Home Equity Loan Amortization Calculator

A home equity loan amortization calculator estimates your fixed monthly principal-and-interest payment and total interest from the amount borrowed, annual percentage rate (APR), and repayment term. Enter the loan amount, APR, and term to see those estimates; it does not determine how much you may borrow or include lender-specific charges.

Formula

The calculator uses the standard level-payment amortization formula for a fixed-rate loan. It assumes equal monthly payments and a monthly rate derived from the annual APR:

• Monthly rate: r = APR / 1200, where APR is entered as a percentage per year.
• Number of payments: n = years × 12.
• Monthly payment: M = P × r / [1 − (1 + r)⁻ⁿ].
• Total interest: I = (M × n) − P.

Here, P is the principal, or amount borrowed, in dollars; r is the monthly interest rate as a decimal; n is the number of monthly payments; M is the monthly principal-and-interest payment in dollars; and I is the estimated total interest in dollars. The calculator displays the payment to the nearest cent, then calculates total interest using that displayed payment and the full number of monthly payments.

Worked Example

Using the calculator’s defaults—$20,000 principal, 8% APR, and 5 years:

1. Convert the APR to a monthly rate: 8 / 1200 = 0.0066667.
2. Convert the term to payments: 5 × 12 = 60 months.
3. Apply the payment formula: $20,000 × 0.0066667 / [1 − (1.0066667)⁻⁶⁰] = approximately $405.53 per month, rounded to cents.
4. Calculate total interest using the displayed payment: ($405.53 × 60) − $20,000 = $4,331.80.

These figures are estimates under the assumptions below. A lender’s payment schedule can differ if the actual rate, payment timing, fees, or loan terms differ.

Assumptions

• The interest rate stays fixed for the full term.
• Payments are equal monthly payments made at the end of each monthly period.
• Interest compounds monthly using APR / 12.
• The calculation excludes fees, taxes, insurance, PMI, and escrow; it models only principal and interest.

How Home Equity Loan Amortization Works

A home equity loan provides a lump sum that is repaid over an agreed term. In a fully amortizing loan, each scheduled payment covers the interest accrued for that period and reduces the unpaid principal. Early in the schedule, the interest portion is generally larger because it is calculated on a larger balance. As principal falls, less interest accrues and more of each level payment goes toward principal.

For example, the $405.53 estimate above is not $405.53 of principal reduction every month. The first period’s interest under the model is about $133.33 ($20,000 × 0.0066667), leaving roughly $272.20 of that payment to reduce principal. Later installments have different interest and principal portions even though the scheduled payment remains level. Exact cents in a lender’s schedule may vary because of its calculation and rounding practices.

How to Use and Read the Estimate

Use the amount and repayment term shown in the proposed loan documents, and enter the APR as a percentage—not a decimal. For instance, enter 8 for 8%, rather than 0.08. The APR field is annual, while the formula converts it to a monthly rate. The term is in years, so a 10-year term is entered as 10; the formula multiplies it by 12.

• Monthly payment is the estimated recurring principal-and-interest amount, not necessarily the complete amount due if separate charges apply.
• Total interest is the estimated interest paid over all scheduled installments if payments are made as modeled and the loan runs to the end of its term.
• Changing the inputs helps show how the scheduled payment and cumulative interest respond mathematically to a different principal, APR, or term. It does not predict a lender’s offer.

Compare the same kinds of figures when reviewing estimates: principal-and-interest payment is not the same as a total housing payment, and total interest is not the same as the total amount repaid. The modeled total paid would be monthly payment multiplied by the number of payments; it includes principal as well as interest.

Costs and Limits the Calculator Does Not Show

This calculator does not add origination or other charges, and it cannot determine a lender’s APR or fees. Enter the actual figures supplied for the loan you are evaluating; defaults are only an illustration. If charges are financed into the principal, the amount entered should reflect the amount on which the modeled payments are based. If charges are paid separately, they are not represented in these outputs.

The model also omits property-related taxes, homeowners insurance, escrow, and any other obligations that may be billed separately. It assumes no missed or late payments, rate changes, payment changes, extra principal payments, or early payoff. It is not a loan approval, borrowing-limit, equity, or affordability calculator. For a payment schedule that includes lender-specific dates and rounding, consult the loan disclosure or amortization schedule.

Common Questions and Calculation Pitfalls

A frequent mistake is treating APR as the monthly rate. The formula divides the entered annual percentage by 1,200 to get a monthly decimal rate. Another is interpreting total interest as total repayment: the interest figure excludes the original principal. Remember, too, that the displayed monthly payment covers principal and interest only under this model, not every possible housing cost.

Rounding also matters. The payment is rounded to cents before total interest is calculated, so multiplying the unrounded mathematical payment by the term may produce a slightly different total. A lender may use its own rounding and payment-date conventions, particularly for the first or final payment.

Frequently Asked Questions

What does a home equity loan amortization calculator show?
It estimates a fixed monthly principal-and-interest payment and the total interest over the entered term, based on the principal and APR supplied.

Does the monthly payment include taxes and insurance?
No. This calculator includes principal and interest only. It does not add taxes, insurance, escrow, PMI, or fees.

Why does the interest portion of a payment change?
Interest is calculated on the outstanding balance. As scheduled payments reduce principal, less interest accrues in later periods, so more of a level payment reduces principal.

Does a longer term always mean lower total cost?
No conclusion about a particular loan follows from the term alone. In this fixed-rate model, changing the term changes both the payment and the number of periods over which interest is calculated; use the actual loan inputs to see the arithmetic.

Can I use this calculator for extra payments or a variable rate?
No. The formula assumes equal scheduled payments and a fixed rate, with no extra principal payments. A changing rate or additional payments needs a model that accounts for those details.

The result is an estimate, and the lender’s disclosure gives the exact figures.

Related

• Create a Loan Amortization Schedule
• Daily Interest Loan Amortization Calculator
• Commercial Loan Amortization Schedule Calculator

in p | Loan amount | $ | 20000 | 1 | 100000000
in apr | Interest rate (APR) | % | 8 | 0.01 | 100
in yrs | Loan term | years | 5 | 0.0833 | 50
out pmt | Monthly payment | $ | p * (apr / 1200) / (1 - (1 + apr / 1200) ^ -(yrs * 12)) | 2
out int | Total interest | $ | pmt * yrs * 12 - p | 2