🏠 Home Equity & HELOC Borrowing Calculator
A home equity loan calculator for borrowing capacity and the exact monthly payment, including HELOC draw-period shock. No signup, no personal details.
Runs entirely in your browser. No name, email, phone number or credit check — nothing is sent anywhere.
What Home Equity & HELOC Borrowing Calculator Does
Home equity is the part of your property you actually own: market value minus what you still owe. Lenders will let you borrow against some of it, but not all — they cap the combined loan-to-value ratio, typically at 80% to 85%, because they need a cushion if prices fall.
That cap is what limits your borrowing, not your equity. On a $500,000 home with a $280,000 mortgage you have $220,000 of equity, but at an 85% CLTV limit you can only borrow $145,000. The remaining $75,000 stays locked in the house.
The choice between a home equity loan and a HELOC matters more than the headline rate. A loan is a lump sum at a fixed rate with level payments. A HELOC is a revolving line at a variable rate that usually charges interest only during a draw period, then switches to full amortization — and that switch commonly raises the payment by 70% or more overnight.
How to Use Home Equity & HELOC Borrowing Calculator
- Enter current estimated home market value and remaining mortgage balance
- Select lender maximum LTV threshold (80%, 85%, or 90%)
- Review total equity ownership and maximum available HELOC credit line
Formula Used by Home Equity & HELOC Borrowing Calculator
Available equity and borrowing capacity
capacity = (home_value × max_CLTV) − mortgage_balance
- max_CLTV
- The lender's combined loan-to-value ceiling, usually 0.80–0.85
- mortgage_balance
- All existing loans secured by the property, not just the first mortgage
Worked example
A $500,000 home with a $280,000 mortgage, at an 85% CLTV limit.
- Total equity: 500,000 − 280,000 = 220,000
- Lender ceiling: 500,000 × 0.85 = 425,000
- Capacity: 425,000 − 280,000 = 145,000
Result: $145,000 available — despite $220,000 of equity. The gap is the lender's cushion.
Monthly payment on a fixed home equity loan
M = P × [ r(1 + r)^n ] ÷ [ (1 + r)^n − 1 ]
- P
- Amount borrowed
- r
- Monthly rate: APR ÷ 12
- n
- Term in months
Worked example
Borrowing $100,000 at 8.5% over 10 years — the question people most often arrive with.
- r = 0.085 ÷ 12 = 0.00708333, n = 120
- (1.00708333)^120 = 2.33265
- M = 100,000 × (0.00708333 × 2.33265) ÷ (2.33265 − 1)
Result: $1,239.86 a month, and $48,783 of total interest over the ten years.
HELOC payment shock
draw_payment = balance × r repayment_payment = amortized over the remaining term
- draw period
- Typically the first 10 years, interest-only
- repayment period
- The remaining term, during which principal must also be repaid
Worked example
A $145,000 HELOC at 8.5% with a 10-year draw and a 10-year repayment period.
- During the draw: 145,000 × (0.085 ÷ 12) = 1,027.08
- After the draw, amortized over 120 months: 1,797.79
Result: The payment rises from $1,027 to $1,798 — a 1.75× jump, on the same balance at the same rate.
Monthly Payment per $100,000 Borrowed
Fixed-rate home equity loan at 8.5%. A longer term lowers the payment and raises the total cost substantially.
| Term | Monthly payment | Total interest | Total repaid |
|---|---|---|---|
| 5 years | $2,051.65 | $23,099 | $123,099 |
| 10 years | $1,239.86 | $48,783 | $148,783 |
| 15 years | $984.74 | $77,253 | $177,253 |
| 20 years | $867.82 | $108,278 | $208,278 |
Home Equity Loan vs HELOC vs Cash-Out Refinance
| Home equity loan | HELOC | Cash-out refinance | |
|---|---|---|---|
| Structure | Lump sum, second lien | Revolving line, second lien | Replaces your first mortgage |
| Rate | Fixed | Usually variable | Fixed or variable |
| Payment | Level from day one | Interest-only, then jumps | Level from day one |
| Best when | You know the exact amount | Costs are staged over time | Current rates beat your existing mortgage |
| Main risk | Fixed obligation on your home | Rate rises and payment shock | Resetting a low mortgage rate to a higher one |
What Determines Your Limit
Capacity is the binding constraint far more often than equity is.
| Factor | Typical requirement |
|---|---|
| Combined LTV | 80–85% of value, including the first mortgage |
| Equity retained | Lenders generally want 15–20% left untouched |
| Credit score | Usually 680+; the best pricing above 740 |
| Debt-to-income | Commonly 43% or lower after the new payment |
| Appraisal | The lender's valuation governs, not your estimate or a listing site |
How to Read Your Result
This is your home as collateral
The rate is lower than a credit card or personal loan for one reason: the debt is secured by your house. Consolidating unsecured debt into a home equity loan converts something a lender can only sue over into something they can foreclose on. That can still be the right trade — but it is a trade, and it should be a deliberate one.
The draw period ending is the real HELOC risk
Borrowers budget around the interest-only payment because that is what they have paid for years. On the example above the payment goes from $1,027 to $1,798 in a single month. If the rate has also risen — HELOCs are usually variable — the jump is larger still. Model the repayment-period payment before you draw, not after.
Interest is only deductible for home improvements
The IRS restricts the deduction to interest on funds used to buy, build or substantially improve the home securing the loan, within an overall $750,000 limit on qualified residence debt ($375,000 filing separately). Using a HELOC to pay off credit cards or fund a holiday makes that interest non-deductible, even though the loan is secured by the house. These provisions have been amended more than once — check the current tax year before assuming a deduction.
Your valuation is not the lender's
Capacity is calculated from the lender's appraisal. Automated estimates from listing portals are frequently high, and a valuation that comes in below expectation reduces your borrowing power dollar-for-dollar at the CLTV ratio — a $20,000 shortfall in value cuts capacity by $17,000 at 85%.
Limitations & Accuracy Notes
- Capacity here uses the CLTV limit you select. Actual approval also depends on credit score, income, debt-to-income ratio and the lender's own appraisal, none of which are modeled.
- Closing costs are excluded. Home equity loans commonly carry appraisal, origination and title fees; some HELOCs waive them but add an early-closure fee if you repay within two or three years.
- HELOC rates are typically variable and tied to the prime rate. The payment figures shown assume the rate you enter stays fixed, which it generally will not.
- The draw-period comparison assumes a 10-year interest-only draw followed by amortization over the remaining term. Real HELOC structures vary and some require principal during the draw.
- Property values move. A fall in value reduces your equity and can leave a combined balance above the property's worth, which restricts refinancing and selling.
- This is an estimate for planning, not a loan offer, pre-qualification, or financial advice. Your home secures this debt — take advice before borrowing against it.
Frequently Asked Questions
What is Home Equity?
What is the maximum LTV limit for a HELOC?
What is the difference between a home equity loan and a HELOC?
How much can I borrow?
What is the risk compared with other borrowing?
Is the interest tax deductible?
Is my data stored?
References & Further Reading
- IRS IR-2018-32 — Interest on home equity loans often still deductible — The buy/build/substantially-improve test and the $750,000 qualified residence limit, with worked examples
- eCFR — 12 CFR Part 1026 (Regulation Z, Truth in Lending) — Governs HELOC disclosures, including the required draw and repayment period terms
- Federal Reserve — Selected Interest Rates (H.15) — The prime rate that most variable HELOC rates are indexed to