What is the difference between a home equity loan and a HELOC?

A home equity loan gives you a fixed-rate lump sum with equal payments. A HELOC is a variable-rate revolving line of credit you draw from as needed. The loan is better for one known expense; the line is better for flexible or ongoing needs.

What credit score do I need for a home equity loan?

Many lenders look for a credit score of about 620 or higher, with the best rates reserved for scores above 700. You also generally need to keep at least 15% to 20% equity in the home after the loan and have a debt-to-income ratio under roughly 43%.

Home Equity Loan Calculator

See how much you can borrow with a fixed-rate home equity loan — and your exact monthly payment — based on your home value, what you owe, your rate, and your term.

How much can I borrow with a home equity loan? Lenders cap your combined loan-to-value at about 80–85% of your home's value. Your loan is that cap minus your existing mortgage balance, repaid as a fixed lump sum at a set monthly payment. On a $400,000 home with $250,000 owed at an 85% cap, you could borrow about $90,000.

Reviewed by the HomeEquityWise Editorial Team · Last updated May 2026 · How we calculate these numbers

Your details

Home value

Not sure? Just enter your estimate.

Current mortgage balance

Loan amount you want (optional)

Fixed interest rate (%)

Loan term (years)

Max combined loan-to-value (%)

Most lenders cap combined LTV at 80–85%.

Your estimate

Don't want to guess? Premium

Try these options — type your address and we'll pull an instant home value and drop it straight into the calculator. No account, no spam, no realtor calls.

Sites like Ownerly charge ~$35/month — your whole year here costs less than one of their months.

Home equity loan lenders to compare

Reputable lenders that offer fixed-rate home equity loans. We're not paid to list these and this isn't an endorsement — compare at least three offers and confirm terms directly. See our editorial standards.

Discover Home Loans — fixed-rate home equity loans with no origination or appraisal fees
Rocket Mortgage — larger loan amounts and a strong digital process
U.S. Bank — national bank offering fixed home equity loans
TD Bank — small loans from $10k; lower credit-score options
Navy Federal Credit Union — military members/families; competitive fixed rates

How a home equity loan works

A home equity loan — sometimes called a "second mortgage" — lets you borrow a one-time lump sum against the equity in your home while keeping your existing first mortgage exactly as it is. You repay it at a fixed interest rate in equal monthly installments over a set term, so the payment never changes. That predictability is the main reason homeowners choose it over a variable-rate HELOC.

How much you can borrow is limited by your combined loan-to-value (CLTV) — the total of all loans against the home divided by its value — which lenders usually cap at 80–85%. This calculator applies that cap, subtracts your current balance, and amortizes the result at your rate and term.

The formula

Two calculations drive a home equity loan:

Loan available = (home value × max CLTV) − current balance
Monthly payment = the loan amount, amortized at your fixed rate over your term

Worked example

Your home is worth $400,000, you owe $250,000, and the CLTV cap is 85%. The maximum total of loans allowed is $400,000 × 0.85 = $340,000; subtract the $250,000 you owe and you could borrow about $90,000. Take that $90,000 at a 7.5% fixed rate over 15 years and your payment is roughly $834/month — and it stays there for the life of the loan, while your original mortgage keeps its own rate and payment.

Home equity loan vs. HELOC vs. cash-out refinance

All three tap your equity, but they behave very differently:

Option	How you get the cash	Rate	Effect on your mortgage
Home equity loan	One fixed lump sum	Fixed	Keeps it; adds a 2nd payment
HELOC	Revolving line, draw as needed	Variable	Keeps it; adds a credit line
Cash-out refinance	Lump sum; replaces your mortgage	Fixed (whole balance)	Replaces it entirely

For the full breakdown, read cash-out refinance vs. home equity loan.

How to qualify for a home equity loan

Credit score — usually 620+ to qualify, with the best rates above 700.
Equity remaining — most lenders require you to keep 15–20% equity after the loan (the CLTV cap).
Debt-to-income — total monthly debts typically under about 43% of gross income.
Verified income and value — pay stubs or tax returns, plus an appraisal or automated valuation.

What a home equity loan costs

Closing costs are usually far lower than a cash-out refinance because they're based on the smaller second-loan amount — often 2–5% of the loan, and some lenders (like Discover) waive origination and appraisal fees entirely. There's no rate risk once you close, since the rate is fixed. Watch for any early-repayment fees before signing.

When a home equity loan makes sense

It's the right tool when your current mortgage rate is low and worth keeping, you need a single, known lump sum (a renovation, debt consolidation, a major expense), and you want the certainty of a fixed payment. If you'd rather borrow flexibly over time, compare a HELOC; if today's rates are at or below your current rate, a cash-out refinance may be cheaper overall.

Frequently asked questions

How much can I borrow with a home equity loan?

Up to your CLTV cap (usually 80–85%) of the home's value, minus your existing mortgage. On a $400,000 home with $250,000 owed at 85%, that's about $90,000.

What is a home equity loan?

A fixed-rate second loan that gives you a one-time lump sum against your equity while keeping your first mortgage in place, repaid in equal monthly installments over a set term.

How is it different from a HELOC?

A home equity loan is a fixed-rate lump sum with equal payments; a HELOC is a variable-rate revolving line you draw from as needed. The loan suits one known expense; the line suits flexible or ongoing needs.

What credit score do I need?

Usually about 620+, with the best rates above 700. You also generally need 15–20% equity left after the loan and a debt-to-income ratio under roughly 43%.

Sources: CFPB — Home equity loans and HELOCs · CFPB Owning a Home · our methodology.