Home Equity Loan Calculator

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Reviewed by: David Chen, CFA
David is a Chartered Financial Analyst and a home equity lending specialist with 15 years of experience in real estate finance.

This 4-in-1 Home Equity Loan calculator helps you plan for borrowing against your home. Enter any three values—Loan Amount, Annual Rate, Term, or Monthly Payment—and we will solve for the fourth.

Loan Amount ($) (P)

Annual Interest Rate (%) (R)

Loan Term (Years) (T)

Monthly Payment ($) (M)

Home Equity Loan (Amortization) Formulas

Internal Variables:
i = R / 12 / 100 (Monthly Rate)
n = T * 12 (Number of Months)

Solve for Monthly Payment (M):
M = P * [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]

Solve for Loan Amount (P):
P = M * [ (1 + i)^n – 1 ] / [ i(1 + i)^n ]

Solve for Term (n):
n = log( M / (M – P*i) ) / log(1 + i)

Solve for Rate (i):
(No direct formula; solved iteratively)

Formula Source: CFPB

Formula Variables

(P) Loan Amount: The total amount you wish to borrow against your home’s equity.
(R) Annual Rate: The Annual Percentage Rate (APR) for the home equity loan.
(T) Loan Term: The total number of years to repay the loan (e.g., 10, 15, or 20).
(M) Monthly Payment: The fixed monthly payment (Principal & Interest) to repay the loan.

Related Calculators

What is a Home Equity Loan?

A home equity loan, sometimes called a “second mortgage,” is a type of installment loan that allows you to borrow against the equity you have built in your home. Equity is the difference between your home’s current market value and the amount you still owe on your primary mortgage.

Unlike a Home Equity Line of Credit (HELOC), which is a variable-rate revolving credit line, a home equity loan provides you with a single, lump-sum payment. You then repay that loan with fixed monthly payments at a fixed interest rate over a set term (e.g., 5 to 20 years). This predictability makes it a popular choice for large, one-time expenses like a major home renovation, college tuition, or debt consolidation.

This 4-in-1 calculator helps you plan for this type of loan. You can solve for the Monthly Payment (M) to see if it fits your budget. Or, you can solve for the Loan Amount (P) to see how much you can borrow based on a payment you can comfortably afford, then check that against the LTV limits from a lender.

How to Calculate a Home Equity Loan (Example)

Identify Loan Variables
You need to borrow for a new roof and kitchen remodel:
• Loan Amount (P): $75,000
• Annual Rate (R): 8.99%
• Loan Term (T): 15 years
Convert to Monthly Terms (i, n)
The formula uses monthly values:
• Monthly Rate (i): 8.99% / 12 / 100 = 0.0074917
• Number of Months (n): 15 years * 12 = 180
Choose the Payment Formula
Use the standard formula to solve for Monthly Payment (M):
M = P * [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
Calculate the Monthly Payment
Plug in the monthly values:
• Numerator: 0.0074917 * (1 + 0.0074917)^180 = 0.02879
• Denominator: (1 + 0.0074917)^180 – 1 = 2.8427
M = $75,000 * [ 0.02879 / 2.8427 ]
M = $75,000 * 0.010128 = $759.60
Your monthly home equity loan payment will be $759.60.

Frequently Asked Questions (FAQ)

Home Equity Loan vs. HELOC: What’s the difference?

A Home Equity Loan (this calculator) is an installment loan. You get a lump sum upfront and make fixed payments. A HELOC (Home Equity Line of Credit) is a revolving line of credit, like a credit card. It has a variable interest rate and a “draw period” where you can pull funds, often followed by a repayment period.

How much can I borrow?

Lenders typically allow you to borrow up to a “combined loan-to-value ratio” (CLTV) of 80% or 85%. For example, if your home is worth $500,000 and you owe $300,000, your 85% CLTV limit is $425,000. Your maximum new loan would be $425,000 – $300,000 = $125,000. Use our LTV Calculator to find this.

Are the interest rates (R) good?

Home equity loan rates are typically higher than primary mortgage rates but *significantly* lower than personal loan or credit card rates. This is because the loan is “secured” by your house, making it less risky for the lender.

Is the interest tax-deductible?

Under current US tax law (as of 2024), the interest is only deductible if the loan proceeds are used to “buy, build, or substantially improve” the home that secures the loan. Interest on a loan used for debt consolidation is generally not deductible. Consult a tax professional.

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