What can I borrow and what will I pay?
A home equity loan is a lump sum borrowed against the part of your home you own, repaid in level installments. This page answers two connected questions with two tabs. Borrowing capacity estimates how much equity is left to borrow against under a combined loan-to-value limit you choose. Payment and cost takes a loan amount, a fixed rate, a term and any closing costs and shows the monthly payment, the money you actually receive, an annualized cost estimate and a full schedule.
Both tabs are arithmetic on your own assumptions. They do not look up rates, check credit or decide eligibility. You can send a capacity result to the payment tab with one button, but nothing is calculated until you press Calculate.
Start with the question that matters to you. If you are asking whether borrowing is possible at all, begin with the capacity tab; if you already know the amount, go straight to payment and cost. A result in one tab can be copied to the other with one click, so you can move from how much to what it will cost each month without retyping.
Estimate capacity with combined loan-to-value
Lenders usually look at combined loan-to-value (CLTV): all loans secured by the home, divided by its value. With value V, existing debt D and a chosen limit q, the headroom is the larger of zero and q × V − D. Every secured loan belongs in D, not just the first mortgage, and the value is your estimate, which an appraisal can change.
| Limit | Total allowed debt | Headroom | Equity kept |
|---|---|---|---|
| 75% | 450,000 | 200,000 | 150,000 |
| 80% | 480,000 | 230,000 | 120,000 |
| 85% | 510,000 | 260,000 | 90,000 |
| 90% | 540,000 | 290,000 | 60,000 |
On a 600,000 home with 250,000 owed, an 80% limit leaves 230,000, and 85% leaves 260,000. If existing debt rises to 300,000, the 80% headroom falls to 180,000. If debt exceeds value, say 110,000 owed on a 100,000 home, equity is -10,000, loan-to-value is 110% and headroom is zero with a 30,000 shortfall at 80%. The 80% default is illustrative, not a universal limit.
Value is the shakiest input. A 10% change in home value moves the headroom by more than 10%, because the debt stays the same: at an 80% limit with 250,000 owed, a 540,000 home leaves 182,000 and a 660,000 home leaves 278,000. Include every loan secured by the home, such as a second mortgage or a line of credit balance, and use a realistic value rather than an optimistic one.
Calculate a fixed home equity loan payment
The payment uses the standard level-payment formula: M = P × i ÷ (1 − (1 + i)−n), with P the gross amount, i the annual rate divided by 1,200 and n the number of months. At 0% it is simply P ÷ n. For 150,000 at 8% over 15 years, M is 1,433.48. Over 180 payments you pay 258,026.06, of which 108,026.06 is interest.
Fees do not change this payment. In this model closing costs are deducted from the funding or paid upfront, never added to the loan amount, so the payment depends only on the gross amount, the rate and the term. Adding fees to the principal would be a different loan.
Term and rate move the payment in different ways. For 150,000 at 8%, a 10-year term has a payment of 1,819.91 and 68,390 of interest, 15 years has 1,433.48 and 108,026, and 20 years has 1,254.66 and 151,118. At 15 years, 7% gives 1,348.24 and 9% gives 1,521.40. A longer term lowers the payment and raises the interest, so a monthly payment alone does not show what the loan costs.
Closing costs and the cash you receive
Suppose closing costs are 7,500 on the 150,000 loan, either 5% of the loan or a fixed amount. They can reach you in two ways:
| Item | Deducted | Paid upfront |
|---|---|---|
| Cash received | 142,500.00 | 150,000.00 |
| Cash paid upfront | 0.00 | 7,500.00 |
| Net funding | 142,500.00 | 142,500.00 |
| Monthly payment | 1,433.48 | 1,433.48 |
The two paths look different on the day of closing but cost the same: net funding is 142,500 and the monthly payment is unchanged. Count each fee once, in one place. The total borrowing cost is the interest plus the fee: 108,026.06 + 7,500.00 = 115,526.06.
Fees are easiest to understand as a cash-flow timeline. In the deducted case you receive 142,500 of net funding, and then you repay 258,026 in installments over 180 months. The cost of the money is the difference, 115,526, which is the interest plus the closing costs. Ask the lender for an itemized list so that nothing is counted twice or missed.
Interest rate versus annualized borrowing cost
The note rate ignores fees. The annualized estimate finds the monthly rate at which the payments, based on the gross amount, have a present value equal to the net funding. With the 7,500 fee the net funding is 142,500 while you still repay installments on 150,000, so the estimate is 8.86% against the 8% rate. With no fees the two are equal. It is a nominal estimate under stated assumptions, not a statutory APR, and it is shown as unavailable when fees are as large as the loan.
When you compare offers, compare the annualized estimate, not just the rate, and compare it at the same term. A lower rate with higher fees can cost more than a slightly higher rate with none, and the estimate shows which. The estimate is nominal and assumes you keep the loan to the end; if you repay early, the fees are spread over fewer months and the effective cost is higher.
Read your amortization schedule
The first payment of 1,433.48 splits into 1,000.00 of interest and 433.48 of principal, leaving 149,566.52. In year one you pay 17,201.74, of which 11,804.97 is interest and 5,396.77 reduces the balance. Interest shrinks and principal grows each month, because interest is charged on a falling balance. Switch between the yearly and monthly views, export the ledger as a CSV with your assumptions, or print the page; both are local actions.
Two numbers are worth tracking over time: the balance after each year and the share of each payment that is principal. In the example the balance falls from 150,000 to 144,603 after year one, interest takes 69% of the year-one payments, and principal first exceeds interest in year 7. In the final year almost the whole payment is principal.
Home equity loan, HELOC or refinance?
The Consumer Financial Protection Bureau explains the difference: a home equity loan pays a lump sum, while a HELOC lets you borrow and repay repeatedly up to a limit, usually at an adjustable rate. This page models a single fixed installment loan. It does not model repeated draws, variable rates or a draw period followed by repayment, and real equity loans can have adjustable rates too.
A refinance replaces your first mortgage instead of adding a second loan; to weigh that, compare refinancing costs and remaining debt. For a general installment loan use the loan payment calculator, and see how a new payment fits your budget with the debt-to-income calculator. The mortgage and real estate calculators page lists the housing tools together.
A cash-out refinance is a different product: it replaces your first mortgage with a larger new loan instead of adding a second one, so the rate on the whole balance changes. A home equity loan leaves the first mortgage as it is, which can matter if that rate is low. A HELOC adds flexibility but also variable payments. Which fits depends on your first mortgage rate, the amount you need and your plans, and a lender can quote each.
Limits and questions for a lender
This is arithmetic, not an approval. Real offers depend on value, credit, income, other secured debt, fees, rate type and local rules, and no fixed credit-score or debt-to-income rule is built into this page. Ask a lender what loan-to-value limit applies, which fees are charged and when, whether the rate is fixed, whether there is a prepayment charge and what happens if you sell. Your home secures the loan, so missed payments put it at risk. This page does not give tax advice.
Useful questions for a lender include: what combined loan-to-value limit applies and how the home will be valued, what fees are charged and when, whether the rate is fixed for the life of the loan, whether there is a prepayment charge, and what happens if you sell. Keep the answers with your estimate so that you can compare offers on the same basis.
FAQ
How much can I borrow against my home?
The tool estimates headroom under your entered combined LTV limit; actual approval can be lower and depends on other conditions.
How is the monthly payment calculated?
The gross amount is amortized at the entered fixed rate over the selected monthly term.
Are closing costs added to my loan?
Here they are deducted from funding or paid upfront, not added to gross principal.
Why is annualized cost higher than my interest rate?
Fees reduce net funding while installments are based on gross principal.
Is this the same as a HELOC?
No. This models a single installment loan; HELOCs support repeated draws and different repayment rules.
Does a capacity result mean I qualify?
No. It is arithmetic under your value, debt and limit assumptions.