Home Equity Loan Payment Calculator and Formula

This calculator estimates the fixed monthly payment on a home equity loan from the amount borrowed, annual percentage rate (APR), and repayment term. Enter those three figures to see the monthly payment and estimated total interest; the result assumes level payments and a fixed rate.

Formula

The calculator uses the standard level-payment loan formula. It first converts the annual APR to a monthly rate, then calculates the payment that would repay the starting balance over the selected number of monthly payments.

• Monthly payment: M = round(P × r ÷ [1 − (1 + r)⁻ⁿ], 2)
• Total interest: I = M × n − P
• Monthly rate: r = APR ÷ 1,200
• Number of payments: n = years × 12

P is the loan amount in dollars, APR is the annual percentage rate entered as a percentage, r is the monthly rate as a decimal, n is the number of monthly payments, M is the monthly payment in dollars rounded to cents, and I is estimated total interest in dollars. The total-interest calculation uses the rounded monthly payment shown by the calculator.

Worked Example

Using the calculator defaults—$20,000 borrowed, 8% APR, and five years—the loan has 60 monthly payments.

1. Convert APR to a monthly rate: 8 ÷ 1,200 = 0.0066667.
2. Set the payment count: 5 × 12 = 60.
3. Apply the payment formula: $20,000 × 0.0066667 ÷ [1 − (1.0066667)⁻⁶⁰] = $405.53 per month, rounded to cents.
4. Calculate estimated total interest using that rounded payment: $405.53 × 60 − $20,000 = $4,331.80.

The results are an estimated monthly payment of $405.53 and estimated total interest of $4,331.80.

Assumptions

• The interest rate is fixed for the full repayment term.
• Payments are equal, made monthly, and begin one month after borrowing.
• Interest compounds monthly using APR divided by 12.
• The estimate excludes lender fees, taxes, insurance, and escrow; none is included as a calculator input.

What a Home Equity Loan Payment Represents

A home equity loan is generally structured as a lump-sum loan secured by the borrower’s home. The payment is usually made up of principal—the amount being repaid—and interest charged on the remaining balance. Unlike a revolving line of credit, a home equity loan typically has a stated repayment schedule, so a fixed-rate loan’s scheduled principal-and-interest payment stays level when payments are made as agreed.

“Home equity” is commonly used to describe the difference between a home’s value and the debt secured by it. That figure is not the same as the amount a lender will offer. Loan availability and terms depend on information the calculator does not collect, and those figures must come from the lender. This page calculates payment arithmetic only; it does not determine eligibility or the amount available to borrow.

How to Read and Use the Estimate

The monthly payment is the scheduled principal-and-interest amount under the entered assumptions, not necessarily the complete monthly cost of owning the home or borrowing. A lender’s bill or payment arrangement may include separate charges. Compare the estimate with the lender’s written figures and check that the amount borrowed, APR, term, and payment frequency match.

The total-interest result is an estimate across the full term if all scheduled payments are made and the loan follows the modeled fixed-rate schedule. It is not the total amount repaid: add the original loan amount to total interest to get the modeled principal-plus-interest total. In the example, that sum is $24,331.80. Rounding each monthly payment to cents can make this estimate differ slightly from a lender’s final payment schedule, especially if the lender adjusts the last payment.

For a useful estimate, enter the proposed loan principal rather than the home’s value or equity, use APR as a percentage (for example, enter 8 for 8%), and enter the term in years. The calculator converts APR to a monthly rate and years to monthly payments automatically. If the lender quotes a variable rate, a payment may change over time, so this fixed-rate calculation will not describe later payments.

Costs and Limits the Formula Does Not Capture

The formula isolates scheduled principal and interest. It does not account for closing or other borrowing costs, any charges added to the balance, late payments, payment holidays, or additional principal payments. It also does not model a rate change, irregular payment dates, or a final payment adjusted to clear a remaining balance. Ask the lender for the actual payment schedule and for a breakdown of charges rather than treating this estimate as a quote.

APR is an input, not a prediction or a rate recommendation. The default 8% is only an example for demonstrating the arithmetic. Enter the rate and fees relevant to a specific offer as provided by the lender; fee treatment can differ, and this calculator does not separately model fees. The payment formula also assumes that the entered APR is positive, as required by the calculator’s input range.

Common Misunderstandings

• “The payment is my total housing cost.” It is only the modeled home equity loan principal-and-interest payment; other housing and borrowing costs may be separate.
• “Equity equals the loan amount.” Equity is a description of a home’s value relative to debt, while the principal entered here is the amount borrowed.
• “A lower payment always means lower cost.” A longer term can reduce the scheduled monthly payment while increasing the number of payments and potentially the total interest. This calculator displays the term and estimated interest so both can be considered.
• “The estimate proves I qualify.” It does not assess approval, collateral value, underwriting, or any lender-specific conditions.

Frequently Asked Questions

How do I calculate a home equity loan payment?
Use the loan amount, monthly interest rate (APR divided by 1,200), and number of monthly payments in the level-payment formula shown above. The calculator performs those steps and rounds the payment to cents.

Does a home equity loan payment include taxes and insurance?
Not in this estimate. It calculates principal and interest only; taxes, insurance, escrow, and fees are not inputs and may be handled separately.

Why does a longer loan term reduce the monthly payment?
The same principal is spread over more scheduled payments. Because interest accrues during the longer repayment period, total interest can be higher even when the monthly payment is lower.

Is a home equity loan payment fixed?
A payment can remain level under the assumptions here—a fixed interest rate and equal monthly payments. Check the loan’s actual terms; a variable rate or other contract features are not modeled.

Is the calculator result the amount a lender will approve?
No. It estimates payment arithmetic only and does not evaluate eligibility, property value, or lender requirements. Get the loan terms and payment schedule from the lender.

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

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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 | $ | round(p * (apr / 1200) / (1 - (1 + apr / 1200) ^ -(yrs * 12)), 2) | 2
out int | Total interest | $ | pmt * yrs * 12 - p | 2