Small Business Loans in Louisiana
Learn All About Small Business Loans in Louisiana
There are more than 511,000 small businesses in Louisiana, which account for approximately 99.5% of all enterprises in the state. From the seafood processors along the Gulf Coast to the energy support firms in the Bayou Region, these companies employ over half of the state’s private workforce.
Whether you are launching a tourism venture in New Orleans or expanding an agricultural operation in the northern parishes, finding small business loans in Louisiana can be a key step. Here’s what you need to know about securing financing for your company.
- Key Points
- • The State Small Business Credit Initiative (SSBCI) offers a Micro Lending Program (MLP) that provides direct loans up to $100,000 for smaller financing needs.
- • Louisiana’s Collateral Support Program (CSP) helps businesses secure financing by pledging cash deposits to cover companies’ collateral shortfalls with lenders.
- • The Small and Emerging Business Development (SEBD) program offers managerial and technical assistance to certified small businesses.
- • The Hudson Initiative certification helps small businesses gain greater access to state purchasing and contracting opportunities.
- • Agricultural producers and seafood businesses can rely on equipment financing to maintain their vessels and heavy machinery.
Popular Types of Small Business Loans in Louisiana
Entrepreneurs in the Pelican State can benefit from a unique mix of state-sponsored support and private lending options tailored to key local industries. The sections below describe the most common funding options available to business owners in Louisiana.
Louisiana Small Business Loan Programs
The state actively fosters economic growth through Louisiana Economic Development (LED). LED manages the State Small Business Credit Initiative (SSBCI), which includes the Micro Lending Program, providing loans of up to $100,000 for businesses needing smaller amounts of capital. And Louisiana’s Collateral Support Program (CSP) pledges cash deposits to help cover companies’ collateral shortfalls so they can secure loans. And Louisiana’s Collateral Support Program (CSP) pledges cash deposits to help cover companies’ collateral shortfalls so they can secure loans. Additionally, the Small Business Loan Guaranty Program provides guarantees to banks, allowing them to lend to businesses that might not otherwise qualify for traditional financing.
Term Loans
A term loan can provide a small business with an upfront lump sum of capital. The principal, along with interest (which is usually charged at a fixed rate), is then repaid in regular payments over a defined period of time. A predictable repayment structure can be useful as you prepare monthly budgets, and because the funds come in a lump sum, these loans can be well-suited to funding large, one-time investments. For example, a restaurant in Baton Rouge might use a term loan to renovate its dining room.
Business Lines of Credit
In contrast to a term loan, a business line of credit can give you access to a pool of funds that you can draw from as you need, up to a predetermined limit. You pay interest only on the money you actually withdraw, and as you repay the balance, you replenish the pool of funds and the money is generally available for withdrawal again.
Lines of credit can be helpful for businesses that have seasonal lulls or uneven cash flow. For example, a festival vendor in Lafayette could use a line of credit to purchase inventory ahead of Mardi Gras.
Equipment Financing
If your business is in need of a specific physical asset, like machinery, vehicles, or technology, you might consider applying for equipment financing. A shrimper in Houma could use this to finance a new boat engine, while a chemical manufacturer in Lake Charles might use it to acquire specialized safety gear.
Because the equipment itself serves as collateral for the lender, equipment financing loans can be easier to obtain than unsecured loans. Additionally, they may often come with more favorable terms.
SBA Loans
Private lenders are the actual issuers of SBA loans, but this financing is partially guaranteed by the U.S. Small Business Administration. That federal backing reduces the lender’s risk, so the loan conditions may allow lower down payments and longer repayment terms. If you qualify, these Louisiana business loans are available through many banks and credit unions.
Below are the types of SBA loans that may be the most useful for small businesses.
• The SBA 7(a) loan is very flexible: Amounts can range from $500 to $5 million. It’s suitable for covering working capital, refinancing debt, or purchasing supplies.
• The SBA 504 loan is specifically meant for companies to use on major fixed assets, such as commercial real estate or heavy equipment. The maximum amount is between $5 million and $5.5 million.
• The SBA Microloan is meant to help with short-term needs and can be useful to companies that need startup loans. You can borrow up to $50,000 and the maximum repayment term is seven years.
Using an SBA loan calculator may help you estimate what your loan costs might be for different kinds of SBA funding.
Recommended: Small Business Financing Guide
How to Apply for a Small Business Loan in Louisiana
Applying for a Louisiana small business loan requires preparation and attention to detail. You’ll need to provide prospective lenders with a clear picture of your company’s financial health and a well-developed plan for how their funds would be used.
Here’s a step-by-step breakdown of how to apply for a small business loan in Louisiana.
Define Your Loan Purpose and Amount
Before you begin contacting prospective lenders, it’s a good idea to have a precise understanding of your funding needs so that you can articulate exactly how much money your company needs and how it will generate a return. A specific proposal, such as “$50,000 to upgrade our cold storage facilities, which should prevent 35% of spoilage loss” demonstrates to lenders that you’re thinking strategically about your finances.
Know Your Credit Score
When reviewing your Louisiana business loan application, prospective lenders will usually pay particular attention to your company’s credit profile. They’ll probably scrutinize your personal credit scores, too: Traditional banks often require a credit score for a business loan in the range of 680 or higher. Other lenders, like online banks, may be willing to look at slightly lower scores.
Because of your scores’ importance, it’s smart to review your credit reports before you apply so that you can find any errors and have them fixed — and be sure you fully understand your financial situation before you submit your application for a Louisiana small business loan.
Gather Your Key Documents
Submitting an application package that’s organized and complete can speed up the review process and show a potential lender that you’re reliable and motivated. While requirements vary by lender, you should usually be ready to provide the following:
• Credit report
• Income statement
• Bank statements
• Budget
• Income tax returns (both business and personal)
• Business plan
• Collateral valuation and supporting documents (which may include titles, deeds, or invoices)
Compare Lenders and Loan Offers
When you’re looking at Louisiana small business loans, shopping around can help you find the financing that best suits your needs, since different banks may offer very different options on term loans, for instance. It may also be beneficial to compare options from multiple kinds of sources, including small local banks, large national institutions, and online lenders.
As you consider financing proposals, it can be helpful to use a business loan calculator to estimate the monthly payments for different options. It’s also a good idea to look closely at the Annual Percentage Rate (APR) of each loan to understand its true cost.
Submit Your Application and Await Approval
After you’ve filled out the loan application form and gathered your supporting documentation, you should be ready to submit the application package. Once that’s done, you’ll need to wait for the lender’s response. This can take as little as two days in some cases, but may require several weeks in others.
Tips for Improving Your Loan Approval Chances
Lenders generally want to see evidence of your business’s stability as well as its ability to repay the loan. Taking steps to strengthen your business’s financial profile before you apply might help you increase your chances of securing a loan. Here are some steps to think about trying:
• Ensure that you have a realistic business plan with detailed financial projections.
• Work to build your business and personal credit scores by paying down your current balances and making timely payments.
• If you have collateral available, consider offering it as security to potentially bolster your application’s chance for approval with certain Louisiana business loans.
Other Funding Options for Louisiana Small Businesses
If a traditional loan isn’t the right fit for your funding needs, there are other possible ways to fund your business. Louisiana’s entrepreneurial ecosystem offers several alternative paths to obtain capital. One of these options may align better with your business’s specific stage of growth or industry.
Small business grants are generally a highly sought-after option because they don’t require repayment. The State Trade Expansion Program (STEP), for instance, provides reimbursements for eligible companies that are selling to foreign markets. You can also search national databases like Grants.gov for federal programs relevant to your industry.
Crowdfunding may be another viable route, allowing your business to raise smaller amounts of capital online from a broad base of supporters.
Additional Business Resources in Louisiana
Success in business often takes more than just capital. It requires expert guidance and a supportive community. Louisiana has a robust network of resources designed to help small business owners navigate challenges. The Louisiana Small Business Development Center (LSBDC) is a significant resource, offering no-cost advising at locations across the state. And Louisiana’s Hudson Initiative can help small businesses gain greater access to state purchasing and contracting opportunities.
In terms of mentorship, local SCORE chapters connect entrepreneurs with experienced business leaders who volunteer their time. Additionally, the Small and Emerging Business Development (SEBD) program provides managerial and technical assistance to certified small businesses. Engaging with your local Chamber of Commerce may also provide valuable networking opportunities.
The Takeaway
Securing a Louisiana small business loan can be the factor that allows your company to expand and thrive. While the process involves careful planning, it’s an important step in your company’s development. By defining your goals and utilizing state resources, you should ultimately be able to find the right financing solution for your business.
If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.
(without impacting your credit score)†
FAQ
How do I get a small business loan in Louisiana?
To apply for a Louisiana business loan, start by defining your funding needs and checking your credit scores. Gathering essential documents like your business plan, tax returns, and bank statements will help you prepare your loan application for submission. Finally, compare options from various lenders to find the best terms you can get for your Louisiana small business loan.
Can I get a startup business loan with no money?
This can be challenging, since most lenders require an owner’s investment. However, some SBA microloans that are designed for startups have lower capital requirements. Another possibility is to look for business grants, which provide funding that doesn’t generally need to be repaid.
How hard is it to get a small business loan in Louisiana?
The degree of difficulty generally depends on factors such as your business’s financial health, time in operation, and credit history. Traditional bank loans can have rigorous qualifications. Online lenders often offer more flexible requirements, making them a more accessible option for many Louisiana businesses.
What is the easiest type of business loan to get approved for?
Loans secured by collateral, such as equipment financing, are generally easier to obtain because the asset lowers the lender’s risk. Short-term loans and invoice financing from online lenders also typically have less stringent requirements.
What credit score do I need for a small business loan?
Requirements vary, but for traditional bank and SBA loans, a personal credit score of 680 or higher is often preferred. However, some online lenders may be willing to approve applicants with scores in the low 600s. Bear in mind that higher scores can result in better approval odds and lower interest rates.
What can I use a Louisiana small business loan for?
You can use a small business loan for almost any legitimate business purpose. Common uses include buying equipment, purchasing inventory, funding marketing campaigns, or refinancing debt. However, you can’t spend small business loans on personal expenses.
Are there any small business grants available in Louisiana?
Yes, grants may be available from a variety of sources. The Louisiana Economic Development (LED) site can be a resource for finding state-level opportunities like the STEP grants. You can also search national databases such as Grants.gov for federal programs relevant to your industry.
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Is There Such a Thing as Too Much Cash? For Gen Z, Maybe
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When saving for retirement, one rule of thumb is the longer there is until you retire, the more risk you can generally afford to take.
That often translates to keeping more of your money invested in stocks, since the younger you are, the more time you have to ride out the stock market’s ups-and-downs — and ideally build wealth. Then, as you get closer to retirement, it’s often considered safest to pare back riskier holdings, keeping more in cash.
But data from retirement services firm Empower suggests young people aren’t necessarily heeding that guidance. Cash is king for twenty-somethings, with investors in their 20s holding 34% of their assets in cash — more than any age group except retirees 70 or older, according to Empower’s Sept. 30 figures.
It’s not for lack of spare cash (the median cash balance for investors in their 20s is just over $29,000), so it seems more likely that these young people are wary of taking on risk — especially considering that many of them came of age over the past five years, as the pandemic and geopolitical turmoil fueled economic uncertainty.
But just as investing comes with risk, there is a risk to not investing enough.
“Time can either be your best friend or worst enemy,” said Brian Walsh, a Certified Financial Planner® and SoFi’s Head of Advice & Planning. “Make it your best friend by investing early so your money has more time to grow.”
While some advisors recommend keeping between 2% and 10% of your portfolio in cash (and cash equivalents), the right mix of cash versus investments will depend on many factors, including your financial goals and your risk tolerance.
Here are some things to consider as you gauge it. (Remember, there’s always a risk-reward tradeoff.)
Decide what you actually need to have in cash. Financial advisors generally recommend having enough liquid cash to cover three to six months’ worth of living expenses, in case something unexpected happens. It may make sense to hold onto even more if your income isn’t steady or if you’re making a big purchase (like a house) soon.
Consider your risk tolerance. People talk about the opportunity cost of not investing in the U.S. stock market because despite its ups and downs — especially in recent months — the S&P 500 index has trended up over time. Returns vary widely, but historically, the average annualized return is about 10% per year, or 6% to 7% after inflation (not accounting for fees, expenses, and taxes).
Ask yourself what you want to achieve with your investible assets. Are you happy collecting interest in a high-yield savings account, or are you willing and able to take a risk and invest it in the market in exchange for the possibility of higher returns?
Don’t forget inflation. Cash tends to lose value over time because of inflation. And although holding on to large sums can shield you from volatility, you’re giving up potential growth along with potential losses. If you don’t need the money right now, putting it to work can help you reach your goals faster (think buying a house, saving for your kid’s college tuition, or having financial security in retirement).
Weigh your time horizon. Whether it’s retirement or something else, it’s key to know how long you have before you’ll need to cash out of your investments. One approach is to subtract your age from 110 to gauge how much money you should keep in stocks. For example, if you’re 25, you would keep 85% of your money in stocks because 110-25 = 85.
Bottom line: There is no single strategy that works for everyone, or even one strategy that works for a lifetime. The best approach is to reassess as you get older and as your goals and financial situation shift.
Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
SoFi isn't recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.
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Read moreFree Iowa Home Equity Loan Calculator
Iowa Home Equity Loan Calculator
By SoFi Editors | Updated December 16, 2025
A home equity loan is a type of second mortgage that allows you to borrow against the ownership stake — or equity — you have in your home. An Iowa home equity loan calculator empowers homeowners to estimate their potential borrowing capacity, project monthly payments, and understand the long-term financial implications of a loan before ever engaging with a lender. This guide will walk you through the essential components of a home equity loan, explain how to use the calculator effectively, and provide the context you need to make an informed decision.
- Key Points
- • A home equity loan lets homeowners borrow a lump sum of money using the equity they’ve built in their home as collateral.
- • An Iowa home equity loan calculator determines how much you might be able to borrow and estimates potential monthly payments.
- • A borrower’s credit score and debt-to-income ratio are factors that influence the interest rates offered by lenders.
- • Home equity loans generally feature a fixed interest rate, which results in consistent monthly payments throughout the loan term.
- • Funds from a home equity loan are disbursed in a single, upfront lump sum. Repayment terms are typically five to 30 years.
Calculator Definitions
• Home Value: This is the current estimated market value of your property. It is important to use a recent estimate rather than the price you originally paid for the home.
• Desired Loan Amount: This is the total amount of money you
wish to borrow. It should reflect the specific lump-sum amount you need for your financial goal.
• Current Mortgage Balance: This field represents the total
amount you currently owe on your existing home loan. You
should also include the balance of any other loans secured by your home, such as an existing home equity loan or line
of credit.
• Home Equity Loan Repayment Term: This is the length of
time over which you will repay the loan. Repayment terms typically range from five to 30 years.
• Interest Rate: The interest rate is the cost of borrowing
money, expressed as a percentage. For most home equity loans, this is a fixed rate, meaning it will not change over
the life of the loan.
• Maximum Loan Amount: This output is the estimated highest
amount a lender might offer you. This figure is based on your home’s equity, your credit profile, and other financial
factors.
• Estimated Monthly Payment: This is the calculated amount you
can expect to pay each month to repay the loan. The payment includes both the principal (the amount you borrowed) and
the interest charges.
• Available Equity Amount: This figure represents the portion of your home’s value that you own outright. It is calculated by subtracting your current mortgage balance from your home’s estimated market value.
How to Use the Iowa Home Equity Loan Calculator
While a home equity loan calculator is a simple tool on the surface, understanding the correct information to input is necessary for a meaningful estimate. This step-by-step guide will walk you through the process of how to use the Iowa home equity loan calculator.
Step 1: Enter Your Home Value
Input the current estimated market value of your home. Use a realistic, up-to-date valuation, not the original purchase price, as this is the basis for determining your equity.
Step 2: Input Your Desired Loan Amount
Enter the specific lump-sum amount you intend to borrow. This should align with the cost of your project or financial need, whether it’s for a home remodel, debt consolidation, or another major expense.
Step 3: Type in Your Current Mortgage Balance
Provide the outstanding balance on your primary mortgage. If you have other loans secured by your property, such as an existing home equity loan, include those balances as well.
Step 4: Select a Home Equity Loan Repayment Term
Choose a repayment period for the loan. Lenders typically offer terms ranging from five to 30 years. Selecting different terms will show you how the length of the loan impacts your monthly payment and total interest paid.
Step 5: Estimate Your Interest Rate
Enter an estimated interest rate to make the calculation more accurate. This rate is influenced by factors like your credit history and current market conditions, so looking at average rates offered by lenders can provide a reasonable estimate.
Step 6: Review Your Results
After entering the required information, the calculator will provide estimates for your maximum potential loan amount and your estimated monthly payment. Remember that this is an estimate designed to aid in your financial planning, not a formal loan offer.
What Is a Home Equity Loan?
A basic understanding of what a home equity loan is is necessary for making informed financial decisions. This type of loan, also known as a second mortgage, allows you to borrow against the equity you have built in your property. Equity is the difference between your home’s current market value and the amount you still owe on your mortgage.
Here are some features of a home equity loan:
• Lump-sum disbursement: A home equity loan provides funds in a single, upfront payment. This makes it well-suited for large, one-time expenses where the total cost is known in advance, such as a major home renovation or consolidating high-interest debt.
• Secured loan: The loan is secured by your home, which serves as collateral. This security reduces the lender’s risk, which translates into lower interest rates for the borrower; however, it also increases the borrower’s risk, as the home is on the line if payments are missed.
• Fixed interest rate: Home equity loans come with fixed interest rates, which means your interest rate — and therefore your monthly payment — will remain consistent and predictable for the entire duration of the loan.
• Defined repayment term: The loan is repaid over a specific period, generally between five and 30 years. You will make regular monthly payments that cover both principal and interest until the loan is paid off.
• Competitive interest rates: Because your home secures the loan, lenders typically offer lower interest rates than those for unsecured debt like personal loans or credit cards.
Recommended: Apply for a Home Equity Loan
Home Equity Trends in Iowa
As home values have risen over the last five years, so have homeowner equity levels. In fact, equity levels have doubled since 2020, a collective increase of $5.7 trillion (see chart below). About half of homeowners with a mortgage are considered “equity rich,” which means their mortgage balance is less than 50% of their home’s value.
In Iowa, equity levels increased a whopping 107% over the same period. The average home equity growth perhomeowner is just over $69,241. No wonder there is so much interest around how to get equity out of your home.
Current home equity loan rates by state.
Compare current home interest rates by state and find a home equity loan rate that suits your financial goals.
Select a state to view current rates:
How to Use the Home Equity Loan Calculator Data to Your Advantage
The output from a home equity loan calculator is more than just a set of numbers; it is actionable data that can empower you to make strategic financial choices. Here’s how you can use it to your advantage:
• Effective budgeting: The estimated monthly payment can help immensely with financial planning. It allows you to assess how the loan will fit into your monthly budget and determine whether the new obligation is affordable without straining your finances. This helps prevent taking on more debt than you can comfortably manage.
• Informed loan selection: The calculator enables you to run different scenarios. By adjusting variables like the loan term, you can see the trade-offs in real-time. For example, a longer term will result in lower monthly payments but higher total interest costs, while a shorter term means higher payments but less interest paid over time.
• Evaluate loan amounts: The calculator shows the maximum potential loan amount you might qualify for. This helps you see if your borrowing potential aligns with your financial need. Remember, you do not have to borrow the maximum amount offered.
Home Equity Loan Scenarios
Understanding common use cases for a home equity loan can help homeowners determine if this financial product is the right fit for their needs. Check out how a home equity loan can help with these three scenarios.
Scenario 1: Home Improvement Projects
For a fixed-cost kitchen remodel with a clear timeline, a home equity loan can be ideal. It provides a lump sum upfront, along with a fixed interest rate and predictable payments, making it easier to budget without worrying about fluctuating costs.
Scenario 2: Consolidating High-Interest Debt
If you’re carrying several high-interest credit card balances, a home equity loan can pay them off all at once. The debt will be consolidated into a single loan with one predictable monthly payment, often at a significantly lower fixed interest rate. This can save money and simplify your finances.
Scenario 3: Paying for a Child’s Tuition
A family needing to pay for a child’s college tuition also presents a fitting scenario. Since the cost is a known, large expense, the lump sum from a home equity loan can cover it entirely. This allows the family to secure the necessary funding in one transaction, and the structured repayment plan provides a clear path for paying back the education costs over several years.
Recommended: The Different Types of Home Equity Loans
Tips on Home Equity Loans
While home equity loans offer clear benefits, they also carry significant responsibilities. The following tips can help ensure you’re making a sound financial decision.
• Use for value-adding projects: Home equity loans are particularly well-suited for financing home renovations that can increase the property’s value, effectively allowing you to reinvest the borrowed funds back into your primary asset.
• Understand the risks: The biggest consideration is that your home is used as collateral. If you fail to make payments, the lender can initiate foreclosure proceedings, and you could lose your home.
• Compare multiple lenders: Do not accept the first offer you receive. It’s important to shop around and get quotes from several lenders. Comparing interest rates, fees, and loan terms can save you a substantial amount of money over the life of the loan.
• Maintain financial health: Lenders will closely review your credit score and debt-to-income (DTI) ratio when you apply. A higher credit score and a lower DTI ratio demonstrate financial responsibility and can lead to more favorable loan offers, including lower interest rates.
Alternatives to Home Equity Loans
A home equity loan is not the only option for accessing funds, and it may not be the best fit for every situation. Below are several alternatives you may want to consider:
Home Equity Line of Credit (HELOC)
A home equity line of credit (HELOC) is a revolving line of credit secured by your home, functioning much like a credit card. Instead of a lump sum, a HELOC provides a credit limit from which you can draw funds as needed during an initial “draw period,” which typically lasts 10 years. During this time, payments may be interest-only. This is followed by a “repayment period,” often 20 years, where you must repay the principal and any remaining interest. Interest rates are typically variable, meaning they can fluctuate with market conditions. This can cause your monthly payments to change over time.
A HELOC interest-only calculator can calculate what your payments might be during the initial period. To determine your principal plus interest amount during the subsequent repayment period, you can use a HELOC repayment calculator.
Recommended: What Is a Home Equity Line of Credit?
Home Improvement Loan
A home improvement loan is a type of personal loan specifically intended for renovations and is typically unsecured. Because the loan is not secured by your home, your property is not at risk of foreclosure if you default. However, this often results in higher interest rates and shorter repayment terms compared to a home equity loan. The application and funding process is often faster, making it a good option for those who need smaller loan amounts or have not yet built significant equity.
Personal Line of Credit
A personal line of credit is an unsecured, revolving line of credit that is not backed by your home as collateral. Similar to a HELOC, it allows for flexible borrowing up to a set limit. However, because it is unsecured, interest rates are typically higher and borrowing limits may be lower than a HELOC.
Cash-Out Refinance
A cash-out mortgage refinance replaces your existing mortgage with a new, larger one, and you receive the difference in cash.
When comparing a cash-out refinance vs. home equity line of credit, a cash-out refinance consolidates your debt into a single, primary mortgage payment, rather than adding a separate second mortgage payment. You get a lump sum of cash at closing. The new mortgage can have either a fixed or variable interest rate, and you will have a new loan term.
Recommended: HELOC vs. Home Equity Loan
The Takeaway
If you have equity in your Iowa home, you might be thinking about taking out a home equity loan to finance a renovation, consolidate high-interest debt, or pay for a large medical expense. An Iowa home equity loan calculator provides a clear, initial estimate of your potential borrowing power and what your monthly payments might look like, helping you make an informed decision.
SoFi now offers home equity loans. Access up to 85%, or $750,000, of your home’s equity. Enjoy lower interest rates than most other types of loans. Cover big purchases, fund home renovations, or consolidate high-interest debt. You can complete an application in minutes.
Unlock your home’s value with a home equity loan from SoFi.
FAQ
How is a home equity loan different from a home equity line of credit (HELOC)?
A home equity loan provides a single lump sum of cash at a fixed interest rate, which results in predictable monthly payments. In contrast, a HELOC is a revolving line of credit with a typically variable interest rate. With a HELOC, you borrow funds as needed and may only pay interest on the amount used during the initial draw period.
How much can I borrow with a home equity loan?
The amount you can borrow depends on your home’s equity, credit history, and income. Lenders often permit borrowing up to 85% of your home’s equity. An online calculator can provide an initial estimate of your potential loan amount, but the exact figure is determined after a formal application and appraisal process.
What can I use home equity loan money for?
A home equity loan can be used for almost any expense, such as home improvements, debt consolidation, education funding, medical expenses, or other large purchases. The funds are disbursed as a lump sum, offering flexibility for your financial needs. Remember, the loan is secured by your home.
Is the interest rate on a home equity loan fixed or variable?
Home equity loans almost always feature a fixed interest rate. This means the rate remains unchanged for the entire loan term, providing the benefit of a stable and predictable monthly payment. This is a key difference from HELOCs, which typically have variable interest rates.
What are the typical loan terms for a home equity loan?
Repayment terms for home equity loans are flexible, generally ranging from five to 30 years. Opting for a longer term will result in lower monthly payments but increase the total interest paid over the life of the loan. Conversely, shorter terms have higher payments but reduce overall interest costs.
What are the qualification requirements for a home equity loan?
Lenders typically require homeowners to have at least 15% equity in their home. Other key qualifications include a good credit score (often 620 or higher), a steady and verifiable source of income, and a debt-to-income ratio that is generally below 50%.
Are there closing costs or fees with home equity loans?
Yes, home equity loans typically include closing costs, which can range from 2% to 5% of the total loan amount. These fees may cover expenses such as an appraisal, credit report, document preparation, and loan origination. Some lenders might offer loans with no closing costs, but this could result in a higher interest rate.
Does a home equity loan replace my first mortgage?
No, a home equity loan does not replace your first mortgage. It is a second mortgage taken out in addition to your primary one, meaning you will have two separate monthly payments. A cash-out refinance is the financial product that replaces your first mortgage with a new, larger loan.
Learn more about mortgages:
SoFi Loan Products 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.
SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
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.
All loan terms, fees, and rates may vary based upon your individual financial and personal circumstances and state.You should consider and discuss with your loan officer whether a Cash Out Refinance, Home Equity Loan or a Home Equity Line of Credit is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit not originated by SoFi Bank. Terms and conditions will apply. Before you apply, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and a minimum loan amount. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria. Information current as of 06/27/24.In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee.
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.
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Free Illinois Home Equity Loan Calculator
Illinois Home Equity Loan Calculator
By SoFi Editors | Updated December 11, 2025
For many homeowners, the equity built up in their property represents a significant financial asset. This value can be leveraged to secure financing for major expenses, such as home renovations, debt consolidation, or education costs. A home equity loan provides a powerful way to turn this equity into ready cash.
This guide will explain how a home equity loan works and demonstrate how you can use an Illinois home equity loan calculator to explore your potential borrowing capacity. Let’s get started.
- Key Points
- • An online home equity loan calculator helps borrowers compare different loan scenarios and estimate payments.
- • A homeowner’s credit score and debt-to-income ratio are important factors for lenders when determining loan eligibility and terms.
- • A small difference in interest rates can lead to a large difference in the total cost of a loan.
- • Interest paid on a home equity loan may be tax-deductible.
- • Home equity loans typically have fixed interest rates, which ensures that monthly payments remain predictable.
Calculator Definitions
• Home Value: This is the current estimated market value of your property — not the original price you paid but rather what it might sell for in today’s market.
• Desired Loan Amount: This is the sum of money you wish to borrow. It should reflect the amount needed for your intended purpose, such as a renovation project or debt consolidation.
• Current Mortgage Balance: Your balance is the total amount you still owe on your primary home loan plus the balance of any other existing loans that are secured by your home.
• Home Equity Loan Repayment Term: The term is the length of time over which the loan will be repaid. Repayment terms for home equity loans range from five to 30 years.
• Interest Rate: The interest rate is the cost of borrowing the money, which is multiplied by the loan balance. For most home equity loans, this rate is fixed for the life of the loan.
• Maximum Loan Amount: This is the estimated highest amount a lender might be willing to offer you, based on your available equity.
• Estimated Monthly Payment: You would pay this amount each month to repay the loan. The payment includes both the principal (the amount you borrowed) and the interest charges.
• Available Equity Amount/Percentage: The home equity calculator will show you the cash value and the percentage of your home’s value that you own outright. Lenders typically want the homeowner to retain at least 15% of their equity as a protective cushion, so you won’t be able to borrow 100% of these numbers.
How to Use the Illinois Home Equity Loan Calculator
A home equity loan calculator is more than just a calculation tool; it’s a strategic resource that empowers you to model different financial scenarios. Follow these steps to use it properly:
Step 1: Enter Your Home Value
Input the current estimated market value of your home. This is the starting point for determining how much equity you have available.
Step 2: Input Your Desired Loan Amount
Enter the sum of cash you wish to borrow. This allows the calculator to determine if your requested amount is feasible based on your available equity.
Step 3: Enter Your Current Mortgage Balance
Input the remaining balance on your existing mortgage. If you have any other loans secured by your property, their balances should be included here as well.
Step 4: Select a Home Equity Loan Repayment Term
Select a loan term from the available options, which generally range from five to 30 years. Remember that longer terms result in lower monthly payments but lead to higher total interest costs over the life of the loan.
Step 5: Estimate Your Interest Rate
Enter an estimated interest rate to see how it affects your monthly payment. Your actual offered rate will depend on several factors, including your credit history and debt-to-income ratio.
Step 6: Review Your Results
After you enter the required information, the home equity calculator will provide estimates for your monthly payment and the maximum potential loan amount.
Recommended: What Is a Home Equity Line of Credit?
What Is a Home Equity Loan?
Before you borrow against your home equity, it’s important to understand what a home equity loan is, exactly. At its core, a home equity loan is a second mortgage that allows you to borrow against the equity you have built in your property. The key characteristics define how it functions:
• Lump-sum payout: The loan is disbursed as a single, upfront payment, making it ideal for large, one-time expenses with a known cost.
• Fixed interest rate: It typically has a fixed interest rate, which ensures that monthly payments are consistent, making budgeting easier.
• Fixed repayment term: The loan is repaid over a period determined at its outset, usually between five and 30 years.
• Secured by your home: These loans typically offer lower rates than unsecured personal loans or credit cards. But if you fail to make payments as agreed, you risk foreclosure.
Home Equity Trends in Illinois
Since 2020, the average amount of equity a homeowner has in Illinois has more than doubled. The average equity amount is now over $80,000. In fact, the state is one of the top five in equity growth from 2020 to 2025. Much of this growth is tied to increased home values. In the U.S. as a whole, about half of homeowners with a mortgage are considered “equity rich,” which means their mortgage balance is less than half of the home’s value. Take a look at how equity has risen in the U.S. as a whole in recent years.
Current home equity loan rates by state.
Compare current home interest rates by state and find a home equity loan rate that suits your financial goals.
Select a state to view current rates:
How to Use the Home Equity Loan Calculator Data to Your Advantage
The output from a home equity loan calculator provides more than just numbers; it is a strategic planning resource. This data allows homeowners to assess affordability, compare different loan structures, and align their borrowing decisions with their financial goals.
By analyzing the Estimated Monthly Payment provided by the home equity loan payment calculator, you can determine how a new loan payment would fit into your existing budget. This is a critical step to prevent overextending yourself.
The Maximum Loan Amount gives you the lowdown on how to get equity out of your home and how much equity you might harness. This estimate will be useful if you are planning large-scale projects, such as a major renovation.
Finally, using the calculator to model different loan terms — for example, comparing a 10-year repayment term to 20-year one — illustrates the fundamental trade-off between lower monthly payments and higher total interest costs. Modeling different rates and terms in the calculator is an important step in your decisionmaking process.
Home Equity Loan Scenarios
Here are two scenarios that illustrate the practical applications of a home equity loan:
Scenario 1: Funding Home Renovations
Imagine a homeowner planning a complete kitchen remodel. They have obtained quotes and know the project will cost $40,000. A home equity loan is a good financing solution because it provides the full amount in a single lump sum, allowing them to pay the contractor and purchase materials without delay. The fixed monthly payments shown by the home equity loan payment calculator make it easy to budget for the repayment over a set term.
Scenario 2: Consolidating High-Interest Debt
Consider a homeowner with multiple high-interest debts, such as credit card balances and a personal loan, totaling $25,000. By taking out a home equity loan, they can pay off all these debts at once. This consolidates their multiple monthly payments into a single, predictable payment, often at a significantly lower interest rate, which can save them money and simplify their finances.
Tips on Home Equity Loans
Securing favorable terms on a home equity loan and using it wisely requires more than just having equity in your home. Take these smart steps as well:
• Build a strong credit history. Lenders view a strong credit score as an indicator of financial responsibility. Lenders typically favor credit scores of at least 680 or higher for home equity loan applicants, with many preferring 700 or more.
• Manage your debt-to-income ratio. Your debt-to-income (DTI) ratio, which is your total monthly debt payments divided by your gross monthly income, is a key metric for lenders. Lenders typically look for a DTI ratio below 50% for a home equity loan, and ideally below 36%. Reducing existing debts before applying for a home equity loan can lower your DTI and make you a more attractive borrower.
• Understand the risks. Only borrow if you are confident in your ability to repay the loan. Missing payments could result in foreclosure.
• Shop around. Interest rates, fees, and terms can vary significantly between lenders.Get offers from multiple financial institutions to compare your options.
• Borrow only what you need. You might qualify for a large loan amount, and it can be tempting to borrow more than necessary. To avoid taking on extra debt, limit your loan to the amount required for your specific purpose.
Alternatives to Home Equity Loans
While a home equity loan is an attractive financial tool, it is not the only option available to homeowners who need access to funds. Although there aren’t different types of home equity loans, there are alternative ways to borrow based on home equity, as well as loans that don’t involve using your home as collateral.
Recommended: HELOC vs. Home Equity Loan
Home Equity Line of Credit (HELOC)
A HELOC is a revolving line of credit secured by your home. In practice, it’s much like a credit card. Borrowers can draw funds as needed up to a predetermined limit during a “draw period,” which typically lasts for several years. During this time, they need only pay interest on the borrowed amount (a HELOC interest-only calculator is useful).
After the draw comes the repayment phase, when borrowers pay both interest and principal. There’s a HELOC repayment calculator for that. Interest rates on HELOCs are usually variable so monthly payments aren’t entirely predictable. While a home equity loan typically allows borrowing up to 85% of your equity, a HELOC may allow up to 90%. HELOCs are ideal for times when you don’t entirely know how much you will need to borrow, or when a large project might require you to borrow in phases versus all at one time.
Home Improvement Loan
A home improvement loan is a type of unsecured personal loan specifically intended for renovation projects. Because it is unsecured, your home is not used as collateral, eliminating the risk of foreclosure. While funding can be faster, interest rates may be higher, and loan amounts are often smaller compared to a home equity loan.
Personal Line of Credit
Similar to a HELOC, a personal line of credit is a revolving line of credit. But this credit line is not secured by your home. Funds can be drawn as needed up to a set limit. Interest rates may be higher than those for a HELOC or home equity loan because there is no collateral for the credit line.
Cash-Out Refinance
A cash-out mortgage refinance replaces your existing primary mortgage with a new, larger one, and the difference is paid to you as a lump sum of cash. This option is often limited to borrowing up to 80% of your home equity. Unlike a home equity loan, which adds a second monthly payment, a cash-out refinance results in only one mortgage payment.
When you consider a cash-out refinance vs. a home equity line of credit or home equity loan, an important consideration will be current mortgage interest rates. If they are higher than the rate you have with your current home loan, a home equity loan or HELOC might be a better borrowing option.
The Takeaway
For Illinois homeowners, a home equity payment calculator is a useful tool when you want to estimate your borrowing capacity and understand what potential monthly payments might be. Doing research with the calculator can help you approach the lending process with a clearer understanding of what to expect. It is also important to compare offers from different lenders before committing to a specific loan — in the long run, doing so will be well worth a small investment of your time.
SoFi now offers home equity loans. Access up to 85%, or $750,000, of your home’s equity. Enjoy lower interest rates than most other types of loans. Cover big purchases, fund home renovations, or consolidate high-interest debt. You can complete an application in minutes.
Unlock your home’s value with a home equity loan from SoFi.
FAQ
How is a home equity loan different from a home equity line of credit (HELOC)?
A home equity loan provides a one-time lump sum of cash that is repaid with monthly payments at a fixed interest rate. In contrast, a HELOC is a revolving line of credit with a typically variable interest rate. You can borrow and repay funds as needed during a set draw period, usually 10 years. With a home equity loan, you begin making payments on the interest and principal at once. HELOCs typically allow you to pay only interest during the draw phase.
How much can I borrow with a home equity loan?
The amount you can borrow is based on your home’s value, existing mortgage balance, income, and credit. Lenders typically limit borrowing up to 85% of your equity.
Is the interest rate on a home equity loan fixed or variable?
Home equity loans almost always come with a fixed interest rate. This means the rate shown by the home equity payment calculator will not change over the life of the loan, resulting in predictable and consistent monthly payments. A home equity line of credit, on the other hand, typically has a variable rate.
Are there closing costs or fees with home equity loans?
Yes, home equity loans typically have closing costs, which often amount to 2% to 5% of the total loan amount. These costs can include fees for appraisal, title search, and loan origination. Some lenders may offer no-closing-cost options, which might come with a slightly higher interest rate.
Learn more about mortgages:
SoFi Loan Products *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. Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners. External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement. ¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency. †Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.
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.
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Free Idaho Home Equity Loan Calculator
Idaho Home Equity Loan Calculator
By SoFi Editors | Updated December 23, 2025
Idaho homeowners can seek out a home equity loan to fund major projects like home renovations or debt consolidation. Our Idaho home equity loan calculator helps you explore your borrowing power and determine how much equity you can tap into. Refer to this guide to learn more about housing trends, alternative financing options, and how to use the calculator, so you can make an informed decision.
- Key Points
- • An Idaho home equity loan calculator helps homeowners compare different loan options and their long-term costs.
- • Experiment with the calculator to see that small differences in interest rates can lead to substantial cost variations over the loan’s duration.
- • Research home equity loan alternatives, such as a home equity line of credit, a home improvement loan, personal line of credit, and cash-out refinance.
- • The interest paid on the loan may be tax-deductible, regardless of fund usage (consult with a tax professional for guidance).
Calculator Definitions
• Home Value: The home value represents the property’s current estimated market value, which may be different from the price you originally paid for it. This figure is what your home is worth in today’s real estate market.
• Desired Loan Amount: This is the specific lump sum of money the homeowner wishes to borrow. It should reflect the total cost of the project or expense being financed.
• Current Mortgage Balance: This represents the total outstanding amount you owe on all existing home loans secured by your home, including your primary mortgage.
• Home Equity Loan Repayment Term: This is the designated time frame for repaying the loan in full. Repayment terms for a home equity loan typically range from five to 30 years.
• Interest Rate: The loan’s interest rate is a percentage of whatever amount you borrow and ultimately determines the cost of borrowing the money.
• Maximum Loan Amount: This amount represents the highest amount a lender might be willing to offer you based on your equity.
• Estimated Monthly Payment: The estimated monthly payment is the projected amount due each month to repay the loan. This payment includes both principal and interest. The calculator gives you a payment amount for your maximum loan and your desired loan amount.
• Available Equity Amount/Percentage: This is the portion of your home’s value that you own outright, and is basically the amount you can potentially borrow against. It is calculated by finding the difference between your home’s market value and your current mortgage balance.
How to Use the Idaho Home Equity Loan Calculator
An Idaho home equity loan calculator lets homeowners experiment with different scenarios and understand potential outcomes before signing on to a loan. Here are the steps to use the calculator effectively:
Step 1: Enter Your Home Value
Enter the current estimated market value of your home. This value serves as the starting point for all subsequent estimations of your available equity and borrowing power.
Step 2: Input Your Desired Loan Amount
Provide the sum of cash you wish to borrow. This allows the calculator to determine if your requested amount is feasible based on your available equity.
Step 3: Choose Your Current Mortgage Balance
Input the remaining balance on your primary mortgage and any other loans secured by your property. This information allows the calculator to determine the amount of equity you have already built in your property.
Step 4: Select a Home Equity Loan Repayment Term
Select a repayment period, keeping in mind that terms typically range from five to 30 years. A shorter term means a higher monthly payment but less interest paid over the life of the loan.
Step 5: Estimate Your Interest Rate
Enter an estimated interest rate to see how it affects your potential payment. While the actual rate you are offered will depend on your credit profile, income, and the lender’s policies, inputting a hypothetical rate allows you to understand the impact it can have on your total loan costs.
Step 6: Review Your Results
Analyze the results. Use the outputs to help you determine what you can afford.
What Is a Home Equity Loan?
A home equity loan is a financial product that allows a homeowner to borrow against the equity they have built in their property. Often referred to as a “second mortgage,” it is designed for homeowners who need a one-time sum of cash to cover major expenses.
Before considering a home equity loan as a financing option, you’ll need to understand what a home equity loan is. In short, a home equity loan is a tool to help you finance a large amount and it can go toward a home remodel, debt consolidation, or something else altogether. During repayment, you have a fixed interest rate, which makes budgeting convenient and easy (your payment amount will not change). Repayment terms typically range from five to 30 years.
The interest on a home equity loan, regardless of how you use the funds, may be tax deductible. Always consult a professional tax advisor on potential tax implications. The main downside: The loan is secured the equity in your home. If you fail to make payments as agreed upon by the terms, the property is at risk, and the lender could initiate foreclosure.
Recommended: What Is a Home Equity Line of Credit?
Home Equity Trends in Idaho
As home values rise, so do homeowner equity levels, which may leave you thinking about how to get equity out of your home.
The trend over the last five years nationwide shows that equity levels have doubled since 2020, a collective increase of $5.7 trillion (see chart below). In fact, about half of homeowners with a mortgage are considered “equity rich.” This is an industry term that means your outstanding mortgage balance is less than half of the home’s fair market value.
Idaho homeowners, like those throughout most of the U.S., have benefited from this upswing in home values over the same period. In Idaho, equity levels increased by 75% over the same period, with the average home equity per homeowner a whopping $217,000. That’s more than enough to fund a home renovation or other major purchase.
This trend is helpful to track as you consider tapping into your home equity.
Current home equity loan rates by state.
Compare current home interest rates by state and find a home equity loan rate that suits your financial goals.
Select a state to view current rates:
How to Use the Home Equity Loan Calculator Data to Your Advantage
The Idaho home equity loan calculator is a powerful tool to help you plan for a home equity loan.
First, you can use the estimated monthly payment amount to help you determine how a new loan payment fits into your current budget. If the estimate feels too high, consider reducing the desired loan amount to avoid overextending your finances.
Next, the maximum loan amount represents your borrowing capacity, which is useful for budgeting for large expenses (like major renovation or repairs). It may be tempting, but try to avoid borrowing more than you need.
Lastly, experiment with different repayment terms, interest rates and scenarios. For example, you will see there’s a trade-off between a lower monthly payment and a higher total interest cost over the life of the loan.
Using the Idaho home equity loan calculator to its fullest can help you locate a balance between securing the funds you need and maintaining a repayment schedule that’s within your budget.
Home Equity Loan Scenarios
Now that you’re familiar with the Idaho home equity loan calculator, here’s a look at some real-world scenarios:
Scenario 1: Home Improvement Project
A homeowner facing a project with a known, fixed cost, such as a kitchen remodel or a roof replacement, may want to pursue a home equity loan for financing. In this case, you receive the full loan amount upfront in a lump sum, which is essential for paying contractors and purchasing materials. The stability of a fixed monthly payment schedule allows for straightforward budgeting throughout the project and for the life of the loan.
Scenario 2: Debt Consolidation
A second homeowner has accumulated high-interest credit card debt, and wants to consolidate to make the payment more manageable. With a home equity loan, they can simplify their finances by replacing several unpredictable, high-rate payments with a single, fixed monthly payment at a much lower interest rate—eventually paying off the balances in full and saving thousands of dollars in interest over time.
Tips on Home Equity Loans
Here are tips to help you navigate the home equity loan process wisely:
• Build your financial profile. Work on improving your credit score and managing your debt-to-income (DTI) ratio. Lenders prefer credit scores in the mid-600s or higher, with scores of 680-700 often required for the best rates. Aim for a DTI ratio below 43%, and ideally below 36%, to demonstrate to lenders that you can comfortably manage an additional payment.
• Evaluate your loan options. Don’t just accept the first loan offer you receive. Comparison shop for interest rates and fees from multiple lenders and use the calculator to estimate monthly payments.
• Understand the risks. A home equity loan is secured debt where your home serves as the collateral. This means that if you fail to make timely payments, you risk foreclosure on your home.
• Avoid overextending. Resist the temptation to borrow the maximum amount. Instead, borrow only what you need by calculating the specific amount required for your project.
Alternatives to Home Equity Loans
Consider alternatives to borrow against your home equity: a home equity line of credit (HELOC), a home improvement loan, a personal line of credit, and a cash-out refinance. Read on to learn about these other options to leverage your home’s value.
Home Equity Line of Credit (HELOC)
A home equity line of credit, known as a HELOC, is ideal for ongoing projects with uncertain costs. That’s because you can take out money as you need it, up to the limit that was approved. It’s a revolving line of credit, usually with a variable interest rate, secured by your home.
The draw period (typically up to 10 years) allows you to borrow funds, and you may be required to pay only interest. Then during the repayment period (usually up to 20 years), you repay both principal and interest. Interest is typically paid only on the amount you have borrowed.
You can use a HELOC interest-only calculator to calculate what your payments might be during the draw period. Go ahead and use a HELOC repayment calculator to calculate principal plus interest amount during the repayment period.
Recommended: HELOC vs. Home Equity Loan
Home Improvement Loan
A home improvement loan is an unsecured personal loan specifically marketed for funding renovations. Unlike the home equity loan, this tool does not use your home as collateral and therefore, no risk of foreclosure exists if you are unable to make payments. Also, the application process is often faster, however this typically results in higher interest rates and lower loan amounts compared to a home equity loan.
Personal Line of Credit
A personal line of credit (not to be confused with a personal loan), is a revolving credit line that can be used to pay for a variety of personal expenses. It is considered unsecured because it is not secured by your home equity. This lack of collateral results in less risk for you as the borrower, but it may lead to higher interest rates and lower credit limits compared to a HELOC.
Cash-Out Refinance
When you consider a cash-out mortgage refinance, you are essentially replacing your current mortgage with a new, larger loan. The difference between the new loan amount and your old mortgage balance is given to you in cash.
An important difference between a cash-out refinance vs. a home equity line of credit is that a cash-out refinance leaves you with just one monthly payment.
Review these alternatives as part of your borrowing decision-making process.
The Takeaway
An Idaho home equity loan calculator is an essential planning tool for any homeowner pursuing a major home renovation or consolidating high-interest debt. The calculator provides the initial data needed to estimate potential monthly payments and assess overall affordability before you formally apply for a home equity loan, allowing you to explore your options without risk.
SoFi now offers home equity loans. Access up to 85%, or $750,000, of your home’s equity. Enjoy lower interest rates than most other types of loans. Cover big purchases, fund home renovations, or consolidate high-interest debt. You can complete an application in minutes.
Unlock your home’s value with a home equity loan from SoFi.
FAQ
How much can I borrow with a home equity loan?
Lenders typically allow homeowners to borrow 85% of their available equity, requiring a protective cushion of equity to remain in the home. This means you generally cannot borrow the full amount of your equity. Ultimately, the amount you can borrow depends on your home’s equity, your credit history, and your income.
Is the interest rate on a home equity loan fixed or variable?
The interest rate on a home equity loan is often a fixed interest rate, so the rate does not change over the life of the loan.
What are the typical loan terms for a home equity loan?
Borrowers generally can choose anywhere from five to 30 years for the repayment term for a home equity loan. A shorter term will have higher monthly payments but less total interest paid, while a longer term offers lower monthly payments but more interest paid over the life of the loan.
What are the qualification requirements for a home equity loan?
You generally need to have at least 20% equity in your home to quality. Lenders also look for a manageable debt-to-income ratio and a history of steady, verifiable income to approve an application. Your credit score should be in the mid-600s or higher range with scores of 680 to 700 required for the best rates.
Learn more about mortgages:
SoFi Loan Products 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.
SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
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.
All loan terms, fees, and rates may vary based upon your individual financial and personal circumstances and state.You should consider and discuss with your loan officer whether a Cash Out Refinance, Home Equity Loan or a Home Equity Line of Credit is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit not originated by SoFi Bank. Terms and conditions will apply. Before you apply, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and a minimum loan amount. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria. Information current as of 06/27/24.In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee.
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.
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