Home Equity Calculators: Which One to Use

Each way of turning home equity into cash has its own math, so each needs a different calculator. Most examples use one household: a $380,000 home with $205,000 left on the mortgage.

Option	The question you are asking	Inputs	Core math
HELOC	What will I pay during and after the draw period?	Balance, rate, draw and repayment years	Interest-only payment, then an amortized payment
Home equity loan	Which term fits my budget at the lowest total cost?	Amount, fixed rate, term	Amortized payment and total interest
Cash-out refinance	Is one bigger mortgage cheaper than a second loan?	Current balance, rate and term; new rate; closing costs	Both options' payments and interest
Home equity investment	What will I owe at settlement as my home's value changes?	Cash, investor's share, cap, home price path	Share of future value, limited by the cap
Reverse mortgage (HECM)	How much can I receive, and how fast will the balance grow?	Youngest borrower's age, home value, expected rate	Capped home value times an FHA factor; balance compounds

How much can you borrow against the home?

For the three loans, lenders cap the combined loan-to-value ratio (CLTV): all debt secured by the home, including the new loan, divided by its value.

Borrowing limit = home value × CLTV cap − debt already secured by the home

At an 85% cap: $380,000 × 0.85 − $205,000 = $118,000. At 80%: $99,000.

Bank of America says you can generally borrow up to 85% of your home's value minus what you owe. PenFed allows up to 85% outside Texas and 80% on condos. Texas caps homestead home equity debt at 80% of fair market value. Freddie Mac caps a cash-out refinance of a one-unit primary residence at 80% loan-to-value: $304,000 here, or $99,000 above the current balance before closing costs.

To run your own home value, balance and state through this formula and see the HELOC payments, use HomeEquityCalcs.com. Home Equity Calcs is a free calculator site from the same team as Tools Portfolio.

HELOC: what happens to the payment after the draw period?

A HELOC has two phases. In the draw period, which the CFPB says could last 10 years, you borrow as needed, and some plans allow interest-only payments. After it ends, you stop drawing and repay the balance, often over 10 or 20 years. The rate is usually variable: an index such as the U.S. prime rate (7.00% on October 2, 2026) plus the lender's margin.

Interest-only payment = balance × annual rate ÷ 12

Amortized payment = P × r ÷ (1 − (1 + r)⁻ⁿ), with P the balance, r the monthly rate, n the months.

Worked example

$60,000 drawn at 8.00% (prime plus an example 1.00% margin), 10-year draw, 20-year repayment:

Draw period: $60,000 × 0.08 ÷ 12 = $400 a month
Repayment period: $502 a month
Repayment if the rate rises 2 points to 10%: $579 a month
Interest over 30 years if the rate never changes: $108,447

Mistake: entering a teaser rate. The CFPB describes introductory rates that are unusually low for a short period, such as six months. Use the index plus the margin.
Mistake: treating the limit as guaranteed. Lenders can generally freeze or reduce the line if the home's value falls or your finances get worse.
Mistake: missing a balloon. Some plans require the whole balance when the draw period ends. If you cannot pay it, you could lose your home.

Home equity loan: which term costs the least overall?

A home equity loan pays one lump sum, repaid in regular monthly payments. The CFPB notes the rate may be fixed or adjustable. With a fixed rate, the term is the main choice.

$60,000 at an example fixed 8.50%	Monthly payment	Total interest
10 years	$744	$29,270
15 years	$591	$46,352
20 years	$521	$64,967

Stretching the term from 10 to 20 years lowers the payment by $223 and more than doubles the interest. Avoid picking a term by payment alone, and count closing costs.

Cash-out refinance: is a bigger mortgage cheaper than a second loan?

A cash-out refinance replaces your mortgage with a bigger one and pays you the difference. The CFPB notes that you often pay closing costs and should weigh the rate carefully if it is above your current one.

Suppose the $205,000 balance carries 3.25% with 22 years left, and you need $60,000. Freddie Mac's 30-year average was 7.28% on October 1, 2026, and Fannie Mae adds loan-level price adjustments to certain cash-out refinances, so the example uses 7.50%.

	Keep mortgage, add home equity loan	Cash-out refinance
Loans	$205,000 at 3.25%, 22 years left, plus $60,000 at 8.50% for 15 years	$271,000 at 7.50% for 30 years ($60,000 cash plus example closing costs of $6,000)
Monthly payment	$1,679	$1,895
Interest in year one	$11,587	$20,240

The refinance costs $216 more a month and about $8,650 more interest in year one, because the 3.25% balance is repriced at 7.50%; it also adds 8 years of payments. Home equity loan fees, left out here, would narrow the gap. Compare the refinance payment with your current mortgage plus the new second loan. The CFPB's Explore interest rates tool shows how credit score, down payment, term and loan type move quoted rates for a home purchase.

Home equity investment: what will you owe at settlement?

A home equity investment, also called a home equity contract, pays cash now for one repayment later based partly on your home's value. It is due at the end of the term, often 10 to 30 years, or at a trigger such as a sale. The contract quotes no interest rate, so a loan calculator cannot price it. In the CFPB's example, the homeowner gets 10% of the home's value for a 20% stake in its future value. Companies often add a rate cap, which works like a maximum interest rate; as of 2024, several set it around 18% to 20%, compounded monthly. Processing fees are often 3% to 5% of the upfront cash.

Amount owed (CFPB example structure) = lesser of (share × home value at settlement) and (cash × (1 + cap ÷ 12)^months)

Effective annual cost = (amount owed ÷ cash)^{1 ÷ years} − 1

Each company calculates repayment its own way: some take a share of the gain only, and some start from a home value set below the appraisal (25% below in one CFPB example). Use the formula in your own contract. Example: $38,000 (10% of $380,000) for a 20% share, with a 20% cap.

Settlement scenario	Amount owed	Annual cost before fees
Year 3, home grows 0%, 3% or 5% a year	$68,899 (cap applies)	21.9%
Year 10, home falls 2% a year	$62,098	5.0%
Year 10, home stays at $380,000	$76,000	7.2%
Year 10, home grows 3% a year	$102,138	10.4%
Year 10, home grows 5% a year	$123,796	12.5%

For comparison, $38,000 on a HELOC at 8.00%, interest-only for 10 years, costs $30,400 in interest ($68,400 with principal). The investment has no monthly payment; you pay for that at settlement. If you cannot pay at the end of the term, you risk having to sell the home or facing foreclosure.

Reverse mortgage (HECM): how much can you get, and what will you owe?

A Home Equity Conversion Mortgage (HECM), the most common reverse mortgage, requires the youngest borrower to be 62 or older at closing. There are no monthly loan payments: interest and fees are added to the balance each month.

The amount you can receive, the principal limit, is the maximum claim amount times an FHA factor set by the age of the youngest borrower (or eligible non-borrowing spouse) and the expected interest rate. The maximum claim amount is the appraised value, capped at $1,249,125 for 2026. FHA charges an upfront mortgage insurance premium of 2% of that amount and an annual premium of 0.5% of the balance.

A HECM must be a first lien, so its proceeds first pay off any mortgage. At a 7.0% expected rate, FHA's factor is 0.333 at age 65 and 0.400 at 75: $126,540 or $152,000 on our $380,000 home. Both fall short of the $205,000 owed, so this household would first have to pay down the difference, plus the upfront premium, fees and closing costs the loan must also cover.

Worked example: a $380,000 home with no mortgage

The upfront premium is $380,000 × 2% = $7,600. A $100,000 balance at an example 6.50% rate plus the 0.50% annual premium, compounded monthly, reaches about $200,966 after 10 years and $284,895 after 15, before any financed fees.

The insurance means you never owe more than 95% of the home's value when the loan comes due. You or your heirs repay it, usually by selling the home. Before taking out the loan, you must meet with a HUD-approved housing counseling agency; FHA's counseling agency search lists them by location.

What risks do the calculators leave out?

Your home secures the debt. Fall behind on a HELOC and you could lose the home. A HECM can end in foreclosure if taxes, insurance or upkeep lapse.
Payments change. A variable rate moves the payment without new borrowing, and HELOC payments are often significantly higher once repayment starts.
Fees. Closing costs, annual fees, and a fee for closing a HELOC early, usually within the first two or three years.
Time. Texas home equity loans and lines cannot close until the 12th day after application or the required notice, whichever is later. On a main home, a HELOC can be canceled within three business days of opening or the disclosures, whichever is later, and the lender generally cannot release the money until that window passes.

How to decide: a short checklist

Money needed in stages suits a HELOC; one known amount suits a home equity loan.
If your mortgage rate is well below today's average, price a second loan before refinancing.
Check that you could pay the HELOC repayment at a rate 2 points higher.
For a home equity investment, compute the payoff at 0%, 3% and 5% growth and at year 3.
62 or older and staying put: finish HECM counseling before comparing offers.
Get quotes from several lenders before you choose.

Home Equity Calculators: Which One Answers Which Question