Home Equity Loan Payment Calculator and Costs

This calculator estimates the monthly principal-and-interest payment and total interest on a fixed-rate home equity loan. Enter the amount borrowed, annual APR, and repayment term to see the payment and the interest calculated using that payment.

Formula

The calculator uses the standard amortizing-loan payment formula. It assumes equal monthly payments and a fixed APR over the full term:

Monthly payment = P × r ÷ [1 − (1 + r)⁻ⁿ]

Total interest = (monthly payment × n) − P

• P is the amount borrowed, in dollars.
• r is the monthly interest rate, calculated as APR ÷ 1,200. APR is entered as a percentage per year.
• n is the number of monthly payments, calculated as loan term in years × 12.

The monthly payment is rounded to the nearest cent before total interest is calculated. The formula does not estimate what a lender will offer or include charges outside principal and interest.

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: 8 ÷ 1,200 = 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] = $405.53 per month, rounded to cents.
4. Calculate total interest using the rounded payment: ($405.53 × 60) − $20,000 = $4,331.80.

Under these assumptions, the estimated payment is $405.53 per month, and estimated total interest is $4,331.80. Actual lender figures may differ because a contract can use different payment details or include charges not represented here.

Assumptions

• The interest rate is fixed and remains unchanged throughout the term.
• Payments are made monthly, at the end of each monthly period.
• Interest accrues monthly using the APR divided by 12.
• The calculation excludes fees, taxes, insurance, PMI, escrow, and any charges not entered as inputs.

What a Home Equity Loan Costs

A home equity loan is generally structured as a lump sum repaid in scheduled installments. Its cost is not just the amount borrowed: interest adds to the repayment total, and a lender may also quote fees or other charges. Those charges are not included in this calculator, so the calculator’s total interest is not the same as the full cost shown in a loan disclosure.

For instance, borrowing $20,000 does not mean repaying only $20,000. In the example, the 60 rounded monthly payments total $24,331.80: $20,000 of principal and $4,331.80 of modeled interest. A different APR or term changes the result. For a given amount and APR, extending the term generally lowers the scheduled payment but gives interest more time to accrue; shortening it generally raises the payment and reduces the number of interest-accruing months.

Ask the lender for the actual APR, payment schedule, itemized charges, and total repayment figures before relying on a quote. Enter the offered amount, APR, and term here to make a like-for-like arithmetic estimate. Do not treat the calculator’s default APR as a market rate or an offer.

How Home Equity Loans Work

Home equity is the portion of a home’s value not represented by debt secured against it. A home equity loan uses the home as collateral and provides a set loan amount that is typically repaid over a defined period. Because the home secures the debt, missed payments can have serious consequences, including risk to the property. The calculator models repayment mathematics only; it does not assess collateral, eligibility, or the consequences of borrowing.

This differs from a home equity line of credit (HELOC), which is generally a revolving credit arrangement rather than one fixed lump-sum loan. A HELOC can have different draw and repayment phases and may use a variable rate. The fixed-rate amortization formula on this page is not designed to calculate a HELOC balance or payment. Compare the actual product terms and disclosures, not just a headline payment.

Using the Estimate Carefully

Use the principal amount you expect to borrow, not your home’s estimated value or your available equity. Enter APR as a percentage—for example, enter 8 for 8%, not 0.08—and enter the term in years. A mismatch in units can produce a dramatically incorrect result. The calculator accepts terms from 0.0833 to 50 years; its payment count is the entered term multiplied by 12.

Interpret the monthly payment as modeled principal and interest, not a complete household cost or an approval decision. The result assumes the payment is made on schedule and the rate does not change. It does not establish the amount a lender may offer, whether an application would be approved, or how much borrowing is appropriate for any person.

• Use lender-provided figures for the APR and loan term; the defaults are illustrative inputs only.
• Check whether a quote includes fees or other charges that are absent from the formula.
• Compare the same borrowed amount and repayment period when checking payment estimates.
• Remember that rounding can create a small difference from a lender’s final payment schedule.

Frequently Asked Questions

How much is the monthly payment on a $20,000 home equity loan?
It depends on the APR and term. At the calculator’s illustrative defaults of 8% APR for five years, the estimated monthly principal-and-interest payment is $405.53. This is not a lender quote.

Does this calculator show the full cost of a home equity loan?
No. It estimates principal-and-interest payments and total interest under the entered assumptions. Fees, taxes, insurance, and other charges are excluded unless represented by an input, and this calculator has no such inputs.

Does a longer term make a home equity loan cheaper?
It usually reduces the scheduled monthly payment for the same principal and APR, but the loan runs for more months and can accumulate more interest. Compare the payment and total repayment figures together.

Is a home equity loan the same as a HELOC?
No. A home equity loan is generally a lump-sum loan with scheduled repayment, while a HELOC is generally revolving credit with terms that can include a draw period. This calculator applies only to a fixed-rate, level-payment loan.

Can the estimate tell me how much I can borrow?
No. It calculates payment and interest for an amount you enter. It does not evaluate a home, an application, eligibility, or a lender’s terms.

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

Related

• Home Equity Loan Payment Calculator and Formula
• Home Equity Loan Payment Calculator: Free Estimate
• Home Equity Loan for $1 Million: Payment 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