Home Equity Loan Calculator | Monthly Payment, Total Interest & Combined Loan-to-Value (CLTV)
Calculate the monthly payment and total interest for a fixed-rate, lump-sum home equity loan (second mortgage) taken on top of your existing mortgage, plus your combined loan-to-value (CLTV) ratio.
Example Payments by Loan Term
Estimates for a $40,000 loan at a fixed 8.00% interest rate, by repayment term.
| Term | Monthly Payment | Total Interest |
|---|---|---|
| 5 years | $811.06 | $8,663.35 |
| 10 years | $485.31 | $18,237.25 |
| 15 years | $382.26 | $28,806.95 |
| 20 years | $334.58 | $40,298.25 |
What Is a Home Equity Loan?
A home equity loan is a second mortgage that lets you borrow against the equity in your home while keeping your existing (first) mortgage untouched. Unlike a HELOC (Home Equity Line of Credit), which you draw from as needed like a credit card, a home equity loan pays out the full amount in a lump sum at closing and starts fixed-rate, fully amortizing repayment right away.
Most lenders cap the combined loan-to-value (CLTV) — your existing mortgage balance plus the new home equity loan, divided by your home's value — at around 80-85%. This calculator estimates your monthly payment and total interest, and flags a warning if your CLTV is likely to exceed that typical ceiling.
How to Use the Home Equity Loan Calculator
- Enter your home's value Provide your best estimate of your home's current market value. This is used to calculate CLTV.
- Enter your existing mortgage balance and payment Provide the remaining balance and current monthly payment on your first mortgage.
- Enter the new loan amount, rate, and term Provide the amount you want to borrow, the fixed annual interest rate, and the repayment term in years.
- Review your results The calculator shows the new loan's monthly payment, the combined monthly payment with your existing mortgage, total interest, and CLTV.
Tips for getting more out of it
- A higher CLTV often means stricter underwriting and higher rates, so it's worth checking your combined balance against your home's value before you apply.
- You can generally use the lump sum for any purpose, but common uses include home renovations, education costs, and consolidating higher-interest debt into a single fixed payment.
- Unlike a HELOC, which has a variable rate and a draw period, a home equity loan has a fixed rate and payment for the entire term, which makes budgeting easier.
- Since you'll be carrying two loans against your home, always check that the combined monthly payment still fits comfortably in your household budget.
Home Equity Loan FAQ
Side Note — Understanding the "Second Mortgage"
When you buy a home with a mortgage, the lender places a lien on the property. A home equity loan adds a second lien on top of that existing (first) mortgage lien — hence the term "second mortgage." If the borrower ever defaults and the home is sold at foreclosure, the first-lien holder gets paid back first, and only the leftover proceeds go toward the second lien. This makes second mortgages riskier for lenders than first mortgages.
That extra risk is usually reflected in the interest rate: home equity loans tend to carry a somewhat higher rate than a typical first mortgage. Even so, they're usually far cheaper than unsecured options like credit cards or personal loans, which makes them an attractive way to access a large lump sum of cash.
A close relative is the HELOC (Home Equity Line of Credit), which works more like a credit card — you draw funds as needed during a draw period at a variable rate. A home equity loan, by contrast, pays out the full amount up front at a fixed rate. Which one fits best depends on whether you need one lump sum for a known expense or ongoing access to funds over time.