How your borrowing limit is found
A home equity loan lets you turn part of the value you have built in your home into a lump sum of cash. Lenders do not let you borrow against every dollar of value, though. They cap the combined loan-to-value — the total of all loans secured by the home divided by its value.
Your borrowable amount is therefore the home value multiplied by that maximum combined LTV, minus whatever you still owe on your first mortgage. Once that figure is set, the loan is amortized into a fixed monthly payment just like a regular mortgage, with the same rate over the same term.
Lump sum versus a line of credit
A home equity loan and a HELOC both tap equity, but they behave differently. A home equity loan hands you the full amount at once, usually at a fixed rate, with predictable equal payments — useful when you know exactly how much you need, such as for a single renovation or consolidating a fixed debt.
A HELOC, by contrast, is a revolving line you draw on as needed, typically at a variable rate. If your need is one-time and you value payment certainty, the fixed lump sum tends to win.
Reading the result
The headline is the maximum you could borrow under the limit you entered. The chart breaks the cost of that loan into the principal you receive and the interest you pay over the term.
- A higher combined-LTV cap raises how much you can borrow but increases your total debt against the home.
- A shorter term means higher payments but far less interest.
- The loan is secured by your house, so it is at risk if you cannot keep up.
Caveats
Actual limits depend on the lender, your credit and an appraisal of the home, and rates and fees vary. This calculator is a planning estimate, not an offer of credit, and does not include closing costs. Borrow against your home only after weighing the risk to the property. This is general information, not financial advice.
Formula
borrowable = homeValue·maxLTV% − mortgageBalance; payment = amortized(borrowable)Frequently asked questions
- What is combined loan-to-value?
- It is the total of all loans against the home divided by its value. Lenders typically allow up to 80–90%, which limits how much equity you can borrow.