Use our home equity loan calculator to learn how much you can borrow to fulfill your financial goals. Home equity is the difference between how much you owe on your mortgage and your home’s value. As you pay down your mortgage, you’ll build equity in your home.
A home equity loan is a type of second mortgage that allows you to borrow against the equity you’ve built in your home. It’s an installment loan that’s repaid on a monthly basis, similar to a regular mortgage.
Home equity loans are disbursed in a lump sum and typically have a fixed interest rate and fixed monthly payments. Repayment terms generally range from five to 30 years. With a home equity loan, your home is used as collateral — so your lender can foreclose on your home if you fail to make payments.
Some common ways to use a home equity loan include:
Our home equity loan calculator can help you determine how much available equity you might qualify to borrow with a home equity loan or home equity line of credit.
Here’s the information you’ll need to use the calculator:
If you need help determining your home’s value, reach out to your real estate agent to request a competitive market analysis. Another option is to use LendingTree’s home value estimator.
Find out how much you owe on your mortgage by taking a look at your most recent mortgage statement. And if you don’t already know your credit score, you can get a free credit score online.
Once you’ve input this information, the calculator provides the estimated home equity loan (or home equity line of credit) amount you might qualify for.
HOME EQUITY LOAN SHOPPING TIP
Once the home equity loan calculator generates a number for you, use it to gather quotes from multiple home equity lenders to find the best deal. Compare the interest rates and costs on each loan estimate you receive, and make sure you gather your quotes on the same day (interest rates change daily).
Our home equity loan calculator doesn’t calculate monthly payments — you’ll see the monthly payment information on the loan estimates you collect while you’re comparing offers.
There are three factors that will affect your monthly home equity loan payments:
Home equity is simply the difference between your home’s market value and your outstanding mortgage balance. As an example, if you have a $300,000 home and owe $200,000 on your primary mortgage, you have $100,000 in equity.
As mentioned above, a home equity loan is paid out in a lump sum and repaid in fixed monthly installments over a set term. On the other hand, a home equity line of credit (HELOC), works much like a credit card. You can use the credit line up to the established limit, but you pay only for what you use — plus interest. HELOCs have a set draw period, during which you can use the credit line. When the draw period ends, the HELOC goes into repayment and you can’t tap any more equity from the credit line.
You must meet several home equity loan requirements to apply and qualify for a loan, such as:
It’s important to note that lenders typically limit the amount you can borrow to 85% of your home’s value, according to the Federal Trade Commission, so you likely won’t be able to tap the full amount. It’s also a good idea to leave some equity in your home in case you need to sell it suddenly due to a job change or personal financial emergency.
You may qualify for a tax deduction on your home equity loan, depending on how the money is used. If you took out the loan to buy, build or substantially improve your home, then you can likely deduct the interest paid on your monthly home equity loan payments under the mortgage interest deduction. However, the interest won’t be tax-deductible for other purposes, such as debt consolidation or buying a second home.
Just as with your first mortgage, there are closing costs to pay on a home equity loan, which can range from 2% to 5% of your loan amount.
Costs typically include but may not be limited to: