Calculate home equity loan payments and see how much equity you can borrow against. Uses the standard 85% LTV lender limit with fixed monthly payment breakdown.
Fixed rate — monthly payment & available equity
A home equity loan calculator helps you see exactly how much you can borrow against your home and what the fixed monthly payments will be. Most US lenders cap borrowing at 85% of your home's value minus what you still owe on your first mortgage. On a $400,000 home with a $250,000 mortgage balance, the math works out to ($400,000 × 0.85) − $250,000 = $90,000 in maximum borrowable equity. The loan comes with a fixed interest rate — typically 7%–10% in 2025 — and a fixed term, so the payment never changes and you know exactly when you'll be done.
The key difference between a home equity loan and a HELOC is predictability. Home equity loans give you a lump sum at a fixed rate and fixed payment — ideal for a single large expense like a kitchen renovation or debt consolidation. A HELOC works more like a credit card: a revolving line you draw from during the draw period (usually 10 years) at a variable rate. If you need a defined amount for a specific project, a home equity loan's fixed structure makes budgeting easier. Interest on home equity loans may be tax-deductible when funds are used for home improvements, per IRS rules — consult a tax professional to confirm your situation.
Home equity loans carry fixed rates; HELOCs are typically variable (prime rate + margin). If rates rise, HELOC payments rise. A fixed home equity loan shields you from rate increases and makes budgeting straightforward.
Most lenders won't let combined loan-to-value exceed 85%. Some credit unions and lenders go to 90%–95%, but rates are higher. Knowing your available equity before shopping lets you negotiate from a position of knowledge.
IRS rules allow interest deductions on home equity debt used to "buy, build, or substantially improve" your home. Using equity for a vacation or car purchase does not qualify. Deductions are capped at $750,000 of total mortgage debt.
Best uses: home improvements that add value, debt consolidation at a lower rate than credit cards, or large one-time expenses. Avoid using home equity for depreciating purchases — you're putting your home at risk as collateral.
A home equity loan is a second mortgage: a fixed lump sum at a fixed rate, repaid on a fixed schedule, sitting behind your first mortgage in priority. That structure is its main advantage over a HELOC — the payment never changes and the debt actually amortizes from day one, whereas a HELOC is variable-rate and typically interest-only during its draw period. Because it is second in line, the rate is higher than a first mortgage but far below unsecured borrowing. Combined loan-to-value across both mortgages is what limits how much you can borrow.
Available equity = (Home value × max CLTV) − First mortgage balancePayment = M = P × [ i(1+i)^n ] ÷ [ (1+i)^n − 1 ]CLTV = (First mortgage + Second mortgage) ÷ Home valuewhere:
Assumptions: Secured on the home. Closing costs are lower than a first mortgage but not zero. Interest is deductible only if the funds substantially improve the property securing the loan.
The same homeowner as the cash-out example, borrowing the same amount a different way.
Result$582.08 a month — $211.01 less than cash-out refinancing
Despite a much higher headline rate (8.25% against 6.9%), this wins decisively because it leaves the $310,000 first mortgage at 4.1% untouched. Whenever your existing rate is well below market, a second lien beats a cash-out refinance almost regardless of the rate gap.