Estimate how much equity you could borrow against your home and what the monthly payment would look like.
A home equity loan lets you borrow against the portion of your home you already own outright. Lenders typically cap the combined loan amount (mortgage + equity loan) at a percentage of your home's value, known as the loan-to-value (LTV) ratio.
Available Equity = (Home Value × Max LTV%) − Remaining Mortgage Balance. Monthly Payment = P × r × (1+r)ⁿ ÷ ((1+r)ⁿ − 1), where P is the loan amount, r is the monthly interest rate, and n is the number of months.
A home worth $400,000 with a $220,000 mortgage balance and an 80% LTV limit has $100,000 of borrowable equity (400,000 × 0.80 − 220,000). Borrowing that amount at 8% over 10 years results in a monthly payment of roughly $1,213.
Lower LTV limits and higher existing mortgage balances both shrink your available equity. Shop multiple lenders — LTV limits and rates vary significantly between them.
Equity = current home value − remaining mortgage balance; lenders typically let you borrow up to a percentage (often 80-85%) of your home's value minus what you still owe.
A home equity loan gives a lump sum with fixed payments; a HELOC (home equity line of credit) works more like a credit card with a revolving credit limit you can draw from as needed.
Yes — since the loan is secured by your home, failing to repay can put your home at risk of foreclosure, unlike unsecured debt.