Home Equity Loan Calculator

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How Does LendingTree Get Paid?

LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.
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Written by Denny Ceizyk | Edited by Crissinda Ponder | Updated on September 22, 2023

How to calculate your home equity loan amount

You 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 determine how much of that equity can be used for a home equity loan.

You only need three pieces of information to start crunching numbers:

  1. Your home’s most recent appraised value (or estimated value). Use LendingTree’s home value estimator to get a ballpark value.
  2. Your outstanding mortgage balance. Grab your current mortgage statement to get this info.
  3. Your credit score range. If you don’t already know your credit score, you can get a free credit score online

A note about your maximum loan amount: Our calculator limits you to an 85% loan-to-value (LTV) ratio, the industry standard set by most home equity lenders. That means the balance of both your current mortgage and new home equity loan 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.

Current Home Equity Loan Rates

LOAN AMOUNT

APR AS LOW AS

$25,000

7.99%

$50,000

7.99%

$100,000

8.13%

$150,000

7.99%
Compare Home Equity Loan Offers

What is a home equity loan?

A home equity loan is a type of second mortgage that allows you to borrow against the equity you’ve built in your home. The term “second mortgage” simply means it’s attached to a home already secured by a first mortgage.

How does a home equity loan work?

Home equity loans are similar to 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 as a lump sum and make monthly installment payments, just like a regular mortgage. A lien is secured against your home and is released once you pay your loan off.

Some standard features of home equity loans include:

  • Fixed interest rates
  • Repayment terms from five to 30 years
  • Potential to foreclose on your home if you fail to make payments

 

  Learn more about how a home equity loan works.

How to get a home equity loan

Once you’ve used the home equity loan calculator to get a rough idea of how much of your home equity you can borrow, follow these five steps to get one:

  1. Shop around. LendingTree studies show borrowers that compare rates with at least three different lenders save thousands in interest charges and closing costs.
  2. Have your documents ready. Once you choose your lender in Step 1, collect current paystubs, W-2s and bank statements.
  3. Get ready for the appraisal. Make improvements, clear out clutter and clean up the outside of your home so it looks nice for the home appraisal.
  4. Finalize your figures. You’ll receive a closing disclosure three business days before closing. Check the terms to make sure they align with your original loan estimate and request changes from the lender as needed.
  5. Close your loan and get your money. You’ll receive your money on the fourth business day after you sign. During that time you have the right to cancel if you have second thoughts.
How Does LendingTree Get Paid?
LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.

How Does LendingTree Get Paid?

LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.
LenderLendingTree rating and "best of" categoryAvailable featuresLender review

Low credit scores

680 minimum credit score

90% LTV with higher score

$45K minimum draw

Read our review

Navy Federal Credit Union

High LTV ratios

5- to 30-year terms

No-closing-cost options

100% LTV for qualified borrowers

Read our review

TD Bank

Online experience

5- to 30-year terms

$10K to $500K loan amounts

0.25% rate discount for eligible borrowers

Read our review

Rate and closing cost discounts

5- to 30-year terms

0.50% rate discount for eligible borrowers

No upfront fees

Read our review

Fast closings

5- to 30-year terms

$500K maximum loan amount

14-day closings possible

Read our review
Get Home Equity Loan Offers Today

What can I use a home equity loan for?

A home equity loan is a great financial tool to manage debt, build wealth or spruce up a home. Some popular uses of home equity loans include:

  • Covering the cost of home improvements. Replace outdated appliances, worn carpet or improve your home’s curbside appeal with some new landscaping and lighting features. An added bonus: Home equity loan interest is tax-deductible if you use it for fixer-upper projects.
  • Paying off high-interest-rate credit card debt. Home equity loan interest rates are typically lower than credit card rates.
  • Paying for college or other higher education costs. Locking in a home equity loan interest rate now may be a good hedge against future student loan rate increases.
  • Buying a rental property. Use your home equity to buy an investment property and start building a real estate investment portfolio.
  • Expanding or starting a business. Control your monthly business expenses with the predictability of a fixed monthly home equity loan payment.
  • Avoiding mortgage insurance with a piggyback loan. Consider an 80-10-10 loan to skip paying conventional private mortgage insurance (PMI), which is required with less than a 20% down payment.

Home equity loan vs. HELOC: What’s the difference?

Our calculator also estimates how much of a home equity line of credit (HELOC) you might qualify for. Although a HELOC is also secured by your home’s equity, it works very differently from a home equity loan.

A HELOC is a revolving line of credit that works like a credit card during the “draw” period, which usually lasts 10 years. You can charge it, pay it off and only make payments on the amount you use. Many lenders offer interest-only options, which keep your payments low but don’t reduce your loan balance.

View Current HELOC Rates

 

 

Are home equity loans a good idea?

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.

Avoid home equity loans 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.

Once the draw period is up, the balance is paid in monthly installment payments like a home equity loan. Another big difference between HELOC and home equity loans: HELOC rates are typically variable, which means the payment can change when rates change.

Ready to compare home equity offers?
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Frequently asked questions

Most lenders qualify you based on the following home equity loan requirements:

  • Maximum debt-to-income (DTI) ratio: 43%
  • Minimum credit score: 620
  • Maximum LTV ratio: 85%

In most cases, you’ll spend 2% to 5% of your home equity loan 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:

  1. Make extra mortgage payments. Consider biweekly mortgage payments or pay extra principal whenever you can to reduce your loan balance faster.
  2. Pick home improvements that increase your value. Check out a cost versus value report for your ZIP code for clues about which home improvements will give you the most home-equity-building bang for the buck.
  3. Use a bonus or commission to recast your loan. Put a large commission or bonus check to use by recasting your loan. Most loan servicers allow you to make a one-time payment of at least $5,000 toward your principal and they “recast” the loan, which reduces your monthly payments based on the new lower loan amount. Some added perks: You keep your current mortgage rate and avoid the cost of a full refinance.

It takes roughly two to four weeks to complete a home equity loan.