How much can you borrow against your home, and what will it cost?

How much equity can I borrow against?

Lenders typically cap the combined loan-to-value (CLTV) of your first mortgage plus a new home equity loan at around 80-85% of your home's value, though this varies by lender and your credit profile. Your maximum available equity is your home's value times that CLTV limit, minus whatever you still owe on your existing mortgage — this calculator computes that ceiling automatically and flags it if your desired loan amount goes over it.

Home equity loan vs. HELOC — what's the difference?

A home equity loan gives you a lump sum upfront at a fixed rate, repaid on a set amortization schedule, exactly as modeled above. A HELOC (Home Equity Line of Credit) instead gives you a revolving credit line you draw from as needed, usually at a variable rate, with interest-only payments during an initial draw period before switching to full repayment. See the HELOC Calculator, a companion tool, to model that structure and compare the two side by side for your situation.

Is the interest tax-deductible?

Only if the loan funds are used to buy, build, or substantially improve the home securing the loan, under current US tax law — it isn't a blanket deduction for any use of the money, such as debt consolidation, education costs, or a large purchase unrelated to the home. Consult a tax professional about your specific situation before assuming any deduction applies to your loan.

What happens if I can't repay it?

A home equity loan is secured by your home, meaning it uses the property as collateral just like your primary mortgage. If you default, the lender can foreclose, putting your home at risk — a materially different and more serious risk profile than unsecured debt like most credit cards or personal loans. Borrow only what you're confident you can repay under the terms shown above.

Worked example: a $400,000 home with a $250,000 existing mortgage balance and an 80% max CLTV gives a maximum available equity of $70,000 ($400,000 × 80% − $250,000). Requesting a $50,000 loan — under that $70,000 ceiling, so no warning appears — at 8% over 10 years gives a monthly payment of about $606.64, with total interest over the life of the loan of roughly $22,796.56.