How is a home equity loan different from a HELOC?

A home equity loan (HEL) is a fixed-rate, fixed-term second mortgage — you receive the full loan amount up front and pay a fixed monthly amount over 5, 10, or 15 years. A HELOC is a variable-rate revolving line of credit you draw against as needed during a 10-year draw period; the rate moves with prime. HEL = predictable, HELOC = flexible. Choose HEL when you know exactly how much you need and want payment certainty.

What credit score do I need for a home equity loan in 2026?

Most national HEL lenders set a minimum credit score of 660-680. 740+ borrowers get the lowest rates (typically 0.4% below baseline). 700-739 sits at baseline pricing. 660-699 borrowers get rate bumps of 0.3-1.2 percentage points. Below 660 is hard to source — try a HELOC with a regional credit union instead.

How much can I borrow on a home equity loan?

The lender cap is 85% combined loan-to-value (CLTV) = your existing mortgage + new HEL ÷ home value. If your home is worth $500K and you owe $280K, your max HEL is $500K × 85% − $280K = $145K. A few specialty lenders (Figure, Aven) will go to 90% CLTV for 780+ borrowers, but the conservative gate is 85%.

What DTI do lenders require for a home equity loan?

Industry-standard back-end DTI cap is 43% — above that and most national lenders auto-decline. 36% is the auto-approve threshold; between 36-43% triggers manual underwriting (human review + likely a 0.25-0.50% rate bump). The calculator above shows your post-loan DTI live so you can see whether reducing the loan amount or paying down existing debt clears you into the green zone.

Are home equity loan interest payments tax-deductible?

Only if the proceeds are used to 'buy, build, or substantially improve' the home that secures the loan (per IRS 2018+ rules). Home renovation? Deductible (subject to the $750K total mortgage debt cap). Debt consolidation or college tuition? Not deductible. Consult a CPA for your specific situation — the rules tightened materially after 2017.

Should I get a home equity loan or a cash-out refinance?

Depends on your existing mortgage rate. If your current rate is at or below today's market rate (~6.5-7.5% in 2026), a cash-out refinance forces you to surrender that low rate on the WHOLE balance — the rate-reset cost almost always exceeds the HEL interest. If your existing rate is materially higher than today's market, cash-out can win. Run both in our four-product financing comparator to see the math head-to-head.

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Home equity loan calculator

Real payment math + real underwriting check. Enter your home value, mortgage balance, loan amount, credit score, and income — see your monthly payment, full amortization, post-loan DTI, and whether a national lender will actually approve you. No email gate.

Home value

Current mortgage balance

Loan amount

Term

Credit score

Gross monthly income

Total monthly debt payments (incl. mortgage)

Include your current mortgage payment, car loans, student loans, minimum credit card payments. Exclude utilities, groceries, insurance.

Likely APPROVED

Your CLTV, DTI, and equity all sit inside the auto-approve zones at every major HEL lender.

Monthly + total

Rate (credit-adjusted)

8.40%

Monthly payment

$494

Total interest

$19,257

Closing costs (est.)

$800

All-in cost

$60,057

Term

10 years

Underwriting check

Available equity (85% CLTV cap)

$145,000

Combined LTV

64.0%

Post-loan DTI

30.5%

DTI green zone

≤ 36%

Fixed-rate · No closing costs

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Fixed-rate home equity loan with zero application fee and zero closing costs. 10-30 year terms. Best for borrowers who want one predictable monthly payment.

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Yearly amortization

How your 10-year loan pays down. Year 1 is mostly interest; the principal share grows each year.

Year	Annual payment	Principal paid	Interest paid	Remaining
1	$5,926	$2,667	$3,259	$37,333
2	$5,926	$2,900	$3,026	$34,434
3	$5,926	$3,153	$2,773	$31,281
4	$5,926	$3,428	$2,498	$27,853
5	$5,926	$3,727	$2,198	$24,125
6	$5,926	$4,053	$1,873	$20,073
7	$5,926	$4,407	$1,519	$15,666
8	$5,926	$4,791	$1,134	$10,874
9	$5,926	$5,210	$716	$5,665
10	$5,926	$5,665	$261	$0

Not sure HEL is the right product?

Compare home equity loan against HELOC, cash-out refinance, and personal loan side-by-side — same inputs, four monthly payments + four all-in costs.

Open 4-product comparator

Home equity loan calculator by state

Each state-specific page pre-fills the calculator with your state's median home value and surfaces local underwriting nuances. All 50 are addressable at /home-equity-loan-calculator/{state-slug}.

A home equity loan is a fixed-rate, fixed-term second mortgage — the safest and most predictable way to convert home equity into renovation cash. Below, the underwriting gates every national lender checks, the mistakes that get applications denied, and when this product wins vs. its alternatives.

How this calculator works

Anchor home value honestly — Don't input last year's tax assessment if your market moved. Use a current Zestimate / Redfin estimate, or pay $400 for a real appraisal if you're applying for the loan.
Subtract current mortgage balance, not original principal — Lenders use OUTSTANDING balance — pull it from your latest statement, not your closing disclosure.
Cap loan amount at 85% CLTV minus mortgage — The 85% combined loan-to-value gate is industry standard. Specialty lenders (Figure, Aven) go to 90% for 780+ borrowers; everyone else is at 85%.
Run DTI before applying — Post-loan DTI = (existing monthly debt + new HEL payment) ÷ gross monthly income. ≤36% = auto-approve. 36-43% = manual UW. >43% = decline.
Match term to your scope — 5-year for a $20K project = highest payment, lowest total interest. 15-year for $80K kitchen = lowest payment, most total interest. Pick the shortest term you can carry without DTI stress.

When to use this vs. skip it

You know the exact dollar amount you need + want one predictable payment

HEL gives you that. Lump-sum, fixed rate, fixed term, identical monthly payment for the full duration.

Your existing mortgage is at a low rate (sub-6%) you don't want to surrender

HEL is a separate second lien — your primary mortgage rate is untouched. Cash-out refi would force you to reset the whole balance to today's higher rate.

You have multi-stage project costs spread over 12-24 months

Consider a HELOC instead. HEL forces you to take the full amount on day 1 and start paying interest immediately.

Your CLTV is already above 80%

You'll be at or above the 85% cap. Either reduce the loan amount or look at unsecured personal loans (no CLTV gate but higher rate).

Common mistakes homeowners make

×Treating a home equity loan and a HELOC as interchangeable — they're not. HEL = fixed, HELOC = variable + revolving.
×Forgetting that closing costs (typically 2% on HEL) come OUT of your loan proceeds — borrow $40K, net ~$39,200.
×Ignoring the rate-reset trap when a cash-out refi looks 'cheaper' than HEL on the surface (it usually isn't once you account for resetting your primary mortgage).
×Banking on tax deduction without verifying use-of-funds. Only renovation use is deductible post-2017 TCJA.
×Maxing out CLTV at 85% — leaves you with zero buffer if your home value dips. Most planners recommend stopping at 75-80%.

Last updated June 1, 2026 · Reviewed by the HavenCostGuide methodology desk