How the home equity loan calculator works
A home equity loan is the plainest way to borrow against a house: one amount, handed over at closing, repaid in equal payments at a rate that never changes. People usually reach for one when they know the number already, the roofer's quote or the balance on a card they are done paying 24% on, and want the payment to be the same in year ten as in month one.
Enter your home's value, what you owe on the mortgage, the amount, the rate, and the term. The page works out how much a lender would likely let you borrow, the fixed monthly payment, and what the loan costs in interest. Add closing costs and it converts the rate into the APR you actually pay. It also prices the same money as a HELOC, and, if you switch on the comparison, as a cash-out refinance of your whole mortgage, which in 2026 is the comparison that matters most.
The formula
monthly payment = P × r × (1 + r)n ÷ ((1 + r)n − 1)
blended rate = (mortgage balance × its rate + loan × its rate) ÷ (mortgage balance + loan)
P is the loan amount, r is the monthly rate (the yearly rate divided by 12, as a decimal), and n is the number of monthly payments. The blended rate is the one number that settles the home equity loan versus cash-out refinance question, and the results show it when you compare.
Worked example
A $400,000 home with $220,000 left on the mortgage holds $180,000 of equity. At an 85% limit a lender allows $340,000 of total debt, leaving room to borrow up to $120,000. You borrow $50,000 for ten years at 8.56%, Bankrate's national average for a ten-year home equity loan the week of September 30, 2026.
The payment is $621.53 a month for 120 months. You repay $74,584, so the loan costs $24,584 in interest. With $1,000 of closing costs taken out of the loan, you receive $49,000 and still repay the full $50,000, which makes the true cost an APR of 9.031%.
Home equity loan or cash-out refinance?
Many homeowners with a mortgage today locked their rate when rates were lower than they are now, and that one fact decides this comparison. A cash-out refinance pays off the whole mortgage with a new, larger loan at today's rate. A home equity loan leaves the old mortgage alone and adds a second loan on top. The first option reprices every dollar you owe; the second reprices only the new ones.
Say the $220,000 mortgage is at 3.5% with 24 years left, so it costs $1,130.17 a month. Keeping it and adding the $50,000 loan above brings you to $1,751.70 a month. A cash-out refinance of $270,000 plus $8,100 of closing costs, at 7.40% for 30 years, costs $1,925.51 a month: more each month, even though it stretches the debt over a fresh 30 years, and $293,110 more over the life of the loans. The reason is the blended rate. $220,000 at 3.5% and $50,000 at 8.56% average out to 4.44%, against 7.40% for the refinance.
The rule that falls out of this is simple: compare the blended rate with the refinance rate. With these amounts the mortgage rate would have to be above about 7.1% before a 7.40% refinance became the cheaper rate. When it does win, look at the totals as well as the payment: at a 7.5% mortgage with 28 years left and a 6.25% refinance, the refinance lowers the monthly payment from $2,189.84 to $1,712.31, and still costs $14,896 more in total, because a new 30-year clock charges interest for longer. Both can be the right call; the page shows you which trade you are making.
Fannie Mae caps a cash-out refinance of a one-unit home you live in at 80% of its value, lower than the 85% many home equity lenders allow, so the refinance can also be the smaller check. VA cash-out loans can go to 100%.
Home equity loan or HELOC?
They answer different questions. A home equity loan fits one known amount paid off on a fixed schedule. A HELOC fits money you will spend over time in amounts you do not know yet. This week the line is cheaper: Bankrate's averages are 8.56% for a ten-year loan and 7.29% for a HELOC. On the same $50,000, the HELOC's usual minimum is $303.75 a month interest only for ten years, then $396.40 for 20, about $81,586 of interest over 30 years; paid off over the same ten years as the loan, it would be $588.04 a month against $621.53, if its rate never moved. It will move, with every change in the prime rate, and the fixed loan is what you are paying for: a payment that cannot change.
Closing costs and the APR
Closing costs on a home equity loan commonly run 2% to 5% of the amount, for the appraisal, title work, and origination. When they come out of the loan, you pay interest on money you never received, and the APR is the rate that counts it. The same fee weighs more on a short loan, because it is spread over fewer payments: $1,000 on this $50,000 loan turns 8.56% into an APR of 9.424% over five years, 9.031% over ten, and 8.781% over 30. Compare lenders by APR, not by rate.
Because the loan is secured by your home, federal law gives you three business days after closing to cancel it for any reason.
Every term, same loan
The term trades payment for interest. On $50,000 at 8.56%:
| Term | Monthly payment | Total interest |
|---|---|---|
| 5 years | $1,027.27 | $11,636 |
| 10 years | $621.53 | $24,584 |
| 15 years | $494.13 | $38,943 |
| 20 years | $435.81 | $54,595 |
| 30 years | $386.58 | $89,171 |
Stretching from ten years to 30 lowers the payment by $234.95 a month and multiplies the interest by 3.6. If the money is paying for something that wears out, like a car or a vacation, a term longer than its life means still paying for it after it is gone.
Home equity investments, briefly
A third kind of product, sometimes called a home equity investment or agreement, gives you cash with no monthly payment in exchange for a share of the home's future value, settled when you sell or when the term of 10 to 30 years ends. It is a different trade, and it is priced differently: the Consumer Financial Protection Bureau's 2025 review found the amounts owed in the contracts it studied grew by about 19.5% to 22% a year in the early years. If no monthly payment is what you need, that is the figure to hold up against the rates on this page.
Is home equity loan interest tax deductible?
Only when the money buys, builds, or substantially improves the home that secures the loan, and only if you itemize. The One Big Beautiful Bill Act made that rule permanent in 2025, along with the $750,000 limit on mortgage debt whose interest can count. With a 2026 standard deduction of $16,100 for a single filer and $32,200 for a married couple filing jointly, many households never itemize, so plan on the full payment and treat any deduction as a bonus.
For any other fixed loan, the loan calculator gives the payment; for the mortgage itself, see the mortgage calculator.