Home Equity Calculator
Calculate your available equity and compare HELOC, home equity loan, and cash-out refinance options.
Property & Loan Details
Home Equity
$170,000
37.8% of value
Current LTV
62.2%
Max Borrow (80% LTV)
$80,000
Combined LTV
75.6%
Loan Comparison
| Option | Rate | Monthly | Total Interest |
|---|---|---|---|
| HELOC | 8.5% variable | $425 | $64,860 |
| Home Equity Loan | 7.9% fixed | $570 | $42,588 |
| Cash-Out Refinance | ~8.15% fixed | $2,530 | $570,960 |
HELOC
+ Interest-only payments during draw period
+ Borrow only what you need
+ Reusable credit line
+ Often no closing costs
− Variable rate can increase
− Payment jumps after draw period
− Temptation to overborrow
Home Equity Loan
+ Fixed rate and payment
+ Predictable budgeting
+ Lump sum for large projects
+ Lower rate than personal loans
− Higher initial payment than HELOC
− Closing costs 2-5%
− Can't reborrow once repaid
✓ Interest may be tax-deductible because the funds are used to buy, build, or substantially improve your home (IRS rules).
Key Considerations
- • The HELOC rate is currently higher than the home equity loan rate. A fixed-rate loan may be the better choice right now.
How Home Equity Works
Home equity is the difference between your home's current market value and what you owe on your mortgage. As you pay down your mortgage and your home appreciates, your equity grows. Most lenders let you borrow up to 80-90% of your home's value minus your existing mortgage balance.
HELOC vs Home Equity Loan vs Cash-Out Refinance
| Feature | HELOC | Home Equity Loan | Cash-Out Refi |
|---|---|---|---|
| Rate Type | Variable | Fixed | Fixed |
| How You Get Funds | Draw as needed | Lump sum | Lump sum |
| Typical Term | 10-yr draw + 20-yr repay | 5–30 years | 15–30 years |
| Closing Costs | $0–$500 | 2–5% of loan | 2–5% of full mortgage |
| Average Rate (2026) | 8.0–9.5% | 7.5–9.0% | 6.5–8.0% |
| Best For | Ongoing expenses, flexibility | One-time large expense | Large amount + lower existing rate |
How Much Equity Do You Need?
| LTV After Borrowing | Typical Lender Response |
|---|---|
| Under 80% | Best rates, easiest approval |
| 80–85% | Approved with slightly higher rate |
| 85–90% | Possible but limited options, higher rate |
| Over 90% | Most lenders decline |
Is Home Equity Loan Interest Tax Deductible?
Under current tax law (Tax Cuts and Jobs Act), interest on home equity debt is only deductible if the funds are used to "buy, build, or substantially improve" the home that secures the loan. Using equity for debt consolidation, college tuition, or investments means the interest is not deductible. The combined mortgage debt limit for the deduction is $750,000.
Frequently Asked Questions
How much home equity can I borrow?
Most lenders allow a combined loan-to-value (CLTV) ratio of 80-90%. For example, if your home is worth $400,000 and you owe $250,000, your equity is $150,000. At 80% CLTV, you could borrow up to $70,000 ($400,000 × 80% − $250,000).
Is a HELOC or home equity loan better?
A HELOC is better if you need flexibility (like ongoing renovations where costs are uncertain) or want lower initial payments. A home equity loan is better if you need a fixed amount with predictable payments (like a one-time debt consolidation or major project). In a rising-rate environment, fixed-rate loans provide more certainty.
See also: Mortgage Calculator and Mortgage Payoff Calculator.