| Year | Payments | Principal | Interest | End Balance |
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Home Equity Loan Payments by Term
The table below compares monthly payments and total costs across all available terms at the current rate. Shorter terms cost more per month but save significantly on total interest — use this home equity calculator to find your ideal balance.
| Term | Monthly Payment | Total Interest | Total Cost | Interest Savings vs 30yr |
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How Much Equity Do You Have?
Enter your home value and mortgage balance to estimate how much you could borrow with a home equity loan.
What Is a Home Equity Loan?
A home equity loan lets you borrow a lump sum against the equity you've built in your home. Unlike a HELOC, which provides a revolving credit line with variable rates, a home equity loan gives you the full amount upfront at a fixed interest rate with predictable monthly payments for the entire loan term.
Because the rate is fixed, your monthly payment never changes — making home equity loans easier to budget for than variable-rate alternatives. This home equity calculator helps you estimate loan payments, compare terms, and determine how much equity is available to borrow against.
How Home Equity Loan Payments Work
Home equity loan payments are fully amortizing from day one. Each monthly payment includes both principal and interest, calculated using the standard amortization formula. Early in the loan, most of your payment goes toward interest. Over time, the principal portion grows as the balance decreases.
Home Equity Loan Rates in 2026
As of early 2026, average home equity loan rates range from 7.25% to 8.75% depending on credit score, loan-to-value ratio, and term length. Unlike HELOCs, home equity loan rates are fixed at origination and do not change with market conditions.
Key factors that affect your rate:
- Credit score: Borrowers with 740+ scores typically receive rates 1-2% lower than those with 680-739 scores.
- Loan-to-value ratio: Keeping combined LTV below 80% earns better rates — use our home equity calculator to check yours.
- Loan term: Shorter terms (5-10 years) often carry slightly lower rates than 20-30 year terms.
- Loan amount: Very small loans (under $25,000) may carry higher rates due to fixed origination costs.
Home Equity Loan Pros and Cons
Advantages
- Fixed rate — payments never change
- Predictable budgeting from day one
- Lower rates than personal loans or credit cards
- Interest may be tax deductible if used for home improvements
- Receive full amount upfront for large expenses
- No risk of rate increases over the loan term
Drawbacks
- Higher rates than primary mortgages (1-2% premium)
- Closing costs of 2-5% of loan amount
- Your home is collateral — risk of foreclosure if you default
- Less flexible than a HELOC — cannot redraw repaid amounts
- Full interest charged on entire balance from day one
- No interest-only payment option during any period
Home Equity Loan vs HELOC: Which Is Right for You?
Both products let you borrow against your home equity, but they serve different purposes:
- Choose a home equity loan if you have a specific, one-time expense with a known cost (kitchen remodel, debt consolidation, medical bills), you want the certainty of fixed payments, or you're concerned about rising interest rates.
- Choose a HELOC if you need flexible access to funds over time (phased renovation, education costs, emergency reserve), you want lower initial payments during the draw period, or you plan to use only part of your available equity.
Use our HELOC calculator to compare variable-rate HELOC costs against the fixed-rate estimates from this home equity calculator. The HELOC calculator includes a side-by-side comparison tab that models both options with your specific numbers.
Common Uses for Home Equity Loans
- Home renovations: The most common use — renovations with a fixed budget and timeline are ideal for a lump-sum home equity loan. Interest may be tax deductible when funds improve the securing property.
- Debt consolidation: Replacing high-interest credit card debt (15-25% APR) with a home equity loan (7-9% APR) can cut interest costs significantly. Remember that this converts unsecured debt to secured debt.
- Major purchases: Large one-time expenses like medical bills, wedding costs, or vehicle purchases. Home equity rates are typically lower than personal loan rates.
- Education expenses: Some borrowers use home equity loans for tuition. Rates may be lower than private student loans, though federal loans offer protections that home equity loans do not.
Tips for Getting the Best Home Equity Loan Rate
- Check your credit score first — scores of 740+ qualify for the best rates. If below 700, consider improving it before applying.
- Keep combined LTV below 80% — lenders reserve the best rates for borrowers who maintain at least 20% equity after the loan. Use the equity estimator above.
- Compare at least 3 lenders — rates and closing costs vary significantly. Include your primary mortgage lender, a credit union, and an online lender.
- Choose the shortest term you can afford — shorter terms carry lower rates and much less total interest. This home equity loan calculator shows the difference.
- Negotiate closing costs — some lenders will waive or reduce origination fees, appraisal fees, or other closing costs for qualified borrowers.
- Consider timing — home equity loan rates generally follow the 10-year Treasury yield. If rates are trending down, waiting a few months could save money.
Home Equity Loan FAQ
As of early 2026, average home equity loan rates range from 7.25% to 8.75% for borrowers with good credit. Unlike HELOCs, home equity loans carry fixed rates that remain the same for the life of the loan. Rates depend on your credit score, loan-to-value ratio, loan amount, and chosen term length.
Most lenders allow you to borrow up to 80-85% of your home's appraised value minus your existing mortgage balance. For example, if your home is worth $400,000 and you owe $250,000 with an 80% LTV limit, you could borrow up to $70,000. Use the equity estimator in our home equity calculator above to check yours.
A home equity loan provides a one-time lump sum at a fixed interest rate with predictable monthly payments. A HELOC is a revolving credit line with a variable rate that lets you draw funds as needed. Home equity loans are better for one-time expenses with a known cost. HELOCs are better for ongoing or unpredictable expenses. Use our HELOC calculator to compare both options.
Interest on a home equity loan may be tax deductible if the funds are used to buy, build, or substantially improve the home that secures the loan. Interest on funds used for other purposes — such as debt consolidation or personal expenses — is generally not deductible under the Tax Cuts and Jobs Act. The combined mortgage and home equity loan debt limit for deductibility is $750,000. Consult a tax professional for guidance specific to your situation.
The home equity loan process typically takes 2 to 6 weeks from application to funding. This includes the application, appraisal (1-2 weeks), underwriting (1-2 weeks), and closing. Some lenders offer expedited processing in as little as 2 weeks for straightforward applications with strong credit profiles.
Most home equity loans can be paid off early without prepayment penalties. However, some lenders charge a prepayment fee during the first 2-3 years. Paying extra toward principal each month reduces your total interest cost and shortens the payoff timeline. Check your loan agreement for specific terms.
Most lenders require a minimum credit score of 620-680, though scores of 740 or above qualify for the best rates. In addition to credit score, lenders evaluate your debt-to-income ratio (typically under 43%), loan-to-value ratio, employment history, and income stability.
Yes. A home equity loan is a type of second mortgage — it is secured by your home and is subordinate to your primary mortgage. If you default, the primary mortgage lender is paid first. Because of this added risk, home equity loan rates are typically 1-2% higher than primary mortgage rates.