Home Equity Loan Calculator
Calculate how much you can borrow against your home using a Home Equity Loan or HELOC.
Understanding Home Equity
Your home equity is the difference between what your house is worth on the market and what you currently owe on your mortgage. A Home Equity Loan or Home Equity Line of Credit (HELOC) allows you to borrow cash against that equity.
Loan-to-Value (LTV) Limits
Lenders will not let you borrow 100% of your home's value. The standard maximum Loan-to-Value (LTV) ratio allowed by most banks is 80% to 85%. This protects the bank if property values drop.
Worked Example
- Home Value: $400,000
- Current Mortgage: $250,000
- Your Current Equity = $150,000
- Max LTV Allowed: 80%
- Max Allowed Debt: $400,000 * 0.80 = $320,000
- Max Borrowable = Max Debt - Current Mortgage = $320,000 - $250,000 = $70,000.
Frequently Asked Questions
What is the difference between a Home Equity Loan and a HELOC?
A Home Equity Loan provides a lump sum with a fixed interest rate. A HELOC acts like a credit card tied to your house, giving you a revolving line of credit with a variable interest rate.
Disclaimer: This calculator is for educational and informational purposes only. It is not a substitute for professional financial advice. Results are estimates based on the information provided and may not reflect actual outcomes. Please consult with a qualified financial advisor, accountant, or tax professional before making any financial decisions. Past performance does not guarantee future results.