Home Equity Loan & HELOC Payment Calculator

A Home Equity Loan is a fixed-rate, lump-sum loan secured by the equity in your home. You receive the full loan amount upfront and repay it in fixed monthly installments over a set term (typically 5–30 years). It's often called a "second mortgage" because it sits behind your primary mortgage. Home Equity Loans are ideal for large, one-time expenses like home renovations, debt consolidation, or major purchases where you want predictable payments.

A HELOC is a revolving line of credit secured by your home equity. It has two phases: a draw period (typically 10 years) where you can borrow as needed and usually pay only interest on the outstanding balance, and a repayment period (typically 15–20 years) where you repay principal plus interest. HELOC rates are usually variable, tied to the prime rate, making them more flexible but less predictable than Home Equity Loans. They're great for ongoing expenses or projects with uncertain costs.

• Structure: Home Equity Loan = lump sum upfront; HELOC = revolving credit line.
• Rate Type: Home Equity Loan = typically fixed; HELOC = typically variable.
• Payments: Home Equity Loan = fixed monthly P&I from day one; HELOC = interest-only during draw period, then P&I during repayment.
• Best For: Home Equity Loan suits one-time expenses with known costs; HELOC suits ongoing or flexible spending needs.

CLTV = (Current Mortgage Balance + New Home Equity Loan or HELOC Balance) ÷ Home Value × 100%. For example, if your home is worth $400,000, you owe $200,000 on your first mortgage, and you take a $50,000 Home Equity Loan, your CLTV is ($200,000 + $50,000) ÷ $400,000 = 62.5%. Most lenders cap CLTV at 80%–85%, though some may go up to 90% for highly qualified borrowers.

Maximum borrowing is typically determined by: (Home Value × Lender's Max CLTV) – Current Mortgage Balance. For instance, if your home is worth $400,000 and the lender allows 80% CLTV, the maximum total debt secured by your home is $320,000. If you already owe $200,000, you could potentially borrow up to $120,000. Keep in mind that lenders also evaluate your credit score, income, and debt-to-income ratio when determining your actual limit.

Interest on Home Equity Loans and HELOCs may be tax deductible if the funds are used to "buy, build, or substantially improve" the home securing the loan. As of current IRS rules (Tax Cuts and Jobs Act), interest on home equity debt used for other purposes (like paying off credit cards or funding a vacation) is generally not deductible. Always consult a tax professional for guidance specific to your situation.

Once the draw period ends, you can no longer withdraw funds, and the repayment period begins. Your outstanding balance is amortized over the remaining repayment term, meaning your monthly payments will increase significantly because you're now paying both principal and interest. It's wise to plan ahead for this payment increase. Some lenders may offer renewal options or conversion to a fixed-rate loan before the draw period expires.