Home Equity Loan Calculator
Calculate your fixed monthly payment, see your combined LTV, compare home equity loan vs HELOC side-by-side, and find out if your interest is tax deductible — with 2026 rates pre-filled.
How to Use This Calculator
Payment tab
The default tab. Enter your home value, existing mortgage balance, desired loan amount, interest rate, and term to see your fixed monthly payment, total interest, and combined LTV. The calculator also shows the maximum you can borrow at both 80% and 85% CLTV thresholds — so you know exactly how much equity you have to work with.
HEL vs HELOC tab
Enter the amount you need and see a side-by-side comparison of a home equity loan (fixed rate, lump sum, fixed payment) vs a HELOC (variable rate, revolving draws, interest-only draw period). See which has the lower total interest cost, which has lower initial payments, and the key trade-offs for your situation.
Tax Deductibility tab
Select your loan purpose (home improvement, debt consolidation, education, or other). The calculator applies IRS rules (post-2018, made permanent by OBBBA) to tell you whether your interest is deductible, calculates your annual and lifetime tax savings, and shows your after-tax effective rate. Includes the $750,000 combined debt limit check.
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The Formula
Home equity loan payments use the standard fixed-rate amortization formula:
where P = loan amount, r = monthly rate (annual rate / 12), n = months
Example: $80,000 at 7.5% for 15 years (180 months)
r = 7.5% / 12 = 0.625% = 0.00625
Monthly payment = $80,000 × 0.00625 / (1 − 1.00625−180) = $742/mo
Total interest = ($742 × 180) − $80,000 = $53,560
Max borrowable (80% CLTV) = Home Value × 0.80 − Mortgage Balance
Example: $500K × 80% − $300K = $100,000
Combined LTV = (Mortgage + HEL) / Home Value
Example: ($300K + $80K) / $500K = 76% CLTV
Unlike a HELOC, a home equity loan has a fixed rate and fixed payment for the entire term. You know exactly what you owe every month from day one — no payment shock, no rate risk.
Home Equity Loan Rates in April 2026
After five Fed rate cuts since September 2024, home equity loan rates have declined from their 2023–2024 highs:
- Average HEL rate (April 2026): 7.75%–7.92% (Bankrate)
- Excellent credit (740+): 7.25%–7.50%
- Good credit (670–739): 7.75%–8.25%
- Fair credit (580–669): 9.00%–10.50%
- Average HELOC rate: 7.18% (variable, Prime + margin)
- Cash-out refi (30yr fixed): ~7.00%–7.25%
- Personal loan (unsecured): 11%–14% average
HEL rates are slightly higher than HELOCs on average, but they are fixed for life. With the Fed expected to hold rates through mid-2026, HELOC variable rates could begin rising again later in 2026 if economic conditions shift.
Is Home Equity Loan Interest Tax Deductible?
Under the One Big Beautiful Budget Act (OBBBA), which permanently extended TCJA provisions, home equity loan interest is deductible only if funds are used to buy, build, or substantially improve the home securing the loan:
- Deductible: Kitchen remodel, roof replacement, room addition, new HVAC, solar panels, finishing a basement, structural repairs, new deck or patio
- Not deductible: Debt consolidation, credit card payoff, education tuition, car purchase, vacation, medical bills, business expenses
- Combined debt limit: $750,000 total (mortgage + HEL) for full deductibility — permanent under OBBBA ($375K married filing separately)
- Mixed use: If you use funds for both qualifying and non-qualifying purposes, you must allocate interest proportionally (IRS tracing rules)
Example tax savings: $80K at 7.5% for 15yr = ~$5,300 interest in year 1. At 24% marginal rate = $1,272 tax savings in year 1. After-tax effective rate = 7.5% × (1 − 24%) = 5.70%.
Keep all contractor invoices and receipts. The IRS recommends a dedicated bank account for home equity loan proceeds used for home improvement to simplify tracing (IRS Publication 936).
Example: David & Maria
David & Maria, 47, Austin, TX. Home value $500,000. Existing mortgage balance $300,000 at 4.5% (locked in 2021). Need $80,000 to renovate the kitchen and add a master bath.
Tab 1 — Payment
$80,000 at 7.5% for 15 years.
Monthly payment: $742/mo (fixed for 15 years).
Total interest: $53,560.
Combined LTV: ($300K + $80K) / $500K = 76% CLTV — well within the 80% limit.
Max borrowable at 80% CLTV: $500K × 80% − $300K = $100,000.
Tab 2 — HEL vs HELOC
Home equity loan at 7.92%: $750/mo fixed, total interest $55,000.
HELOC at 7.18% (draw period): $479/mo interest-only, then $633/mo at repayment. Total interest $61,000.
Verdict: HEL wins for this use case — they know exactly what the renovation costs, want payment certainty, and the HEL saves ~$6,000 in total interest vs a full-draw HELOC.
Tab 3 — Tax Deductibility
Purpose: home improvement (kitchen + bath). Deductible.
Year 1 interest: ~$5,300. At 22% bracket: $1,166 tax savings.
After-tax effective rate: 7.5% × (1 − 22%) = 5.85%.
Lifetime tax savings over 15 years: ~$8,250.
Why not cash-out refi? Their existing mortgage is at 4.5% — refinancing would replace it with 7.25%, costing them much more on the entire $300K balance.
| Home Equity Loan | HELOC | Cash-Out Refi | |
|---|---|---|---|
| Rate | 7.50% fixed | 7.18% variable | 7.10% fixed |
| Monthly payment | $742 | $479 (draw) | $2,564 (new mtg) |
| Preserves 4.5% mortgage? | Yes | Yes | No |
| Rate risk | None (fixed) | Variable | None (fixed) |
| Closing costs | $1,600–$4,000 | ~$0 | ~$15,200 |
Verdict: Home equity loan wins — fixed payment, preserves their low mortgage rate, tax-deductible for renovation, and much lower closing costs than a cash-out refi.
Home Equity Loan vs HELOC vs Cash-Out Refinance
| Feature | Home Equity Loan | HELOC | Cash-Out Refi |
|---|---|---|---|
| Rate type | Fixed | Variable (fixed lock avail.) | Fixed |
| Avg rate (Apr 2026) | 7.75%–7.92% | 7.18% | ~7.00%–7.25% |
| Disbursement | Lump sum | Revolving draws | Lump sum (replaces mortgage) |
| Closing costs | 2%–5% | Low (often $0) | 2%–6% of full loan |
| Payments | Fixed P&I from day 1 | Interest-only during draw | Fixed P&I |
| Replaces existing mortgage? | No | No | Yes |
| Best for | Known one-time expense | Phased or uncertain costs | Large sum + high existing rate |
Frequently Asked Questions
The national average home equity loan rate is 7.75%–7.92% as of April 2026 (Bankrate). Rates are fixed for the life of the loan. Borrowers with excellent credit (740+) may qualify for rates as low as 7.25%, while fair credit borrowers (580–669) may see 9%–10%+. Shop at least 3 lenders including your current bank and local credit unions.
Most lenders allow you to borrow up to 80%–85% of your home's value minus your existing mortgage balance (Combined Loan-to-Value or CLTV). Example: $500,000 home with $300,000 mortgage: $500K × 80% − $300K = $100,000 maximum at 80% CLTV. Some credit unions allow up to 90% CLTV. You'll need a professional appraisal, which costs $300–$500.
Only if the funds are used to buy, build, or substantially improve the home securing the loan. A kitchen remodel or roof replacement qualifies. Debt consolidation, education costs, or car purchases do not. This rule was made permanent by OBBBA. Combined mortgage + HEL debt limit for deductibility: $750,000 ($375K married filing separately). Keep contractor invoices. See IRS Publication 936.
Home equity loan is better when: you know exactly how much you need, you want payment certainty, you're risk-averse about rates rising, or you need the full amount immediately (e.g., pay a contractor). HELOC is better when: your project costs are uncertain, you need to draw funds over time, or you want to keep low initial payments during a renovation. HELOCs currently have lower rates (avg 7.18% vs 7.92%) but are variable — if Prime rises, your HELOC rate follows.
Home equity loan closing costs are typically 2%–5% of the loan amount, covering: appraisal ($300–$500), origination fee (0.5%–1%), title search and insurance, recording fees, and other lender charges. On an $80,000 loan, expect $1,600–$4,000. Some lenders offer no-closing-cost options by rolling fees into a slightly higher interest rate — compare the total cost over your expected hold period.
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