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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 byRene Bermudez| Edited byCrissinda Ponder | Updated August 6, 2024
How to calculate your home equity loan or HELOC 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 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.
Use our home equity calculator to estimate how much you can borrow
You only need three pieces of information to find your estimate:
- Your home’s most recent appraised value (or estimated value). Use LendingTree’s home value estimator to get a ballpark value.
- Your outstanding mortgage balance. Grab your current mortgage statement to get this info.
- Your credit score range. If you don’t already know your credit score, you can get your free credit score on LendingTree.
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85% of your home’s value is the common maximum home equity loan and HELOC 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 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.
How to calculate your potential home equity loan or HELOC amount yourself
If you prefer to estimate how much home equity you may be able to borrow yourself, here’s the formula you can use:
- Multiply your home’s value by 85% (0.85)
- Subtract the amount you have left to pay on your mortgage
- The result is your potential home equity loan amount
Home equity loan vs. HELOC: What’s the difference?
Our calculator isn't just for home equity loans—it also estimates how much of a home equity line of credit (HELOC) you might qualify for. Both home equity loans and HELOCs are secured by your home’s equity, but they work very differently. Learn the differences between a home equity loan and a HELOC below to see if one option might be better for you than the other.
What is a HELOC?
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.
How does a home equity line of credit work?
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.
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. “Second mortgage” simply means the loan is attached to a home that already has a mortgage.
How does a home equity loan work?
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 rates
Unlike 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.
Current Average Home Equity Rates
LOAN AMOUNT | APR AS LOW AS Rates are calculated based on conditional offers for both home equity loans and home equity lines of credit with 30-year repayment periods presented to consumers nationwide by LendingTree’s network partners in the past 30 days for each loan amount. Rates and other loan terms are subject to lender approval and not guaranteed. Not all consumers may qualify. See LendingTree’s Terms of Use for more details. |
|---|---|
$25,000 | 7.13% |
$50,000 | 6.88% |
$100,000 | 6.88% |
$150,000 | 6.88% |
Factors that affect your home equity loan or line of credit payment
→ 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.
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On this page
- Factors that affect your home equity monthly payment
- What can I use a HELOC or home equity loan for?
- Should you use your home equity? How our calculator helps decide
- How to get a home equity loan or HELOC
- Alternative way to access home equity: Cash-out refinance
- Frequently asked questions
- More home equity resources
Average 30-year home equity monthly payments
| Loan amount | Monthly payment |
|---|---|
| $25,000 | $168.43 |
| $50,000 | $328.46 |
| $100,000 | $656.93 |
| $150,000 | $985.39 |
Rates are calculated based on conditional offers for both home equity loans and home equity lines of credit with 30-year repayment periods presented to consumers nationwide by LendingTree’s network partners in the past 30 days for each loan amount. Rates and other loan terms are subject to lender approval and not guaranteed. Not all consumers may qualify. See LendingTree’sTerms of Usefor more details.
What is the monthly payment on a $50,000 HELOC?
Assuming a borrower who has spent up to their HELOC credit limit, the monthly payment on a $50,000 HELOC at today’s rates would be about $403 for an interest-only payment, or $472 for a principle-and-interest payment. But when you get a HELOC, you only have to make payments on the money you’ve used, so if you haven’t 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 20-year loan term would be about $653.
What can I use a HELOC or home equity loan for?
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:
- 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.
- Debt consolidation. Home equity loan and line of credit interest rates are typically lower than credit card rates, which could make them a better option to help manage debt than a credit card.
- College costs. Locking in a HELOC or home equity loan interest rate now may be a good idea to protect you from worrying about 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 help of a home equity loan or HELOC.
- Avoiding mortgage insurance with a piggyback loan. Consider an 80-10-10 loan to skip paying conventional private mortgage insurance (PMI) for a home, which is required with less than a 20% down payment.
Ready to compare home equity rates from top lenders?
Get Custom Home Equity Offers Today
How our calculator helps you decide if you should borrow home equity
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 to 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.
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But it’s also important to know whether getting a home equity loan or HELOC is a good idea for you or not.
Is a home equity loan 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.
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.
Is a HELOC a good idea?
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.
How to get a home equity loan or HELOC
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:
- Shop around. LendingTree studies show borrowers that compare rates with at least three different lenders save thousands in interest charges and closing costs.
- Have your documents ready. Once you choose your lender, gather your current paystubs, W-2s and bank statements.
- 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.
- 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.
- 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.
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.
Cash-out refinance: An alternative way to tap home equity
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.
Advantages of a cash-out refinance:
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.
Frequently asked questions
Most 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%
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:
- Make extra mortgage payments. Consider biweekly mortgage payments or pay extra principal whenever you can to reduce your loan balance faster.
- 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.
- 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.
Featured home equity resources
