Home Equity Loan Calculator
Loans & MortgagesFixed payments on a second mortgage.
Loan details
Enter your home's value to size the loan.
Advanced options
Enter your home's value to size the loan.
The formulas behind the numbers
| Metric | Formula | Your value |
|---|---|---|
| Available equity | Home value − Mortgage balance | $0 |
| Max you could borrow | Home value × CLTV limit − Mortgage balance | $0 |
| CLTV after this loan | (Mortgage + Loan) ÷ Home value | 0.0% |
| Monthly payment | P × r ÷ (1 − (1 + r)⁻ⁿ) | $0 |
| Total interest | Sum of payments − Principal | $0 |
| Equity left after borrowing | Home value − Mortgage − Loan | $0 |
What each input means
| Input | Meaning | Your value |
|---|---|---|
| Home value | Today's market value of your home | $0 |
| Mortgage balance | Remaining balance on the first mortgage | $0 |
| Loan amount | Lump sum you'd like to borrow | $0 |
| Interest rate | Fixed annual rate on the equity loan | 0.00% |
| Loan term | Years to repay the loan in full | 0 yrs |
| Max combined LTV | Lender ceiling on all home debt combined | 0% |
Know what this estimate is based on
- Jurisdiction
- General model; U.S.-specific rules are identified on the relevant tool
- Scope and limitations
- Educational estimate only. A lender may use different compounding, day-count, eligibility, tax, insurance, escrow, fee, or rounding rules.
- Source links checked
- Jul 30, 2026
Built and regression-tested by Smart Tools Lab. It has not been individually reviewed by a licensed financial, tax, or legal professional.
How to use
- 01
Start with what the house is worth right now — a recent appraisal figure or an honest comparable-sales estimate.
- 02
Type in the remaining balance on your first mortgage; the calculator immediately shows the equity available to borrow against.
- 03
Set the loan amount you want to borrow, watching the capacity bar and the maximum-you-could-borrow figure to see how close you sit to the lender's cap.
- 04
Enter the fixed rate and term you were quoted, and open Advanced options to adjust the combined loan-to-value limit if your lender uses something other than 85%.
- 05
Read the results: your monthly payment, the verdict badge, total interest over the full term, the equity you would keep, and any warnings about your position.
- 06
Check the term-comparison table to weigh monthly payment against lifetime interest, save scenarios you want to revisit, then print, copy, or share the result.
Formula
Available equity = home value - first-mortgage balance. Max loan = home value x CLTV limit - first-mortgage balance (never below zero). CLTV after the loan = (mortgage balance + loan amount) / home value. Monthly payment: M = P x r / (1 - (1 + r)^-n), where P is the amount borrowed, r is the annual rate divided into 12 monthly parts, and n is the term in months. When the rate is 0%, M = P / n. Total interest = the sum of all payments - the principal you borrowed.
Example
Say your home is worth $500,000 and you still owe $280,000 on the first mortgage. That leaves $220,000 of equity and a current LTV of 56%. With an 85% CLTV limit, total secured debt can reach $425,000, so the most a lender at that cap would extend is $145,000. You request $60,000, which pushes combined debt to $340,000 — a CLTV of 68% — and keeps $160,000 of equity (32% of the home's value) intact. At a fixed 7.5% over 15 years, the payment is $556.21 a month for 180 months. The very first payment sends $375.00 to interest and only $181.21 to principal. Over the full term you repay $100,117.33, of which $40,117.33 is interest — 40.1% of everything paid back. Shorten the term to 10 years and the payment climbs to $712.21, but lifetime interest drops to $25,465.27.
Definitions
- Home equity loan
- A fixed-rate installment loan secured by your home's equity, paid out as one lump sum and repaid in equal monthly installments while your existing first mortgage stays in place.
- Second mortgage
- A loan secured by a home that already carries a first mortgage. In a foreclosure sale, the second lender collects only after the first lender's balance is fully covered.
- Lien
- A legal claim recorded against a property to secure a debt. Every lien must be paid off or released before the home can transfer to a buyer with clear title.
- Combined loan-to-value (CLTV)
- The sum of every lien on the property — the existing mortgage together with the new equity loan — expressed as a share of home value. Lenders cap CLTV, often near 85%, to keep an equity cushion in place.
- Loan-to-value (LTV)
- Your first-mortgage balance divided by the home's value, expressed as a percentage. A $280,000 balance against a $500,000 home is a 56% LTV.
- Available equity
- The home's market value minus everything currently owed against it. It measures your full ownership stake, not the smaller amount a lender will actually extend.
- Borrowing capacity
- The largest home equity loan the CLTV cap permits: home value multiplied by the cap, minus the first-mortgage balance. Income and credit requirements can shrink it further.
- Fixed interest rate
- A rate locked for the loan's entire life, keeping every monthly payment identical — unlike variable rates, which move with the market and reprice your bill.
- Amortization schedule
- A period-by-period table splitting each installment into its interest and principal parts and tracking the shrinking balance until the loan reaches exactly zero.
- Principal
- The amount you actually borrowed and still owe, excluding interest. Each payment retires some principal, and interest accrues only on the principal that remains outstanding.
- Remaining equity
- Your ownership stake after the new loan: home value minus both the first mortgage and the home equity loan. In the default example, $160,000 — 32% of value.
- Underwater (negative equity)
- Owing more against the home than it is worth. With no equity left to pledge, a home equity loan is effectively unavailable until value recovers or balances fall. In this calculator, the Underwater verdict appears when the first-mortgage balance by itself exceeds the home's value, leaving nothing for a second lender to secure.
Good to know
One loan becomes two: the second lien behind your mortgage
What lenders call a second mortgage is exactly what a home equity loan is — and the phrase should be taken literally. It is an entirely new loan — a separate promissory note, a separate fixed interest rate, a separate term, and a separate monthly bill — secured by the same house that already backs your existing mortgage. That existing mortgage does not change in any way: its balance, its rate, and its remaining schedule carry on exactly as before, and each month you will make two housing-debt payments instead of one. The equity loan simply stacks a second obligation on the same collateral. The word second also describes legal priority, not just sequence. Because the new lien is recorded after the first mortgage, it sits junior to it. If the property were ever sold at foreclosure, sale proceeds would satisfy the first-mortgage lender in full before the equity lender collected anything. That ordering feels abstract at closing, but it quietly sets the interest rate you will be offered, which a later section unpacks. The structure of the loan itself is deliberately simple. You receive the entire amount as one lump sum at closing, and repayment starts immediately with a level, fully amortizing payment. In the calculator's example — $60,000 at 7.5% over 15 years — the bill is $556.21 in month one and $556.21 in month 179, and the last installment is adjusted slightly so the balance lands exactly on zero. There is no draw window, no interest-only phase, and no rate reset to plan around, which is the core contrast with a HELOC's revolving, variable structure. And unlike a cash-out refinance, which swaps your first mortgage for a larger one, an equity loan leaves the original mortgage untouched — often precisely the point when the rate on that first loan is one you would rather keep. If certainty is what you are buying, this product delivers it in full.
Why $220,000 of equity turns into only $145,000 of borrowing room
Start with two numbers the calculator shows side by side, because they answer different questions. Available equity is simple arithmetic: a $500,000 home minus a $280,000 mortgage balance leaves $220,000, which is 44% of the property's value. That figure describes what you own. Borrowing capacity describes what a lender will actually extend, and it is always the smaller number. Lenders size equity loans with a combined loan-to-value ceiling — CLTV — which caps every mortgage lien on the property, first and second together, at a percentage of the home's value. At the 85% limit this tool uses as its default, total debt on the $500,000 house may not exceed $425,000. Subtract the $280,000 already owed on the first mortgage and the largest equity loan on offer is $145,000. The remaining $75,000 of your equity is real, but it is walled off; the cushion is the lender's margin for a forced sale that fetches less than market price. Some lenders hold the line at 80%; a few stretch toward 90% for strong credit profiles, usually at a price. What this calculator adds is a live picture of where your specific request sits inside that capacity. At the $60,000 request, the capacity bar shows the first mortgage as the largest block, the new loan a narrow band beside it, and a clear stretch of unused room before the cap, and the verdict reads Comfortable. Raise the request and the gap visibly closes: push past $120,000 — combined debt beyond 80% of value — and the badge shifts to Near the cap, at the full $145,000 the bar runs flush against the limit, and a single dollar more flips the verdict to Over the cap before any lender sees the application. Your starting position matters just as much. At 56% LTV before borrowing, the example homeowner has ample headroom. A homeowner already sitting at 80% would find that the same $500,000 house supports very little more, no matter how impressive the equity looks on paper.
Inside the $556.21 payment: $375.00 interest, $181.21 principal — at first
Three inputs set the payment: how much you borrow, the rate, and how long you take to repay. Borrow more and the payment scales in direct proportion. Raise the rate and it climbs. Stretch the term and it falls — though, as the next section shows, at a steep lifetime price. For $60,000 at 7.5% over 15 years, the math lands on $556.21 a month for 180 months. What the fixed payment hides is a moving split underneath it. Each month, interest is charged on whatever balance remains. In month one the balance is the full $60,000, so interest claims $375.00 of the payment — 7.5% divided by twelve, applied to $60,000 — and only $181.21 actually retires debt. Every dollar of principal cleared shrinks the next month's interest charge slightly, freeing a slightly larger slice for principal. The payment never changes; its composition shifts continuously and predictably in your favor. The early years are therefore interest-heavy. Across the first twelve payments of the example loan you hand over $6,674.49 but reduce the balance by just $2,250.82; the other $4,423.67 is interest, and the loan still stands at $57,749.18 on its first anniversary. The pattern inverts near the end, when the balance is small and the interest charged on it smaller still. The calculator's payoff chart draws this crossover directly — the balance line sliding toward zero while the cumulative principal and interest lines climb at changing speeds. One detail worth knowing: the schedule adjusts the very last payment rather than leaving a rounding remainder behind. And because the split depends only on balance, rate, and payment, any extra principal you send early does disproportionate work — it removes the dollars that would have generated interest for the longest time.
Five years or thirty: $782.75 a month versus $78,893.72 in interest
The term-comparison table answers the most consequential choice on the page. The same $60,000 at the same 7.5% produces five very different loans. Over 5 years the payment is $1,202.28 and total interest is $12,136.61. Over 10 years, $712.21 and $25,465.27. The 15-year version costs $556.21 a month and $40,117.33 in interest. At 20 years the payment eases to $483.36 while interest climbs to $56,005.42, and at 30 years you pay $419.53 a month and $91,030.33 in interest — more than one and a half times the amount actually borrowed. Read the table at the margins and a pattern emerges: each additional stretch buys less relief for more money. Moving from 15 to 20 years trims the payment by $72.85 a month but adds $15,888.09 of interest. Moving from 20 to 30 years saves just $63.83 a month and piles on another $35,024.91. The end-to-end spread is stark — the 30-year payment is $782.75 lighter than the 5-year payment, and that relief costs $78,893.72 in extra interest. None of this means short terms are automatically right. A payment you cannot reliably make is worse than a longer, costlier loan you can, because this debt rides on your house. The practical approach is to find the shortest term whose payment fits your budget with room to spare, then confirm the fit against your other obligations — including the first-mortgage payment that continues alongside. Some borrowers split the difference: take a longer term for safety, then pay ahead of schedule as if it were shorter. That strategy only works when the loan carries no prepayment penalty, which is worth confirming before signing rather than discovering after.
After closing: 32% equity left and 17 points of headroom
Borrowing against equity converts ownership into debt, and the calculator states the after picture plainly. Add the $60,000 loan to the $280,000 first mortgage and total liens reach $340,000 — 68% of the $500,000 value, the figure reported as CLTV after the loan. Equity falls from $220,000 to $160,000, or 32% of the home. The composition donut slices the same house three ways: first mortgage, new loan, and what still belongs to you. The verdict badge translates that position into plain language. With a CLTV comfortably below the 85% limit, the example reads Comfortable, holding 17 percentage points of headroom. Land within five points of the limit — above 80% and up to 85% at the default setting — and the badge switches to Near the cap: possibly approvable, but almost nothing separates the request from the ceiling. Above the limit the badge reads Over the cap, meaning the request exceeds what the stated CLTV policy supports; and if the first mortgage by itself already exceeds the home's value — meaning there is no equity at all to lend against — it reads Underwater. Headroom matters because the debt side of the ratio is fixed in dollars while the value side moves with the market. At 68% CLTV the example homeowner can absorb a serious decline: the house would have to fall to $400,000 — a 20% drop — before the $340,000 of combined debt reached 85% of value. A borrower who took the full $145,000 capacity would begin at the cap with no buffer whatsoever, so even a mild market wobble pushes the ratio past the line. Nobody forces an immediate response, but a thin cushion narrows every future option: refinancing gets harder, a sale nets less after costs, and further borrowing is off the table. Equity you decline to tap functions, quietly, as insurance.
$60,000 borrowed, $100,117.33 repaid: reading the interest share
The monthly payment tells you whether a loan fits this month's budget; total repayment tells you what the decision costs over its entire life. In the example, 180 payments of $556.21 — the last one trimmed to zero out the balance — sum to $100,117.33. Of that, $60,000 merely returns what was borrowed. The other $40,117.33 is the price of borrowing it, and the calculator expresses that price as an interest share: 40.1% of every dollar you will repay is interest rather than principal. The share is a useful single number because it folds rate and term into one figure. Hold the rate at 7.5% and the share moves with the term alone: modest on the 5-year loan, where interest totals $12,136.61 against $60,000 of principal, and dominant on the 30-year loan, where interest reaches $91,030.33 — exceeding the amount borrowed. Cross that threshold and the loan has, in a very literal sense, cost more than it delivered: the lender ultimately collects more in interest than you ever received in cash. Long terms and high rates each push toward that line, and in combination they cross it quickly. Two cautions keep the lens honest. First, these are nominal dollars; a payment made in year fourteen weighs less than the same payment today, which softens — but does not erase — the sting of long-term interest totals. Second, interest is not the entire cost: origination and closing charges, covered in a later section, sit outside these figures and raise the true price further, especially on small loans. Interest on a home equity loan may be deductible when the money buys, builds, or substantially improves the home securing it — confirm current rules with a tax professional before counting on any of it.
Why second liens price above first mortgages — and how to shop them
Home equity loan rates generally sit above first-mortgage rates for the same borrower and the same house, and the reason is the recording order established at closing. In a foreclosure sale, proceeds flow down the lien ladder: the first-mortgage lender must be made whole before the second-lien lender receives a dollar. If a distressed sale nets less than the combined debt — common once selling costs and unpaid interest pile up — the shortfall lands almost entirely on the junior lender. Same collateral, same borrower, a very different loss profile, so the second lender charges for the seat it occupies in the queue. The size of that premium is not fixed. It widens with risk: a higher combined loan-to-value ratio means a thinner cushion protecting the junior position, so pricing tiers frequently step up as CLTV climbs. Credit score, loan size, term length, and whether the lender also services your first mortgage all move the quote. This is one reason borrowing less than your maximum can pay twice — it reduces lifetime interest and can drop you into a cheaper pricing tier at the same time. Shopping second liens takes some discipline because quotes arrive in different shapes. Fix the amount and the term, gather rate quotes from several lenders, and run each through this calculator to translate the rate gap into monthly and lifetime dollars — a difference that looks trivial as a decimal can amount to thousands over fifteen years. Watch for quotes that pair a low rate with heavy fees, or that quietly assume a shorter term than you asked about, which flatters the interest total. And weigh any relationship discount honestly: a small rate concession for moving your checking account is only worth taking if the underlying offer was competitive to begin with.
Origination, appraisal, title, recording: what fees do to a small loan
The note rate is not the whole price of an equity loan. Closing brings its own bill: an origination or application charge, an appraisal or automated valuation to establish what the house is worth, a title search and often a lender's title policy to confirm lien position, county recording fees, and smaller items such as credit reports or flood-zone certification. Totals vary by lender and state, part of the list is negotiable, and some lenders charge little or nothing up front — but the pattern of the fees matters as much as the sum. Fees deserve extra scrutiny on equity loans specifically because many are flat rather than proportional. An appraisal costs what it costs whether you borrow $20,000 or $145,000, so the smaller the loan, the larger the fixed charges loom as a share of the money you actually receive. A modest loan can carry an effective borrowing cost meaningfully above its stated rate once fees are counted — one reason very small needs are sometimes served better by products with no closing costs at all, even at a higher rate. Many lenders advertise no-closing-cost equity loans, and the fine print deserves a careful read. Often the lender pays the third-party charges on your behalf but reserves the right to claw them back if you pay off or close the loan within an early window, frequently two or three years. That structure is perfectly workable if you intend to keep the loan for its full term; it becomes an exit tax if you expect to sell or refinance soon. When comparing offers, put fees and rate on one footing: total the fees, add the lifetime interest this calculator reports for each quote, and compare the sums for the same amount and term. The cheapest headline rate does not always win.
The collateral is your house: default, foreclosure, and going underwater
Everything favorable about a home equity loan — the fixed rate, pricing far below unsecured credit, the long menu of terms — flows from a single fact: your home guarantees repayment. If the loan goes unpaid, the lender can force a sale of the property, even while your first mortgage remains perfectly current. Both lien holders share the same collateral, so failure on the second can end your ownership just as surely as failure on the first. A balance that would merely bruise your credit as an unsecured debt becomes a housing problem here, which suggests the honest test to apply before signing: this payment should be one you could carry through a bad year, not just a good one. Falling prices create a second, quieter hazard. The combined debt is fixed in dollars, so a declining market erodes equity from the top down. If value drops far enough that total liens exceed what the house would sell for, you are underwater in the everyday sense. (The calculator's Underwater verdict is stricter still: it appears when the first mortgage alone outweighs the home's value, leaving no equity to lend against.) Underwater owners can usually keep paying and stay put, but their exits disappear: a sale only closes if you can cover the gap out of pocket, and refinancing either lien becomes difficult with nothing left to lend against. This is why borrowing to the very edge of the CLTV cap is fragile even when a lender permits it. Maximum borrowing means minimum cushion; any softness in local prices, any appraisal surprise, any interruption to income arrives with no margin to absorb it. It also concentrates risk in one asset, in one place — the downturn that threatens your job can depress your home's value at the same time. A loan sized well inside your capacity, on a payment well inside your budget, turns a fragile position into a boring one. Boring is the goal with secured debt.
Six experiments to run before you talk to a lender
The fastest way to learn from this calculator is to vary a single input while everything else stays put, then note what moves. Start by trimming the requested amount: drop it in $5,000 steps and watch the monthly payment, lifetime interest, and post-loan CLTV fall together, noting where the verdict badge changes color. Second, work the term decision: for a fixed amount, use the comparison table to find the shortest term whose payment your budget clears comfortably, seeing exactly what each additional five years would cost. Third, stress-test the home value: enter a figure 10% or 20% below your honest estimate and check whether the verdict still reads Comfortable — if a plausible dip pushes the plan over the cap, the request is too large. Fourth, re-run the numbers with each rate quote you collect, since a fraction of a percent moves lifetime interest by real money. Fifth, adjust the CLTV limit in the advanced field to mirror a specific lender's policy; a shop that caps at 80% and one that allows 90% imply very different capacities from identical equity. Sixth, save each variation as a scenario and compare them side by side instead of from memory. Read the capacity bar as a positioning tool: it shows the first mortgage, the requested loan, and the room left under the cap in a single stripe, so a request that nearly fills the bar is a request with no slack. The verdict badge compresses the same geometry into one word. Finally, set the winning scenario against the alternatives at a high level: a line of credit if spending will trickle out over months rather than arrive at once, a cash-out refinance if replacing the first mortgage makes sense on its own merits, an unsecured loan for amounts too small to justify fees and foreclosure exposure. Then print or share the version you would actually sign.
Frequently asked questions
How much can I borrow with a home equity loan?
Lenders set a ceiling on total mortgage debt as a share of your home's value, called a combined loan-to-value (CLTV) limit. The calculator multiplies home value by that limit, subtracts your first-mortgage balance, and reports the result as borrowing capacity. In the built-in example, a $500,000 home under an 85% cap supports $425,000 of total secured debt; after subtracting the $280,000 first mortgage, the largest possible second loan is $145,000. Actual approval also depends on income, credit history, and the appraisal, so treat this figure as a geometry check on your equity, not a guarantee.
What would my monthly payment be on a $60,000 home equity loan?
With the default inputs — $60,000 at a 7.5% fixed rate over 15 years — the payment comes to $556.21 a month for 180 months. That covers principal and interest only. Across the full term you would hand the lender $100,117.33, of which $40,117.33 is interest, meaning 40.1% of everything repaid is the cost of borrowing rather than the debt itself. Adjust the amount, rate, or term in the inputs and the payment recalculates immediately.
What's the difference between a home equity loan and a HELOC?
A home equity loan delivers one fixed sum up front and locks in a rate and payment that never move, which suits a single known expense. A HELOC is a revolving credit line instead: you borrow as needs arise, the rate typically floats, and your bill shifts with the balance and the market. If you want a predictable payment you can budget around for years, the fixed loan wins; if costs will arrive in unpredictable pieces, a line may fit better. This calculator models only the fixed lump-sum loan.
Should I get a home equity loan or a cash-out refinance?
A cash-out refinance replaces your first mortgage with a larger one and pays you the difference, so your original loan and its rate disappear. A home equity loan leaves the first mortgage untouched and adds a separate second loan beside it. Keeping the first loan matters most when its rate is lower than what a new mortgage would carry — you tap equity without repricing debt you already have. The trade-off is a second monthly bill and usually a somewhat higher rate, because the second lender only gets paid after the first if the house is ever sold under distress.
What is CLTV and why do lenders cap it?
CLTV, or combined loan-to-value, is every loan secured by the house — first mortgage plus the new home equity loan — divided by the home's value. In the example, $280,000 plus $60,000 against a $500,000 home works out to a 68% CLTV. Lenders cap it, commonly around 85%, because the house is their collateral: if prices dip or a foreclosure sale becomes necessary, the gap between total debt and value is what shields them from a loss. The cap protects you too, since it forces part of your equity to stay in the property.
What happens if I request more than the lender's limit allows?
The calculator still runs the math, but the verdict badge switches to 'Over the cap' and a warning spells out the shortfall. In the example setup, borrowing capacity is $145,000, so any request above that exceeds what an 85% CLTV limit supports. A real lender would counter with a smaller amount, decline the application, or steer you toward a different product. Inside the tool, either lower the requested amount or — if your lender advertises a looser limit — raise the CLTV cap in the advanced settings and watch how much room that opens up.
Can I get a home equity loan if I'm underwater on my mortgage?
Almost certainly not. Underwater means your first-mortgage balance already exceeds what the home is worth, so available equity is negative and nothing remains for a second lender to secure a loan against. The calculator flags this with an 'Underwater' verdict and shows zero borrowing capacity. Your realistic options are to keep paying down the first mortgage, wait for market value to recover, or both. Once value climbs back above the balance — with enough margin under the lender's CLTV cap — a home equity loan becomes possible again.
How does the loan term change what I pay?
A longer term buys a smaller monthly bill at the price of far more interest. For the same $60,000 at 7.5%, a 10-year term costs $712.21 a month and $25,465.27 in interest, while a 30-year term drops the payment to $419.53 but drives interest to $91,030.33 — over one and a half times the amount borrowed. Stretching the term never makes a loan cheaper; it spreads the cost thinner while the balance lingers and keeps accruing. The term-comparison table in the results lays out all five standard terms so you can choose your trade-off on purpose.
Why doesn't my payment ever change — and is a 0% rate possible?
No lender offers a 0% home equity loan — interest is their entire reason for tying up money against your house — though the calculator will accept 0% for illustration, in which case the payment is simply the principal divided by the number of months. 'Fixed' means constant, not free: the rate is set at closing, and the payment is sized so that a fixed count of identical installments — 180 in the 15-year example — retires the balance. What shifts is the mix inside each payment: the interest portion shrinks as the balance falls while the principal portion grows, but the payment itself holds at $556.21, with the final installment adjusted slightly to land the loan exactly on zero.
Is home equity loan interest tax-deductible?
Sometimes. Under current federal rules, the interest may be deductible when the money goes toward buying, building, or substantially improving the home that secures the loan, and only if you itemize deductions. Spend the proceeds on a car, tuition, or consolidating other debts and the interest is generally not deductible, even though your house backs the loan. Definitions and limits change over time and state treatment varies, so confirm the current rules with a tax professional before counting on any deduction. This calculator shows pre-tax costs only.
What happens to my home equity loan if I sell the house?
Both loans come due at closing. The title company pays off the first mortgage and the home equity loan out of the sale proceeds before you receive a dime, because each lender holds a lien that must be cleared for the buyer to take clean title. Using the example, selling at $500,000 with $280,000 left on the first mortgage and the full $60,000 second loan outstanding would leave you roughly $160,000 before selling costs. If the price can't cover both balances, you'd need lender approval for a short sale or cash to close the gap.
Can I pay off a home equity loan early?
Usually, yes. Extra principal payments shrink the balance ahead of schedule, and every dollar removed stops generating interest for the rest of the term, so prepaying cuts total interest — often substantially. Two cautions: some lenders charge an early-closure or prepayment fee, particularly in the first few years, so read your agreement first; and this calculator assumes you make exactly the scheduled payment each month, which makes its interest totals a ceiling rather than a prediction for anyone who prepays. If you plan aggressive extra payments, compare the scheduled totals here against your own accelerated timeline.
Why do my first payments barely reduce the balance?
Because each month's interest is computed on whatever you still owe, and early on you owe the most. The first $556.21 payment in the example splits into $375.00 of interest and only $181.21 of principal — roughly two-thirds of the check covers the lender's charge, not your debt. After an entire first year of payments totaling $6,674.49, the balance has fallen only to $57,749.18. The split improves every month as the balance drops, and the yearly schedule in the results lets you watch the principal share climb year by year until the loan lands exactly on zero.
Does this calculator include closing costs, fees, or escrow?
No. The results cover principal and interest only. Real-world home equity loans often carry closing costs — origination charges, appraisal, title work, recording — which some lenders collect up front and others fold into the rate or balance. There is no escrow modeled here either: property taxes and homeowners insurance are typically handled through your first mortgage or paid directly, not through a second loan. When comparing offers, set the lender's fee sheet next to these numbers; a low rate with heavy fees can cost more overall than a slightly higher rate with none. Budget fees as their own line item.