Home Equity Loan Monthly Payment Calculator

What the monthly payment covers

A home equity loan is a second mortgage paid out in one lump sum, usually at a fixed rate, with a fixed term and equal monthly payments. The Consumer Financial Protection Bureau draws the line the same way in its comparison of a home equity loan and a HELOC: a specific sum borrowed against the equity in the home, repaid on a set schedule.

That monthly figure is principal and interest only. A first mortgage often collects property tax and homeowners insurance in escrow, and a home equity loan almost never does, so those bills keep arriving on their own. Budget for them outside the number this page produces.

The payment also leaves out closing costs, the appraisal fee and any late charge. Those appear on the Closing Disclosure, which a lender has to give you before closing. If you roll closing costs into the loan instead of paying them in cash, add them to the amount borrowed, and the payment goes up with it.

The amortization formula

One line, four variables

The payment comes from the standard amortizing loan formula:

M = P x [ r(1 + r)^n ] / [ (1 + r)^n - 1 ]

M is the monthly payment, P is the amount borrowed, r is the annual rate divided by 12 and by 100, and n is the number of monthly payments, which is the term in years times 12. A 15 year loan has n of 180, a 20 year loan has 240.

The logic behind it is a loop. Interest for the month is the balance times r. Whatever the payment leaves after that interest goes to principal, which lowers next month's interest by a little. The formula solves for the single payment size that drives the balance to exactly zero on payment n. If the rate is zero, the interest term disappears and the payment is P divided by n.

Two consequences matter more than the algebra. The split between interest and principal shifts every month even though the payment never moves, and a change in rate or term moves the payment by more than most people expect. That is why the results below put the total interest next to the payment rather than hiding it in a second step.

Worked example: 50,000 dollars over 15 years

Take a loan of 50,000 at 8.50 percent for 15 years. The 8.50 percent is an illustrative rate chosen to keep the arithmetic readable; a lender quotes its own number, and the calculator takes whatever you type.

The monthly rate is 0.085 divided by 12, which is 0.0070833, and n is 180. Feeding those into the formula gives a payment of 492.37 a month.

The first month sends 354.17 to interest, which is 50,000 x 0.0070833, and 138.20 to principal. The balance drops to 49,861.80, since 50,000 minus 138.20 is 49,861.80. By the final payment the same 492.37 is almost all principal: interest is down to 3.46 and principal is 488.91.

Across the term, 492.37 x 180 = 88,626.60, while the unrounded payment times 180 gives 88,626.56, so rounding the monthly figure to cents costs four cents over fifteen years. Interest is the total minus the principal: 88,626.56 - 50,000 = 38,626.56.

Worked example: 100,000 dollars over 20 years

Now a larger loan on a longer term. Borrow 100,000 at 7.75 percent for 20 years and the payment is 820.95, spread over 240 months.

Read the interest line twice. Over 20 years at 7.75 percent the interest is 97,027.66, which is almost exactly the amount borrowed all over again, and it takes 49.2 percent of every dollar paid. The same 100,000 over 15 years at the same rate costs 941.28 a month and 69,429.64 of interest, so the shorter term raises the payment by 120.33 and saves 27,598.02.

Those two figures are the whole trade in one sentence: a longer term buys a smaller payment with a larger interest bill, and the exchange rate gets worse the further out you go.

What a longer term does to the payment and the interest

The table holds the amount and the rate fixed at 50,000 and 8.50 percent, and changes only the term. Every number comes from the same formula.

Stretching from 15 years to 30 lowers the payment by 107.91 a month and adds 49,777.87 of interest. Going the other way, from 30 years back to 15, raises the payment by the same 107.91 and removes the same 49,777.87, which is the cleanest way to see that the term is a dial and not a discount.

A practical rule for choosing: pick the shortest term whose payment fits your budget with room left over, rather than the longest term the lender allows. The monthly difference between adjacent rows is small compared with the interest gap between them.

Home equity loan, HELOC, or cash-out refinance

Three ways to reach home equity

All three products borrow against the same asset, and they behave differently once the money is out. The Consumer Financial Protection Bureau publishes a side by side HELOC booklet that covers the same comparison, and the table condenses it.

A home equity loan is the right shape for a single known cost, such as a roof or a kitchen, because the payment is fixed and the loan ends on a known date. A HELOC suits a project whose total is unknown, but the payment moves with the index, so this calculator cannot price it: the rate would have to be re-entered every time it resets. A cash-out refinance replaces the first mortgage, which can be helpful when that mortgage rate is higher than today's market and harmful when it is lower.

How much of your equity a lender will let you use

Equity and combined loan to value

Equity is the appraised value minus what you owe on the first mortgage. Lenders then look at the combined loan to value ratio, or CLTV, which puts both loans over the same appraised value:

CLTV = (first mortgage balance + new home equity loan) / appraised value

An example shows how the ceiling works. A home appraises at 420,000 and the first mortgage balance is 265,000, so the equity is 155,000. Adding a 50,000 home equity loan brings total debt to 315,000, and 315,000 divided by 420,000 gives a CLTV of 75.0 percent.

The ceiling itself is set by the lender, not by federal rule, and it moves with credit score, income, property type and how the appraiser values the house. To test a ceiling you were quoted, multiply the value by the cap: 420,000 x 0.80 = 336,000, and 336,000 minus the 265,000 first mortgage leaves 71,000. At an 85 percent cap the same arithmetic gives 357,000 - 265,000 = 92,000.

A lender will also check income against total debt, pull a credit report and order an appraisal. None of that is in the payment formula, so a payment you can afford on paper is not the same as an approval.

What the payment leaves out: tax, rescission and fees

Rules as published for 2025

Interest deductibility. IRS Publication 936 for tax year 2025 allows a deduction for interest on a loan secured by a qualified home only when the money is used to buy, build or substantially improve that same home. Interest on a home equity loan spent on a car, a credit card balance or a vacation is not deductible, no matter when the loan was taken out. For loans taken after December 15, 2017, the home acquisition debt limit is 750,000, or 375,000 for a married couple filing separately, and you have to itemize on Schedule A to claim any of it. The IRS Publication 936 page carries the current text, and the figures here are the 2025 version.

Right of rescission. A home equity loan is a non purchase money mortgage, so the CFPB explanation of the right of rescission applies: three business days to cancel, counted from the last of three events, which are signing the contract, receiving the Truth in Lending disclosures, and receiving two copies of the notice. Saturdays count, Sundays and federal holidays do not, and the cancellation has to be in writing.

Fees. Closing costs, the appraisal and recording charges are not in this payment unless you add them to the principal. Neither is any prepayment penalty, which some lenders still charge on a home equity loan. Ask for the Closing Disclosure and compare the annual percentage rate across offers, since the APR folds in fees that the note rate hides.

The result here is an estimate for a fixed rate loan with equal payments. It is not a loan offer, and it cannot price a variable rate or a balloon payment.