Home Equity Loan Calculator

The CFPB describes the limit on a second mortgage or home equity loan as “generally a percentage of the appraised value of your home, minus the amount you owe on your mortgage.” So take the home’s value, multiply by the lender’s maximum combined loan-to-value, and subtract the first-mortgage balance. On a $400,000 home with a $250,000 mortgage and an 85% cap that is $340,000 − $250,000 = $90,000. If the first mortgage already uses the whole allowance, the answer is zero rather than a negative number, and the calculator says so.

A home equity loan is closed-end: you receive the entire amount once, at a fixed rate, and repay it on level payments that retire the balance by the end of the term. A HELOC is open-end and revolving — you draw, repay and redraw during a draw period, usually at a variable rate, and the payment moves with the balance and the index. The CFPB lists both as second mortgages and distinguishes them exactly this way. Pick the loan when you know the amount and want a payment that cannot change; pick the line when the spending is staged or uncertain.

Because the ceiling is a COMBINED loan-to-value. The federal Interagency Guidelines for Real Estate Lending Policies define the ratio so that “the total amount of all senior liens on or interests in such property(ies) should be included,” and a home equity loan sits behind the first mortgage in line. The lender is sizing every lien against one appraisal, so every dollar still owed on the first mortgage is a dollar of allowance already spent.

Only sometimes, and it does not depend on the loan being labelled a home equity loan. IRS Publication 936 states that “you can no longer deduct the interest from a loan secured by your home to the extent the loan proceeds weren’t used to buy, build, or substantially improve your home,” and the deduction applies to the first $750,000 of home acquisition debt ($375,000 if married filing separately), with higher limits for debt incurred before 16 December 2017. Proceeds used to consolidate credit cards or pay tuition do not qualify. This calculator reports no tax benefit; talk to a tax adviser.

The payment figures still price exactly the amount you entered, and a note tells you it is above the maximum at that combined loan-to-value. That is deliberate: quietly shrinking the loan would hide the gap you actually need to close, whether by taking a smaller loan, finding a lender with a higher cap, or waiting for the balance to fall. The combined loan-to-value shown alongside tells you how far over you are.

Yes. The loan is secured by the house — that is what makes the rate lower than an unsecured personal loan. The CFPB is blunt about it: if you cannot repay a home equity loan or line of credit, “you could potentially lose your home because you are using the equity in your home as collateral.” Consolidating unsecured debt into a home equity loan does not erase the debt; it moves it behind a lien on your house.

Because a servicer bills in whole cents. Each month’s interest is rounded to the cent before it is subtracted from the balance, which is what Regulation Z requires the periodic statement to show, so the running total drifts a dollar or two away from the closed-form figure over a long term. The final payment then absorbs the difference so the balance lands on exactly zero. This calculator follows the statement, not the textbook.

It varies by lender and by credit profile, but the federal supervisory guidance is a useful anchor. The Interagency Guidelines set a supervisory loan-to-value limit of 85% for improved property, and note that for an owner-occupied one-to-four family home equity loan “with a loan-to-value ratio that equals or exceeds 90 percent at origination, an institution should require appropriate credit enhancement in the form of either mortgage insurance or readily marketable collateral.” That is why 80% and 85% caps are the common quotes and why going past 90% gets expensive.