Home Equity Term Loan Calculator: Monthly Payment & Interest

A home equity term loan calculator estimates the monthly principal-and-interest payment and total interest on a fixed-rate loan secured by home equity. Enter the amount borrowed, annual percentage rate (APR), and term to see an illustration; the result does not determine how much a lender may offer or approve.

Formula

The calculator uses the standard fixed-payment amortization formula. It first finds the monthly payment, rounds that payment to cents, then estimates total interest from the rounded payment:

• Monthly payment: M = round[P × r ÷ (1 − (1 + r)⁻ⁿ), 2]
• Total interest: I = M × n − P

P is the loan amount in dollars; APR is the annual rate entered as a percentage; r is the monthly rate, APR ÷ 1,200; n is the number of monthly payments, years × 12; M is the monthly principal-and-interest payment in dollars; and I is estimated total interest in dollars. The payment is rounded to the nearest cent before total interest is calculated, so the total reflects the displayed payment.

Worked Example

Using the calculator’s defaults—$20,000 borrowed, 8% APR, and a five-year term:

1. Convert the APR to a monthly rate: r = 8 ÷ 1,200 = 0.0066667.
2. Convert the term to months: n = 5 × 12 = 60.
3. Substitute: M = round[20,000 × 0.0066667 ÷ (1 − (1.0066667)⁻⁶⁰), 2] = $405.53 per month.
4. Calculate interest using the rounded payment: I = $405.53 × 60 − $20,000 = $4,331.80.

The payment amount covers principal and interest under the formula. Actual payment schedules can differ if a lender uses different rounding, dates, or terms.

Assumptions

• The interest rate is fixed for the full term.
• Payments are equal monthly payments, made at the end of each month.
• Interest compounds monthly using APR ÷ 12.
• Fees, taxes, insurance, property costs, and any closing or account charges are not included.

What a Home Equity Term Loan Is

A home equity term loan is generally a lump-sum loan secured by a borrower’s home, repaid in scheduled installments over an agreed term. The loan amount is distinct from the home’s equity: equity is the difference between a home’s value and the balances of debts secured by it. A lender may use its own valuation, underwriting process, and product terms; this calculator does not estimate any of those.

Because the home secures the debt, missed payments can have serious consequences, including the possibility of losing the property through the applicable process. The calculator only models payment arithmetic. It cannot assess personal circumstances, predict approval, or establish whether borrowing is suitable.

How to Use and Read the Estimate

Enter the amount you intend to borrow, the APR supplied for the specific loan offer, and the repayment term in years. Use the rate as a percentage—for example, enter 8 for 8%, not 0.08. The calculator assumes the same rate and payment structure throughout.

• Monthly payment is the scheduled amount toward principal and interest in this simplified model.
• Total interest is the modeled amount paid above the original principal over all scheduled payments.
• Total payments can be inferred as the loan amount plus total interest, but this is not necessarily the complete cost of borrowing because fees and other charges are excluded.

A longer term usually spreads repayment across more months, which can reduce the payment calculated for a given principal and rate while increasing the number of interest-accruing periods. A higher APR or larger principal also changes the payment. These are mathematical effects, not a recommendation about which loan terms to choose.

Costs, Comparisons, and Common Mistakes

Compare estimates only when the principal, APR, term, and payment assumptions are aligned. A quoted APR or payment may not capture every charge or feature. Ask the lender for the complete payment schedule and written disclosures, and use the figures that apply to the particular offer rather than treating an example rate as a quote.

• Confusing equity with available borrowing: home equity is not automatically the amount a lender will lend. The calculator accepts a loan amount but does not calculate an eligible limit.
• Using a monthly rate as the APR: the input is annual APR in percent. The formula divides it by 1,200 to obtain the monthly rate.
• Ignoring excluded charges: fees and other costs can affect the amount received or repaid, but there are no inputs for them here.
• Expecting the final payment to match perfectly: real schedules may adjust a final installment because of payment dates, daily interest calculations, or rounding.

A term loan is also different from a revolving home-equity line of credit: a term loan typically disburses a lump sum and follows a repayment schedule, while a revolving line permits borrowing and repayment under its own terms. This calculator applies only to a fixed-rate, level-payment term-loan illustration, not a variable-rate balance or a draw-and-repay facility.

Frequently Asked Questions

How much will a $20,000 home equity loan cost per month?
It depends on the APR and term. At the calculator’s example inputs of 8% APR and five years, the estimated payment is $405.53 monthly, excluding charges not modeled.

Does this calculator tell me how much equity I can borrow?
No. It calculates payments for an amount you enter. A lender determines whether to make an offer and what amount and conditions apply.

Is a home equity term loan the same as a HELOC?
No. A term loan is generally a lump sum repaid in installments; a HELOC is a revolving credit arrangement. Their rates, access to funds, and repayment terms may differ.

Why might my lender’s payment differ from this estimate?
The lender may include fees, use different payment dates or rounding, or calculate interest differently. Check the lender’s repayment schedule and disclosure for the exact figures.

Does the estimate include taxes or insurance?
No. It estimates principal and interest only and does not include taxes, insurance, fees, or other property-related costs.

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