home's current market value and your outstanding mortgage balance. Most lenders allow you to borrow up to a combined 80–90% LTV, so set the LTV field to your lender's limit. Add the annual interest rate quoted for the equity loan and choose a term (commonly 5 to 30 years). The calculator returns your available equity, monthly payment, total amount repaid, and total interest.
The Formula Explained
First, the borrowable principal is found with $$P = V \times \text{LTV} - B$$, where V is home value, LTV is the loan-to-value fraction, and B is your current mortgage balance. Then the monthly payment uses the standard amortization formula $$M = \frac{P \cdot r (1+r)^n}{(1+r)^n - 1}$$, where \(r\) is the monthly interest rate (annual rate ÷ 12) and \(n\) is the total number of monthly payments (years × 12).
Worked Example
Suppose your home is worth $400,000, you owe $250,000, your lender allows 80% LTV, the rate is 7.5%, and the term is 15 years. Borrowable = $$400{,}000 \times 0.80 = \$320{,}000$$ minus the $250,000 mortgage leaves $70,000 of available equity. At a monthly rate of 0.625% over 180 payments, the monthly payment works out to about $649, with roughly $46,800 paid in total interest.
FAQ
What is LTV? Loan-to-value is the percentage of your home's value that all loans against it can total. An 80% LTV cap on a $400,000 home means $320,000 of combined debt.
Is this the same as a HELOC? No. A home equity loan is a lump sum with fixed payments, which this tool models. A HELOC is a revolving line with variable payments.
Why is my available equity zero? If your mortgage balance exceeds the home value times the LTV limit, you have no borrowable equity, so the result is capped at zero.
