A home equity loan is a type of secured loan that allows homeowners to borrow against the equity they’ve built in their property. It's often used for major expenses such as home renovations, debt consolidation, or education costs. The loan is disbursed as a lump sum and repaid in fixed monthly installments over a set term.
How Does a Home Equity Loan Calculator Work?
A home equity loan calculator helps you estimate how much you may be able to borrow, based on:
- Your home's current market value
- The remaining balance on your mortgage
- The lender’s maximum loan-to-value (LTV) ratio
- Interest rate and loan term
Estimate Your Home Equity Loan
Calculator Coming Soon – You will be able to input your home value, mortgage balance, interest rate, and term to get a personalized estimate.
Example Calculation
If your home is worth $400,000 and you owe $220,000 on your mortgage, and your lender allows up to 85% LTV:
- 85% of $400,000 = $340,000
- $340,000 - $220,000 (mortgage) = $120,000 available for a home equity loan
Benefits of a Home Equity Loan
- Lower interest rates compared to personal loans or credit cards
- Fixed monthly payments for easier budgeting
- Lump sum funding for large expenses
- Potential tax deductions on interest if used for home improvements (consult a tax advisor)
Key Considerations
- You risk foreclosure if you default
- Closing costs may apply
- Interest rates are generally higher than a primary mortgage
- Your home value must be sufficient to qualify
Top Providers for Home Equity Loans
| Lender | Max LTV | Loan Amount Range | APR Range | Key Benefits |
|---|---|---|---|---|
| Bank of America | 85% | $25,000 – $500,000 | 6.5% – 9.75% | No annual fee, interest rate discounts for auto-pay |
| Wells Fargo | 80% | $20,000 – $500,000 | 6.25% – 10.5% | Flexible terms, easy online management |
| U.S. Bank | 85% | $15,000 – $750,000 | 6.8% – 11.0% | Streamlined application, low closing costs |
| PNC Bank | 85% | $10,000 – $250,000 | 6.9% – 12% | Great for home improvement loans |
Frequently Asked Questions
1. How much can I borrow with a home equity loan?
Most lenders let you borrow up to 80%–85% of your home’s value minus your current mortgage balance.
2. Will a home equity loan affect my credit score?
Yes. Like any loan, it will appear on your credit report. Responsible repayment can improve your score, while missed payments can harm it.
3. Is a home equity loan tax deductible?
Interest may be deductible if the loan is used to “buy, build, or substantially improve” the home securing the loan. Consult a tax advisor for details.
4. How is a home equity loan different from a HELOC?
A home equity loan gives a lump sum with fixed payments, while a HELOC provides a revolving credit line with variable rates and flexible access.
5. How long does approval take?
Approval can take from a few days to several weeks, depending on the lender and documentation requirements.