Back to calculatorMost lenders qualify you based on the following home equity requirements:
- Maximum debt-to-income (DTI) ratio: 43%
- Minimum credit score: 620
- Maximum LTV ratio: 85%
Written by Rene Bermudez | Edited by Crissinda Ponder | Updated April 11, 2024You can calculate your home’s equity by subtracting your current loan balance from what you think your home is worth. Our home equity loan calculator does the extra math to find how much of that equity you could use. You can use our calculator to find out how much you can borrow with either a HELOC or home equity loan, since the calculations are identical.
If you would like to crunch the numbers yourself, we’ve provided those steps, too.
You only need three pieces of information to find your estimate:
85% of your home’s value is the common maximum home equity loan and HELOC amountOur calculator limits you to an 85% loan-to-value (LTV) ratio, the industry standard set by most home equity lenders. That means the total balance of both your current mortgage and new home equity loan or HELOC can’t exceed 85% of your home’s value.
However, some specialized home equity lenders let you borrow up to 100% of your home’s value. Learn more about getting a high-LTV home equity loan.
If you prefer to estimate how much home equity you may be able to borrow yourself, here’s the formula you can use:
HELOC is short for “home equity line of credit.” It’s a line of credit like a credit card but with one huge difference—it’s secured by collateral. That collateral is your home equity, so if you fail to make your HELOC payments, your lender could foreclose on your home.
A HELOC works like a credit card during the initial “draw” period, which usually lasts 10 years. During that time many lenders offer interest-only payment options, which keep your monthly payments low but don’t reduce your loan balance. Once the HELOC draw period ends, you’ll have to start making full payments that cover both principal and interest.
See current HELOC rates today.A home equity loan is a type of second mortgage that allows you to borrow against the equity you’ve built in your home. “Second mortgage” simply means the loan is attached to a home that already has a mortgage.
Home equity loans work like regular mortgages. Lenders qualify you based on your income and credit scores and verify your home’s value with a home appraisal. You receive all your money at one time and make monthly installment payments. When you get a home equity loan, your home is used as collateral until you pay your loan off, so you risk foreclosure if you don’t make your payments.
See current home equity loan rates today. HELOCs come with variable ratesUnlike fixed-rate home equity loans, HELOCs usually come with variable interest rates, which means your interest rate could change each month. HELOC rates are tied to the prime rate, so they go up and down with the market and the federal funds rate set by the Federal Reserve.
A variable rate means your payments could go up or down, even when there’s no change in how much you borrowed. This can be good if, for example, the prime rate goes down. But if interest rates begin to rise, you could end up with larger HELOC payments than you bargained for.
LOAN AMOUNT |
APR AS LOW AS |
|
$25,000 |
6.99% |
|
$50,000 |
6.99% |
|
$100,000 |
7.13% |
|
$150,000 |
6.99% |
→ Interest rate. A higher rate means higher monthly payments. With HELOCs, your interest rate will change with the market, so you could have a different rate each month.
→ Payment type. Home equity loan payments don’t change, but HELOCs have phases. In the first phase, you can make interest-only payments, which are cheaper. For phase two, you have to make payments on both your principal and interest.
→ HELOC rate caps. To protect borrowers from sky-high rates, home equity lines of credit come with a maximum interest rate.
→ Fees. Home equity loans and HELOCs can come with fees. You may have to pay ongoing membership fees, minimum withdrawal fees or one-time fees like home equity closing costs.
On this page
| Loan amount | Monthly payment |
|---|---|
| $25,000 | $166.16 |
| $50,000 | $332.32 |
| $100,000 | $673.72 |
| $150,000 | $996.95 |
What is the monthly payment on a $50,000 HELOC?Assuming a borrower who has spent up their HELOC credit limit, the monthly payment on a $50,000 HELOC at today’s rates would be about $375 for an interest-only payment, or $450 for a principle-and-interest payment. But when you get a HELOC, you only have to may payments on the money you’ve used, so if you have not used the full amount of the line of credit, your payments will be lower.
What is the monthly payment on a $75,000 home equity loan?At current market rates, the monthly payment on a $75,000 home equity loan with a 30-year loan term would be about $592.
HELOCs and home equity loans are great ways to manage debt, build wealth or spruce up your home. Some popular uses of home equity loans include:
Ready to compare home equity rates from top lenders?Our home equity loan and HELOC calculator gives you an estimate for how much equity you could borrow from your home to help you understand whether these options are feasible for you. You can use this estimate calculate your possible monthly payment, and then decide if a home equity loan or line of credit will work well in your monthly budget. You might find that a different option for accessing more cash might be worth looking into.
But it’s also important to know whether getting a home equity loan or HELOC is a good idea for you or not.
Home equity loans make sense if you want to put your equity to use without impacting the rate or terms of your first mortgage. You’ll have the security of a predictable fixed-rate monthly payment, and even get a tax write-off if you use the money for renovation projects.
Home equity loans do not make sense if you plan to sell your home soon. You’ll eat up your profit with a home equity loan balance — and if values drop, you could end up owing money at closing.
HELOCs make sense if your finances are solid and you have a plan to make your payments and you would like some extra cash to cover ongoing debt expenses like medical bills, education costs or home improvements so you can minimize interest costs.
A HELOC doesn’t make sense if you need to use all the money at once or for a one-time expense, you won’t be able to maintain your monthly budget, or your finances are uncertain and you may not be able to afford the payments.
Unsure if you should choose a HELOC or home equity loan? Compare home equity loans vs. HELOCs to decide which option is best for you.Once you’ve used the calculator to get an idea of how much home equity you can borrow, follow these five steps to get a home equity loan or HELOC:
Ready to compare quotes from top lenders? Get Home Equity Rate Offers Today
Read more about our picks for the best home equity loan lenders.
Learn more about our picks for the best HELOC lenders.
If you want an alternative to home equity loans and HELOCs, you may want to consider a cash-out refinance. All three loan types involve converting some of your home equity into cash, but a cash-out refinance loan is unique in that it provides enough funds to both replace your existing mortgage and put an extra lump sum of cash in your pocket.
Lower interest rates. Cash-out refinances are first mortgages, so typically come with lower interest rates than home equity loans and HELOCs, which are second mortgages.
Fixed interest rates. Cash-out refinances have fixed interest rates, which means you’ll have predictable payments that don’t change.
A single payment. You won’t have to juggle multiple bills—your monthly mortgage payments will cover both the cost of your home and the cash.
Easier qualification. The minimum credit score needed to qualify for a conventional cash-out refinance is 620, which is lower than the 680 score many home equity lenders require.
Unsure which option is right for you? Read our guided comparison of cash-out refinances vs HELOCs vs home equity loans.Most lenders qualify you based on the following home equity requirements:
In most cases, you’ll spend 2% to 5% of your home equity loan or home equity line of credit amount toward closing costs.
If you don’t have enough home equity for a loan now, try these three steps to help you build equity in your home:
It takes roughly two to four weeks to complete a home equity loan.