If you’re a homeowner in search of financing, you may be able to tap into your home equity with a home equity loan. This home equity loan calculator will give you an idea of how much you can borrow based on your ownership of your home. By entering some basic information, you can quickly estimate your maximum home equity loan amount.
Disclaimer: Whether you can qualify for a home equity loan depends on several factors, including your credit history and the amount of equity in your home. Homeowners without at least 15% equity are unlikely to qualify.
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A home equity loan calculator gives you an idea of whether you can qualify for a home equity loan, along with how much you can borrow and your monthly payment amount. The calculator bases these figures on your current home value and existing mortgage balance.
You usually need at least 15% to 20% equity in your home to qualify for a home equity loan. Equity is the difference between your home’s value and current mortgage loan balance (plus any other loans secured by your home, such as a home equity loan or line of credit).
Using the home equity loan calculator is easy. All you need to do is enter two basic pieces of information:
• Home’s estimated value (remember, this is not what you paid for your home but rather its current estimated market value)
• Existing mortgage balance (include the balance on all loans or credit lines you have that are secured by your home)
After you provide this information, the home equity loan calculator will reveal your estimated maximum home equity loan amount. Note that this calculator assumes good or excellent credit. If you have weaker credit, you might have higher loan costs or not qualify for a home equity loan. Keep in mind that this calculator only provides an estimate. You’ll need to work with a lender directly to get a specific offer based on your financial situation.
Recommended: Home Loan Help Center
Here are the main advantages of using a home equity loan calculator.
• It crunches the numbers for you. Instantly estimate your potential loan amount without doing the math by hand.
• It shows your maximum loan amount. This calculator shows the most you might be able to borrow — but remember that you don’t have to borrow the full amount if it exceeds your financing needs.
A home equity loan is a type of loan that’s secured by your home. It provides a lump-sum of funding upfront that you pay back in monthly installments over time. You can usually choose a repayment term that ranges anywhere from five to 30 years.
You’ll pay interest on the loan, along with any additional fees. Similar to a mortgage, home equity loans typically come with closing costs, which may total between 2% and 5% of your loan amount.
There are several benefits to taking out a home equity loan, including:
• High loan amounts: Depending on how much equity you have in your home, you may be able to access a large loan amount. This may be helpful if you’re looking to pay for a pricey renovation or other high-cost project.
• Competitive interest rates: Since home equity loans are secured by your home, they may offer better interest rates than unsecured personal loans.
• Lengthy repayment terms: Depending on the lender, you might get to choose a repayment term as long as 30 years.
• Fixed interest rate: Most home equity loans come with a fixed interest rate, so you don’t have to worry about your rate increasing over time. A fixed rate also makes it easy to estimate your long-term loan costs up front.
• Predictable monthly payments: Your monthly payments will stay the same over the life of your loan, making it easier to work them into your budget.
• Possible tax breaks: Through 2025, you can claim a tax deduction on your home equity loan interest if you use the loan to “buy, build, or substantially improve [your] residence.”
Recommended: First-Time Homebuyer Guide
Specific requirements for a home equity loan will vary by lender, but to get a home equity loan you’ll have to go through a process similar to the mortgage preapproval process. Lenders generally consider the following:
• Loan-to-value (LTV) ratio: LTV compares the amount you owe against your home with its current value. Lenders usually want to see an LTV no higher than 80%. (LTV = Loan Value ÷ Property Value.) On a $400,000 home, for example, that means that you should owe no more than $320,000.
• Credit score and history: You’ll need a good or excellent credit score to qualify for the best rates. Lenders also review your credit report for any red flags, such as missed payments or loan delinquencies.
• Income: You’ll need to show that you have sufficient income to pay back your home equity loan in addition to making your mortgage payment or other debt payments.
• Debt-to-income (DTI) ratio: Your DTI compares your monthly debt payments with your gross income. Lenders generally prefer a DTI lower than 43%.
If you decide to take out a home equity loan, here are the steps you’ll need to take:
1. Shop around: Get prequalified with multiple lenders so you can compare several offers from home equity loans. Taking the time to research your options and find the best deal could save you thousands of dollars in the long run.
2. Fill out the application: Once you’ve selected a lender, you can fill out a complete application with your personal and financial details. You’ll need to upload verifying documentation, too, such as pay stubs, W-2s, and bank statements.
3. Prepare for an appraisal: You might need to get an in-person appraisal to assess your current home value. However, some lenders can complete this process online without requiring an in-person visit.
4. Close on your loan: It may take two to six weeks for the lender to process your application and underwrite your loan. Your final steps in the process will be paying closing costs and signing your loan agreement.
5. Receive your loan and start repayment: The lender will send your home equity loan funds as a lump sum. You’ll start paying back your loan on a monthly basis on your agreed-upon terms.
Let’s say that you own a home worth $400,000 and have an outstanding mortgage balance of $200,000. In this case, you’d hold 50% equity in your home, which is sufficient to qualify for a home equity loan.
Now let’s say that you took out a $100,000 home equity loan at an 8% interest rate. Here’s what your monthly payments and long-term interest costs would be on different repayment terms, according to a mortgage calculator.
| Repayment term | Monthly payments | Total interest charges |
|---|---|---|
| 5 years | $2,027.64 | $21,658.37 |
| 10 years | $1,213.28 | $45,593.11 |
| 15 years | $955.65 | $72,017.38 |
| 20 years | $836.44 | $100,745.62 |
| 30 years | $733.76 | $164,155.25 |
Home equity loans can be a useful financing option, especially if you’re using them toward a renovation or other project that will boost the value of your home. They’re also useful if you have a fixed-cost project, such as a deck installation or roof replacement.
If you aren’t sure how much a big project will cost or you just want a more flexible form of financing, a home equity line of credit (HELOC) might be preferable. HELOCs also let you tap into your home equity, but you can borrow from them on an as-needed basis and only pay interest on the amount you take out.
Keep in mind, however, that both home equity loans and HELOCs use your home as collateral. If you can’t afford repayment, the lender can seize your home through foreclosure. You could also end up underwater if your home value decreases, which occurs when you owe more debt on your home than it’s worth.
Another option if you need cash for a big home project is a mortgage refinance, and specifically a cash-out refinance, which allows borrowers to refinance their loan while also taking out funds based on their home equity. As with any refinancing, you’ll end up with a new mortgage interest rate and a new loan term, which could be longer or shorter than your current term.
Home equity loans can offer large loan amounts, competitive interest rates, and predictable monthly payments for qualifying homeowners. Plus, you might qualify for a tax break if you’re using your loan to improve your home.
At the same time, borrowing against your home is risky if you can’t afford the monthly loan payments. Before you borrow, use a home equity loan calculator to estimate how much you might be able to borrow.
SoFi now offers flexible HELOCs. Our HELOC options allow you to access up to 90% of your home’s value, or $500,000, at competitively low rates. And the application process is quick and convenient.
Unlock your home’s value with a home equity line of credit brokered by SoFi.
You can calculate home equity loan payments based on your loan amount, interest rate, and repayment term.
The monthly cost of a $75,000 home equity loan would depend on your interest rate and repayment term. If you assume an 8% interest rate, your monthly payments would be $1,521 on a five-year term, $910 on a 10-year term, $627 on a 20-year term, and $550 on a 30-year term. Expect lower payments with a lower interest rate and higher payments with a higher rate.
The main risk of taking out a home equity loan is losing your home to foreclosure if you can’t afford repayment. It’s also possible that you could end up owing more on your home than the property is worth if your home value goes down.
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*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances. Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice. ²SoFi Bank, N.A. NMLS #696891 (Member FDIC), offers loans directly or we may assist you in obtaining a loan from SpringEQ, a state licensed lender, NMLS #1464945.