A home equity loan calculator estimates the monthly payment, total interest, and total cost of a fixed-rate, lump-sum second mortgage against your home's equity. This calculator estimates home equity loan costs using the loan amount, fixed interest rate, and term applied to the standard amortization formula, expressed as a monthly payment, total interest paid, and total dollars repaid over the life of the loan.
A home equity loan (sometimes called a HELoan) delivers a single lump sum at closing and repays it on a fixed schedule, typically 5 to 20 years, at a rate that does not change. According to the Consumer Financial Protection Bureau, home equity loans are well-suited to one-time, defined-cost borrowing such as a renovation with bids in hand, a debt consolidation of a known balance, or a one-time medical bill (per the CFPB, 2024). Most lenders cap the combined loan-to-value ratio at 80 to 85 percent, so on a $400,000 home with a $250,000 first mortgage, a typical HELoan caps near $90,000.
The fixed rate is the central trade-off versus a variable-rate HELOC. A home equity loan locks the payment from month one, eliminating payment-shock risk if prime rate rises, in exchange for a starting rate that typically runs 0.5 to 1.0 percentage points higher than a primary-mortgage rate. Interest may remain federally deductible when proceeds are used to buy, build, or substantially improve the home that secures the loan, subject to the Tax Cuts and Jobs Act mortgage-interest cap; consult a CPA before relying on the deduction.
Key takeaway
The fixed rate is what you're paying for. On a $50K, 15-year loan at 8.5% vs. a HELOC at the same starting rate, the home equity loan locks your payment at a known number, even if prime rate rises 3 points over the next 5 years. That predictability is worth real money, typically 0.5–1.0% in higher headline rate vs. an introductory HELOC rate. For a defined, one-time expense, fixed beats variable almost every time.
How it's calculated
Home equity loan payment uses the standard fixed-rate amortization formula, identical to a primary mortgage:
M = P × r(1+r)^n / ((1+r)^n − 1)
where P is the loan amount, r is the monthly interest rate (annual ÷ 12), and n is the total number of monthly payments (years × 12).
Total paid = M × n. Total interest = M × n − P. Because home equity loans run shorter than 30-year primary mortgages (typically 10–15 years) and at slightly higher rates, the monthly payment is proportionally higher than an equivalent first mortgage, but you save substantial interest by paying it off faster.
Source: Standard fixed-rate amortization formula (M = P × r(1+r)^n / ((1+r)^n − 1))
Examples
$50,000 at 8.5% over 15 years
- Loan amount $50,000
- Interest rate 8.5%
- Loan term 15 years
On a $50,000 home equity loan at 8.5% over 15 years, the monthly payment is $492 and the total interest is about $38,627, roughly 77% of the original principal. The fixed rate means that $492 figure is locked from month one through month 180, regardless of what prime rate does. The same loan over 10 years would have a $620/month payment but only $24,400 in total interest.
$30,000 at 7.75% over 10 years for a kitchen remodel
- Loan amount $30,000
- Interest rate 7.75%
- Loan term 10 years
A typical home renovation scenario: $30K at 7.75% over 10 years gives a $361 monthly payment with $13,261 in total interest. About 44% on top of principal. Because the project is one-time with a known scope (you have the contractor's bid), a fixed-rate home equity loan is preferable to a HELOC, there's no benefit to the HELOC's pay-as-you-draw flexibility, and you avoid the payment shock when its interest-only draw period ends.
Frequently asked questions
How is a home equity loan different from a HELOC?
A home equity loan is a fixed-rate, lump-sum second mortgage with predictable monthly payments, you receive all the money at closing and repay it on a set amortization schedule. A HELOC is a variable-rate credit line: you draw funds as needed during a 5–10 year draw period (often interest-only payments), then enter a 10–20 year repayment phase with fully-amortizing payments. HELOCs offer flexibility but carry variable-rate risk and payment shock when the repayment phase begins. Home equity loans trade flexibility for predictability.
How much can I borrow with a home equity loan?
Most lenders cap the combined loan-to-value (CLTV) at 80–85% of your home's appraised value, including your primary mortgage. Example: home worth $500K, primary mortgage balance $300K. At 85% CLTV, your maximum total debt is $425K, leaving $125K available as a home equity loan. Some lenders and credit unions go to 90% or 95% CLTV for strong borrowers, but rates jump significantly at those tiers. Underwriting also considers debt-to-income ratio (typically 43% maximum) and credit score (usually 680+).
Is home equity loan interest tax-deductible?
Under the Tax Cuts and Jobs Act (in effect through 2025), interest on a home equity loan is deductible only if the loan proceeds are used to "buy, build, or substantially improve" the home that secures the loan. Using the loan for debt consolidation, education, or other personal expenses makes the interest non-deductible, even though the loan is secured by your home. The total mortgage interest deduction is also capped at $750K of combined first-mortgage and home-equity debt for new loans. Always verify with a CPA, TCJA provisions sunset and rules may change.
What happens if I default on a home equity loan?
Your home is the collateral. The lender can foreclose if you default, exactly like a primary mortgage. Because a home equity loan is a second mortgage, the primary mortgage holder is paid first from any foreclosure proceeds, but if there's enough equity to cover both, you lose the home regardless. This is the most important difference between home equity debt and unsecured debt: defaulting on a credit card hurts your credit; defaulting on a home equity loan can cost you your house. Borrow only what you can comfortably afford to repay.