Borrowing Capacity Calculator

Estimate the maximum home equity loan you can qualify for based on your home value, mortgage balance, and lender CLTV limits.

Borrowing Capacity Inputs

Find your maximum home equity loan

Home Value

Mortgage Balance

Max CLTV Allowed

80% conservative, 85% standard

What Is a Home Equity Loan?

A home equity loan is a fixed-rate, lump-sum second mortgage that uses the equity you've built in your home as collateral. You receive the full loan amount upfront and pay it back in equal monthly payments over a fixed term (commonly 5–30 years). Because the loan is secured by your home, rates are typically lower than personal loans or credit cards — but missing payments can put your home at risk.

This page bundles four tools. The default Home Equity Loan tab models payments, equity utilization, CLTV, and a health score. The Borrowing Capacity tab returns the maximum loan amount most lenders will approve. The HELOC vs Home Equity Loan tab compares fixed-rate home equity loans with variable-rate HELOCs. The Strategy Planner tab stress-tests how the equity should be used. Pair with our HELOC Calculator and Refinance Calculator for the full picture.

How Home Equity Loans Work

Equity is the collateral

Available equity is the home's market value minus what you still owe on the primary mortgage. Lenders typically let you borrow against 80–90% of that, capped by your combined loan-to-value (CLTV) ratio.

Fixed-rate, fixed-payment

Unlike a HELOC, a home equity loan disburses a lump sum and locks in a fixed rate and payment for the life of the loan. Predictable but inflexible — you can't redraw funds you've already paid back.

Closing costs are real

Origination, appraisal, title, recording, and sometimes attorney fees usually run 2–5% of the loan. Roll them into the loan to save cash upfront or pay them out of pocket to lower lifetime interest cost.

Your home is on the line

If you stop making payments, the lender can foreclose. Always size a home equity loan to something you can service comfortably — a payment that would crush your budget in a tight month is a bad idea.

Six Ways to Use This Home Equity Calculator

Right-size your loan

Plug in home value, mortgage balance, and a target loan amount. The CLTV and equity-utilization gauges tell you instantly if the loan is safe, stretchy, or out of bounds.

Find your max

Use the Borrowing Capacity tab to see the largest home equity loan most lenders will write at 80%, 85%, 90%, and 95% CLTV — useful when shopping lenders.

HELOC vs HEL head-to-head

Compare the fixed lump-sum loan against a variable-rate HELOC side-by-side, with monthly payment, total interest, and recommendation. Stop guessing which fits.

Plan a renovation ROI

Use the Strategy tab to model a renovation: enter project cost and expected resale lift. The tool reports net financial impact and ROI on the equity you're spending.

Quantify debt consolidation

Compare your existing card or personal-loan rate against the home equity loan rate. The calculator estimates total interest savings — and reminds you about the security tradeoff.

Print a lender-ready report

Hit the Print Report button to generate a clean PDF with inputs, results, charts, and recommendations to share with your lender, partner, or financial advisor.

Smart Uses for Home Equity — and Risky Ones

Use equity for…

Renovations that demonstrably raise resale value
Consolidating high-rate credit-card or personal-loan debt
One-time major expenses you can repay reliably
Avoiding withdrawing from tax-advantaged retirement accounts
Bridging a temporary cash-flow gap with a clear payoff plan

Avoid using equity for…

Vehicles, vacations, or other depreciating consumption
Speculative investments where returns are not guaranteed
Funding a business with no projected cash flow
Paying off debt you'd just run back up in 12 months
Anytime your job, income, or health is unstable

Core Formulas

Available equity

Available equity = Home value − Mortgage balance

The dollar amount the bank can lend against, before CLTV limits.

Maximum borrowing

Max loan = (Home value × CLTV%) − Existing mortgage

CLTV% is typically 80–90% depending on lender, credit, and program.

CLTV ratio

CLTV = (Mortgage + New loan) ÷ Home value

Above 85% expect higher rates and stricter underwriting.

Monthly payment

P = L × r ÷ (1 − (1+r)⁻ⁿ)

L = loan, r = monthly rate, n = total months. Same amortizing formula as a mortgage.

Common Home Equity Borrowing Mistakes

Borrowing the maximum. Just because a lender will write 85% CLTV doesn't mean you should accept it. A modest equity cushion absorbs market drops and life shocks.
Treating it like a credit card. Home equity loans fund lump sums. If you need ongoing flexible access, a HELOC is the better tool.
Consolidating debt and re-running it up. Refinancing $25,000 of credit-card debt into a 15-year home equity loan, then spending another $25,000 on cards, leaves you with twice the debt.
Ignoring closing costs. A 2–5% closing-cost bite on the loan can erase the rate advantage if the loan is small or short.
Skipping comparison shopping. Rate, points, and fees vary materially between lenders. Get at least three Loan Estimates before signing.

Trust & Methodology

This calculator uses the standard amortization (PMT) formula, the industry-standard CLTV definition, and conservative health-score weights drawn from CFPB and HUD borrower-education resources. The equity projection assumes a constant property-appreciation rate and standard mortgage paydown — actual market behavior will vary.

Outputs are estimates. Actual lender pricing depends on your full credit profile, debt-to-income ratio, CLTV, property type and occupancy, and current market conditions. For binding numbers, request a Loan Estimate (TILA-RESPA Integrated Disclosure form) from each lender within three business days of application. The Closing Disclosure issued before closing is the legally binding fee schedule.

Frequently Asked Questions

What is a home equity loan?

A home equity loan is a fixed-rate second mortgage that lets you borrow a lump sum against the equity in your home. You receive the funds at closing and repay the loan in equal monthly installments over a set term — usually 5 to 30 years. Because the loan is secured by your home, rates are typically lower than personal loans or credit cards, but missing payments can put your home at risk of foreclosure.

How much can I borrow with a home equity loan?

Most lenders cap your combined loan-to-value (CLTV) ratio at 80–90%. CLTV is (your primary mortgage balance + the new home equity loan) ÷ your home's appraised value. So if your home is worth $500,000 and you owe $250,000 on the mortgage, an 85% CLTV ceiling means you can borrow up to (0.85 × 500,000) − 250,000 = $175,000. Use the Borrowing Capacity tab to see your tier-by-tier max.

What is CLTV?

CLTV stands for combined loan-to-value ratio. It's the percentage of your home's value that's encumbered by all the loans secured against it, including your primary mortgage and any home equity loans or HELOCs. Lenders use CLTV as a primary underwriting metric. Above 85% expect higher rates, stricter income/credit requirements, and sometimes mortgage insurance.

How is a home equity loan different from a HELOC?

A home equity loan is a one-time lump sum at a fixed rate with fixed payments. A HELOC is a revolving line of credit at a variable rate, with an initial draw period (often 10 years, interest-only) followed by a repayment period. HELOCs offer flexibility — you draw as needed — while home equity loans offer payment certainty. Use the Compare tab to see the side-by-side numbers for your scenario.

Are home equity loan rates fixed?

Yes. A standard home equity loan is fixed-rate. The interest rate and monthly payment are locked at closing and stay the same for the life of the loan. This is the main appeal versus a HELOC, where the rate (and therefore the payment) can rise if benchmark rates increase.

Can I use a home equity loan for debt consolidation?

Yes, and it can save substantial interest if your existing debt is at a much higher rate (credit cards typically 18–28%). The Strategy tab models this directly. The catch: you're converting unsecured debt into debt secured by your home. If something goes wrong, the lender can foreclose. Always pair consolidation with the discipline to not run the original debts back up.

What credit score is needed?

Most lenders look for a minimum FICO score of 620 for a basic home equity loan, with the best rates reserved for scores of 740+. Lower scores push rates up and tighten the maximum CLTV. Other underwriting factors include debt-to-income ratio (typically capped at 43–45%), stable income, and verifiable employment.

Are closing costs required?

Yes. Home equity loans involve closing costs similar to a mortgage — origination, appraisal, title work, recording, and sometimes attorney fees. Total runs roughly 2–5% of the loan amount. Some lenders absorb fees in exchange for a higher rate (a 'no-closing-cost' loan). The Loan tab itemizes the standard fees so you can compare offers apples-to-apples.

What happens if home values decline?

Your equity shrinks proportionally. If home values drop sharply enough that your mortgage + home equity loan exceed the new value, you're underwater. The lender can't immediately demand repayment as long as you keep making payments, but selling becomes very difficult — you'd owe more than the sale would generate. This is why keeping a meaningful equity cushion matters, especially in volatile markets.

Is a home equity loan tax deductible?

Under the Tax Cuts and Jobs Act, home equity loan interest is only deductible if the loan proceeds are used to buy, build, or substantially improve the home that secures the loan, and only up to combined mortgage debt limits ($750,000 for most filers post-2018). Using a home equity loan for debt consolidation, education, or business funding generally does NOT qualify for the deduction. Consult a tax advisor for your specific situation.

Important Notice

Home equity borrowing places your property at risk if payments are not maintained. Borrowing limits, interest rates, qualification requirements, and tax treatment vary by lender and jurisdiction. Mortgage interest deductibility for home equity loans depends on how proceeds are used and current tax law. Results from this calculator are estimates and should not be considered financial, legal, or tax advice. Consult a licensed mortgage professional and a tax advisor before borrowing.