Home Equity Loan Calculator

How to Calculate Your Home Equity Loan Payment

Tapping into the equity you have built in your home is one of the lowest-cost ways to borrow a large sum of money, whether you are funding a kitchen remodel, consolidating higher-rate debt, or covering a major expense. LoanRateCheck's free home equity loan calculator lets you model both major products in one place: a fixed-rate home equity loan that pays out a lump sum, or a HELOC that works like a revolving credit line. Enter your home value, existing mortgage balance, and desired borrowing amount, then click Calculate for an instant payment estimate, combined loan-to-value ratio, and full amortization schedule.

Home Equity Loan vs. HELOC: Choosing the Right Product

A home equity loan disburses your full approved amount at closing, at a fixed interest rate, with equal monthly principal-and-interest payments for the entire term — usually 5 to 30 years. It is the more predictable choice when you know exactly how much you need, such as a fixed renovation budget. A HELOC, or home equity line of credit, works differently: it is a revolving credit line you can draw from as needed during a "draw period," typically 5 to 15 years, after which it converts to a "repayment period" where you pay down principal and interest over 10 to 25 years. A variable rate HELOC is far more common than a fixed-rate HELOC, meaning your payment can rise or fall with the index rate — usually the Prime Rate — plus a lender margin. Use the Loan Type tabs above to switch between the two and compare the payment structure side by side.

How Much Equity Can You Borrow?

Lenders calculate your borrowing limit using the combined loan-to-value (CLTV) ratio: your existing mortgage balance plus the new home equity loan or HELOC, divided by your home's current appraised value. Most lenders cap CLTV at 80–85%, though some go higher for borrowers with excellent credit. On a $450,000 home with a $250,000 mortgage balance, an 85% CLTV limit allows roughly $132,500 in additional borrowing ($450,000 × 0.85 − $250,000). The Available Equity and Maximum Borrowable fields in the calculator update automatically as you adjust your home value, mortgage balance, and CLTV limit, so you can see exactly how much room you have before submitting an application.

Using a Home Equity Loan for Home Improvements and Renovation

A home equity loan for home improvements is one of the most common — and most tax-advantaged — uses of this financing. Because the funds arrive as a single lump sum with a fixed rate and fixed payment, it is well suited to a defined project with a known budget, such as a full kitchen remodel, a roof replacement, or an addition. A home equity loan for renovation also tends to carry a meaningfully lower interest rate than an unsecured personal loan or credit card, since the debt is secured by your home. When the borrowed funds are used to buy, build, or substantially improve the home securing the loan, the interest may also be tax-deductible under current IRS rules — a benefit that does not apply to most other forms of consumer borrowing. Enter your projected project cost as the Loan Amount Requested to see your exact monthly payment before you commit.

Variable Rate HELOC: How Draw-Period Payments Work

During the draw period of a variable rate HELOC, most lenders only require an interest-only payment calculated on whatever balance you have actually drawn. In this calculator, we estimate the draw-period payment assuming you draw the full credit limit immediately, which represents a reasonable worst-case monthly figure — if you draw less, your actual interest-only payment will be lower. Because the rate is variable, that payment can move up or down as the underlying index changes; it is worth stress-testing your budget against a rate 1–2 percentage points higher than today's quote. Once the draw period ends, the HELOC converts to the repayment period, and the payment jumps to a fully-amortizing principal-and-interest payment over the remaining term — a shift that catches many borrowers off guard if they have not planned for it. Toggle to the HELOC tab above and adjust the draw and repayment period lengths to see both payment phases side by side.

Comparing HELOC Lenders, Including Bank of America's Home Equity Line of Credit

Shopping among HELOC lenders is essential, since rates, fees, and draw structures vary meaningfully between banks, credit unions, and online lenders. Large national banks such as Bank of America offer a well-known Bank of America home equity line of credit product with relationship-based rate discounts for existing checking or investment customers, no annual fee in many cases, and the ability to lock a portion of the balance into a fixed rate. When comparing offers, look beyond the headline introductory rate: check the ongoing variable-rate margin over the index, the length of the draw and repayment periods, any minimum draw or annual fee requirements, and early-closure penalties. Run each lender's quoted rate and terms through this calculator to compare the real dollar impact rather than relying on the advertised rate alone.

HELOC on a Second Home or Vacation Property

Many lenders will approve a HELOC on a second home or vacation property, but qualification standards are typically tighter than for a primary residence. Expect a lower maximum CLTV — often 70–80% instead of 85% — along with a higher minimum credit score, larger cash reserve requirements, and a somewhat higher interest rate to offset the additional risk lenders associate with non-owner-occupied and secondary properties. If you are modeling a second-home HELOC, lower the Max Combined LTV field to reflect these stricter limits before calculating your maximum borrowable amount.

Home Equity Refinance: When to Convert or Consolidate

A home equity refinance replaces your existing home equity loan or HELOC with new terms. Common reasons include locking a rising variable rate into a fixed one before a HELOC's repayment period begins, extending the term to lower the monthly payment, or consolidating a HELOC balance into a new fixed-rate home equity loan. Some lenders also offer a HELOC-to-fixed conversion feature that lets you lock a portion of your draw balance at a fixed rate without a full refinance. Before refinancing, compare your current payment and remaining balance against the new proposed rate and term using this calculator, and factor in any closing costs on the new loan to confirm the move actually saves money over your expected time horizon.

Extra Payments: Paying Off Your Home Equity Loan Faster

Just like a mortgage, any amount you pay above your required payment on a home equity loan or HELOC repayment period goes directly to principal, shrinking the balance on which future interest is calculated. On a $50,000 home equity loan at 8.75% over 15 years, adding just $75 extra per month can save several thousand dollars in interest and shorten the payoff by more than a year. Use the Extra Payment Savings section above to model your own scenario — enter any dollar amount and the calculator instantly shows your new payoff timeline and updated total interest, without altering your original calculation.

Tax Deductibility and Closing Costs

Interest on a home equity loan or HELOC may be tax-deductible when the proceeds are used to buy, build, or substantially improve the home that secures the debt — for example, a renovation, addition, or major repair — subject to current IRS mortgage interest deduction limits. Interest is generally not deductible when funds are used for unrelated purposes such as paying off credit cards or funding a vacation. Closing costs on a home equity loan or HELOC typically run 2–5% of the amount borrowed, covering appraisal, title search, and origination fees, though some lenders waive these costs on smaller lines of credit in exchange for a slightly higher rate. Always confirm the fee structure and consult a tax professional about deductibility before finalizing your decision.