Appraisal, origination, title search, document and notary fees — typically 2–5% of the loan.
Lenders cap the combined loan-to-value ratio (CLTV): your existing mortgage balance plus the new loan, as a share of the home's value. At the common 80% cap, your borrowing room is home value × 80% − mortgage balance. Estimate yours here:
A home equity loan — often called a second mortgage — turns the equity you have built in your home into a one-time lump sum, repaid in fixed monthly payments at a fixed rate over a set term, commonly 5 to 30 years. Because your home secures the loan, rates sit well below credit cards and personal loans — but that security cuts both ways: miss payments and the lender can foreclose. The first calculator above prices a specific loan, closing costs and true APR included; the second estimates how much a lender is likely to let you borrow in the first place.
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Equity alone does not set your limit — the lender's combined loan-to-value cap does. Most lenders stop at 80% CLTV; stronger borrowers sometimes qualify at 85–90%. On a $600,000 home with a $250,000 mortgage, an 80% cap gives $600,000 × 80% = $480,000 of total allowed debt, minus the $250,000 already owed — $230,000 of room, exactly what the calculator above returns. Two more gates apply on top: most lenders cap home equity loans near $1,000,000 regardless of equity, and approval also weighs your credit (scores under roughly 630 often fail) and your debt-to-income ratio, which lenders generally want at or below 43% across all your debts — check it with our debt-to-income calculator.
Expect 2–5% of the loan in closing costs: appraisal, origination, title search, document and notary fees. They are either deducted from your proceeds or paid in cash at closing — and they are exactly why two loans at the same rate can cost different amounts. The APR folds those costs into one annualized figure: on the default loan above, $7,500 of closing costs lifts the true cost from an 8.00% rate to an 8.86% APR. Beware the flip side of convenience: "no-closing-cost" loans simply move the charge into a higher rate or an early-payoff penalty. Compare offers on APR and total cost, never on the headline rate alone — our APR calculator goes deeper.
| Home Equity Loan | HELOC | Cash-Out Refinance | |
|---|---|---|---|
| You receive | One lump sum | A credit line to draw from | Cash from a new, larger first mortgage |
| Rate | Fixed | Usually variable | Fixed or adjustable |
| Payment | Fixed, fully amortizing | Interest-only during the draw period, then repayments | One combined mortgage payment |
| Best for | A known, one-time expense — a roof, a remodel, consolidating card debt | Phased spending — tuition by semester, a staged renovation | When today's mortgage rates beat your current one |
Prefer to draw in stages instead of taking a lump sum? Model the two-phase alternative on our HELOC calculator — it shows the interest-only draw payment and the repayment payment side by side.
One tax caution that shapes the choice for many borrowers: under current IRS rules, interest on home-equity borrowing is generally deductible only when the money goes to buy, build, or substantially improve the home itself. Interest on a loan used to consolidate credit cards usually is not. Rules change and situations differ — confirm with the current IRS guidance or a tax professional before counting on a deduction.
Up to your lender's CLTV cap minus what you already owe: home value × cap − mortgage balance. At 80% on a $600,000 home with a $250,000 mortgage, that is $230,000.
Typically 2–5% of the loan — appraisal, origination, title, document and notary fees. On $150,000, budget roughly $3,000 to $7,500.
Choose the loan for a fixed, known expense and payment certainty; choose a HELOC for flexible, phased draws — accepting that its variable rate can rise.
Yes — the loan is secured by your home, so default can lead to foreclosure. Borrow only what you can repay comfortably, and keep a cash buffer.
Disclaimer: This calculator provides estimates for educational purposes only and does not constitute financial advice. Borrowing limits, rates, and approval depend on the lender, your credit profile, and your home's appraised value.