Home Equity Loan Calculator
Considering a home equity loan for renovations or debt consolidation? Enter your loan details to see your monthly payment, total interest, and how it affects your equity.
Understanding Home Equity Loans
Home equity loans let you borrow against the value you've built in your home. You receive the full amount upfront in a lump sum, then repay it in equal monthly installments over 5-30 years at a fixed interest rate.
Because the loan is secured by your home, rates are typically lower than personal loans or credit cards. A $50,000 home equity loan at 7% over 15 years costs $449.41 monthly and $30,894 in total interest.
The fixed rate and payment make budgeting easy. Unlike HELOCs, where rates fluctuate and payments can jump, home equity loans lock in your terms from day one. You know exactly what you'll pay each month and when the loan will be paid off.
When Home Equity Loans Make Sense
Home equity loans work best for one-time expenses with a clear cost: kitchen remodel, roof replacement, or paying off high-interest credit card debt. The lump sum covers the full expense, and the fixed payment fits neatly into your budget.
Debt consolidation is a popular use case. If you owe $40,000 across five credit cards at 18-22% APR, consolidating into a 7% home equity loan saves thousands in interest and simplifies payments. Just avoid running up new credit card balances after consolidating.
Avoid using home equity for depreciating purchases like cars or vacations. You're borrowing against your home's value—if you default, you risk foreclosure. Reserve home equity loans for appreciating assets or high-return investments.
How to Compare Home Equity Loan Offers
Don't focus solely on the interest rate. Check the APR, which includes all fees and gives you a true cost comparison. A 6.5% rate with a 3% origination fee might cost more than a 7% rate with no fees.
Scrutinize closing costs: appraisal fees, title search, recording fees, and lender charges can add $2,000-$5,000 to your upfront cost. Some lenders advertise low rates but bury high fees in the fine print.
Compare loan terms carefully. A 10-year loan has higher monthly payments than a 20-year loan, but you'll save tens of thousands in interest. Run the numbers for multiple terms to find the balance between affordable payments and minimal total cost.
Frequently Asked Questions
What is a home equity loan?
A home equity loan is a lump-sum loan secured by the equity in your home. It has a fixed interest rate and fixed monthly payments over a set term, typically 5-30 years.
How much can I borrow with a home equity loan?
Most lenders allow you to borrow up to 85% of your home's value minus your existing mortgage. If your home is worth $300,000 and you owe $180,000, you could borrow around $75,000.
Is a home equity loan better than a HELOC?
It depends. Home equity loans offer fixed rates and predictable payments, ideal for one-time expenses. HELOCs have variable rates and flexible draws, better for ongoing expenses like renovations.
Can I deduct home equity loan interest on my taxes?
Only if you use the funds to buy, build, or substantially improve your home. Interest on loans used for debt consolidation or other purposes is not tax-deductible under current law.
What happens if I can't repay the loan?
Your home is collateral. If you default, the lender can foreclose and sell your home to recover the debt. Only borrow what you can comfortably repay.