Home Equity Loan Calculator
Calculate your home equity loan monthly payments, maximum borrowing amount, and combined loan-to-value ratio. Compare fixed-rate home equity loan vs HELOC side by side — free, private, and instant.
| Feature | HEL (Fixed) | HELOC (Variable) |
|---|
What Is a Home Equity Loan?
A home equity loan is a second mortgage that lets you borrow a lump sum against the equity you have built in your home. Unlike a home equity line of credit (HELOC), a home equity loan provides the full amount upfront at a fixed interest rate with predictable monthly payments over a set repayment term of 5 to 30 years. Your home serves as collateral, and the loan is repaid in addition to your primary mortgage.
For example, if your home is worth $400,000 and you owe $250,000 on your primary mortgage, you have $150,000 in equity. With an 80% maximum combined loan-to-value (CLTV), you could borrow up to $70,000 through a home equity loan. Common uses include home renovations, debt consolidation, education expenses, and major purchases. Based on current average rates from the Federal Reserve H.15 release, updated April 2026.
Home Equity Loan vs HELOC
The key difference between a home equity loan (HEL) and a home equity line of credit (HELOC) is how funds are disbursed and repaid. A HEL delivers a one-time lump sum at a fixed rate, making it ideal for a single large expense with a known cost. A HELOC works like a revolving credit line with a variable interest rate — you draw funds as needed during a 10-year draw period (typically interest-only payments) then repay over a 20-year repayment period with fully amortizing payments.
HELOCs often start with lower rates than HELs because they carry variable rates, but your payment can increase significantly if rates rise. A HEL provides payment certainty — your monthly amount never changes. This calculator compares both options side by side so you can see the total cost difference over the life of each loan.
How Much Can You Borrow?
Your maximum home equity loan amount depends on three factors: your home's current appraised value, your outstanding mortgage balance, and the lender's maximum CLTV ratio. Most conventional lenders cap CLTV at 80%, meaning your existing mortgage plus the new home equity loan cannot exceed 80% of your home value. Some lenders, particularly credit unions, may allow up to 85% or even 90% CLTV with correspondingly higher interest rates.
Lenders also evaluate your debt-to-income ratio (DTI), credit score (minimum 620, ideally 700+), and employment stability. According to the Consumer Financial Protection Bureau (CFPB), borrowers should compare offers from at least three lenders, as rates and closing costs can vary significantly. Closing costs for home equity loans typically range from 2% to 5% of the loan amount.
Tax Deductibility of Home Equity Loans
Under the Tax Cuts and Jobs Act (TCJA) of 2017, home equity loan interest is tax deductible only when the borrowed funds are used to buy, build, or substantially improve the home securing the loan. Interest on funds used for other purposes — such as paying off credit card debt, buying a car, or funding a vacation — is not deductible regardless of the loan type (IRS Publication 936).
The total deductible mortgage debt limit is $750,000 for loans originated after December 15, 2017 ($375,000 if married filing separately). This includes your primary mortgage plus any home equity debt used for qualifying home improvements. Consult a tax professional to determine your specific eligibility for the home equity interest deduction.
Frequently Asked Questions
What is the difference between a home equity loan and a HELOC?
A home equity loan (HEL) provides a lump sum at a fixed interest rate with fixed monthly payments over a set term, typically 5 to 30 years. A home equity line of credit (HELOC) works like a credit card with a variable rate \u2014 you draw funds as needed during a 10-year draw period (interest-only payments) followed by a 20-year repayment period with fully amortizing payments. HELs offer payment predictability while HELOCs offer flexibility.
How much can I borrow with a home equity loan?
Most lenders allow a combined loan-to-value (CLTV) ratio of up to 80%, meaning your existing mortgage plus the new home equity loan cannot exceed 80% of your home\u2019s appraised value. For example, if your home is worth $400,000 and you owe $250,000, your maximum borrowable amount is ($400,000 x 0.80) - $250,000 = $70,000. Some lenders may allow up to 85% or 90% CLTV with higher rates.
Is home equity loan interest tax deductible?
Under the Tax Cuts and Jobs Act (TCJA), home equity loan interest is tax deductible only if the funds are used to buy, build, or substantially improve the home that secures the loan. Interest on funds used for other purposes such as debt consolidation or vacations is not deductible. The total mortgage debt limit for the deduction is $750,000 for loans originated after December 15, 2017 (IRS Publication 936).
What credit score do I need for a home equity loan?
Most lenders require a minimum credit score of 620 for a home equity loan, though scores of 700 or higher qualify for the best interest rates. A higher credit score typically means lower rates, reduced closing costs, and higher approved loan amounts. Some credit unions may approve borrowers with scores as low as 600.
What are the closing costs on a home equity loan?
Closing costs for a home equity loan typically range from 2% to 5% of the loan amount. These may include an appraisal fee ($300-$600), origination fee (0.5-1%), title search and insurance, attorney fees, and recording fees. Some lenders offer no-closing-cost home equity loans but compensate with a slightly higher interest rate.
Can I lose my home with a home equity loan?
Yes. A home equity loan uses your home as collateral. If you fail to make payments, the lender can initiate foreclosure proceedings. This is why financial advisors recommend borrowing only what you can comfortably afford to repay and maintaining an emergency fund to cover payments during financial hardship.
How long does it take to get a home equity loan?
The home equity loan process typically takes 2 to 6 weeks from application to closing. This includes the application review (1-3 days), home appraisal (1-2 weeks), underwriting (1-2 weeks), and closing (1-3 days). Some lenders offer expedited processing in as little as 2 weeks for borrowers with strong credit profiles and simple property situations.