Home Equity Loan Calculator

A home equity loan is a second mortgage paid out as one lump sum at closing. You repay it in equal monthly installments at a fixed rate over a set term, usually 5 to 30 years. That makes it different from a HELOC, which is a revolving line of credit with a variable rate that you draw on as needed. Because the payment never changes, a home equity loan suits one known expense: a renovation with a firm bid, paying off higher-rate debt, or a tuition bill.

The loan is secured by your house and sits behind your first mortgage, so falling behind puts the home at risk. That second-lien position is also why the rate is usually a little higher than a first mortgage rate.

Lenders cap the combined loan-to-value (CLTV) ratio: every loan secured by the home divided by its appraised value. Most set the limit at 80% or 85%, and a few go to 90% for strong credit. The most you can borrow is:

Max loan = home value × CLTV limit − first mortgage balance

Example: a home appraised at $450,000 with a $250,000 first mortgage and an 85% limit gives 450,000 × 0.85 −250,000 = $132,500. At 80% the same home supports $110,000, and at 90% it supports $155,000. If your first mortgage already exceeds the limit, there is no borrowable equity until the balance falls or the value rises.