Home equity loan & HELOC calculator

Last updated: September 2026 · Verified by Hugo Cardozo.

How much equity you can actually borrow

Lenders don't let you borrow against 100% of your home's value. They cap total borrowing (existing mortgage plus the new loan or line) at a maximum combined loan-to-value ratio, commonly 80-90%. Subtract your current mortgage balance from that capped amount to get the real ceiling on what a home equity loan or HELOC can offer you.

Home equity loan: one lump sum, one fixed payment

A home equity loan works like a second mortgage — you get the full amount upfront at a fixed rate, then pay it back in equal amortized installments over a set term. The payment never changes, which makes it easy to budget around, and it's usually the simpler choice when you know the exact amount you need for a single expense.

HELOC: a revolving line with two very different phases

A HELOC lets you draw funds as needed, up to a limit, typically with a variable rate. During the draw period, most HELOCs only require interest payments on whatever balance is outstanding — the principal doesn't go down on its own. Once the draw period ends, the loan enters the repayment period, and the payment jumps because it now has to amortize the full remaining balance over a shorter remaining time. That payment jump is the single most common HELOC surprise.

Worked example

A $400,000 home with a $220,000 mortgage balance and an 85% max LTV has about $120,000 in borrowable equity. Borrowing $50,000 as a home equity loan at 8.5% over 15 years costs about $492/month, with roughly $38,600 in total interest. The same $50,000 as a HELOC at 9% costs only about $375/month during a 10-year interest-only draw period — but once the 15-year repayment period starts, the payment jumps to about $507/month, and total interest over the life of the HELOC ends up around $86,300, well above the fixed loan, because the principal barely moves during the draw years.

Which one actually fits your situation

A home equity loan tends to fit a one-time, known expense — a renovation with a fixed budget, debt consolidation, a single large purchase — where a predictable fixed payment matters more than flexibility. A HELOC fits ongoing or uncertain expenses, like a renovation done in phases or a financial cushion you may not fully use, where the flexibility to draw only what's needed is worth the variable-rate risk and the eventual payment jump.

Frequently asked questions