How the maximum loan is calculated
Maximum loan = home value × CLTV limit − mortgage balance
For a $450,000 home with an 85% limit and $260,000 left on the mortgage: $450,000 × 0.85 − $260,000 = $122,500. Borrowing $60,000 for 15 years at 8.25% costs about $582 a month.
Common uses
- Home renovations and repairs, which can add value and may make the interest deductible.
- Consolidating high-interest debt into one fixed payment (only helpful if you avoid running the cards back up).
- Large one-time costs such as education or medical bills.
Before you apply
- Compare APRs, not just rates, since closing costs and fees vary between lenders.
- Ask whether there is a prepayment penalty.
- Leave some equity untouched as a cushion if home prices drop.
Want a flexible line of credit instead? Try the HELOC calculator. Thinking of replacing your mortgage? Compare with the refinance calculator.
Last reviewed October 2026.
Frequently asked questions
How much can I borrow with a home equity loan?
Lenders usually let your total home debt reach 80% to 90% of the home's value. That limit is called the combined loan-to-value ratio (CLTV). Your maximum loan is the home value times the CLTV limit, minus what you still owe on your mortgage.
How is a home equity loan different from a HELOC?
A home equity loan pays you a lump sum and has a fixed rate and a fixed monthly payment. A HELOC is a credit line you draw from as needed, usually with a variable rate and interest-only payments at first. A loan suits one big expense; a HELOC suits ongoing costs.
What credit score do I need?
Many lenders look for a score of 680 or higher, and the best rates usually go to scores of 740 and up. You will also need enough equity and a debt-to-income ratio that is often below 43%.
Is home equity loan interest tax deductible?
Interest can be deductible if you itemize and use the money to buy, build or substantially improve the home that secures the loan, within IRS limits. It is not deductible if you use it for other things like paying off credit cards. Check with a tax professional.
What are the risks?
The loan is secured by your house, so missing payments can lead to foreclosure. If home prices fall, you could owe more than the home is worth. There are also closing costs, often 2% to 5% of the loan.