Home equity loans can be an affordable way to borrow against the value of your home.
Our home equity calculator can help you to understand how much different home equity loan rates and terms would cost you, so you can decide whether this type of loan is right for you.
On this page:
- Home equity loan calculator
- How to use our home equity loan calculator
- Is a home equity loan right for you?
- Where to get a home equity loan
Home equity loan calculator
How to use our home equity loan calculator
You can use our home equity loan calculator to see whether a home equity loan is affordable for you. Simply input details about:
- Your home’s current value
- The amount of outstanding mortgage debt you have
- An estimate of your credit score
You can find out what your current loan-to-value ratio is, as well as the maximum amount you’d likely be able to borrow.
If this maximum loan amount satisfies your needs, you can then gather quotes from a few home equity loan lenders and compare those rates and terms to find the best option.
Is a home equity loan right for you?
Home equity loans make sense for borrowers who have sufficient equity in their homes and who know exactly the loan amount they need. Home equity loans can have lower rates than personal loans because they are secured by your home’s equity, so aren’t as risky for lenders.
If you’re not sure how much cash you need and would prefer access to a revolving line of credit, consider a home equity line of credit (HELOC) instead.
With HELOCs, you are allowed to borrow up to a maximum amount determined by how much equity you have in your home. You can draw from the line of credit as you’d like and borrow more as you pay off what you’ve already borrowed.
Another alternative is a cash-out refinance, which could help you refinance your mortgage rate and provide cash beyond your home value, which you can use and then repay with your mortgage payments.
Ways to use a home equity loan
You can do anything you’d like with the money you get from a home equity loan, but some common uses include:
- Completing home improvement projects
- Debt consolidation or refinancing, including for credit card debt or high-interest loans
- Funding big expenses, such as a wedding or vacation, to avoid putting them on a credit card
>> Read more: Best Home Improvement Loans
How to get a home equity loan
You can apply for a home equity loan with online lenders, banks, or credit unions. Some of the criteria your lender may look for include:
- The amount of equity in your home. It’s common for lenders to limit your total debt, including your home equity loan and unpaid mortgage loan balance, to 90% or 95% of your home’s value, but some lenders allow you to borrow more. The home equity calculator above will help you determine your current LTV to see how much you could borrow.
- Your debt-to-income ratio (DTI). Many mortgage lenders cap your total monthly debt and loan payments at 43% of monthly income, but some will go higher, especially if you have good credit. Learn more in our guide to understanding your DTI.
- Your credit score. You’ll usually need at least fair credit to get a home equity loan—which means a score of 620 or higher. Learn more in our guide to what makes a good credit score.
Where to get a home equity loan
We ranked and rated lenders based on the weighted average of several data points, to help you find the best options. You can review our top picks in our guide to the best home equity loan lenders.