How a home equity loan payment is worked out
A home equity loan is priced on three numbers. The equity is the home value minus the mortgage balance: $450,000 − $280,000 = $170,000.00. The maximum borrowable is the LTV cap times the home value minus the mortgage balance: 80% × $450,000 − $280,000 = $360,000 − $280,000 = $80,000.00. The monthly payment follows the standard loan formula: the monthly rate is the annual rate divided by 12, the number of payments is the years times 12, and the payment is the loan times the monthly rate times (1 + rate) to the power of the payments, divided by (1 + rate) to the power of the payments minus 1.
At the defaults — home value $450,000, mortgage balance $280,000, LTV cap 80%, loan $50,000, annual rate 8.5%, term 15 years — the monthly rate is 8.5% ÷ 12 = 0.708333%, the payments are 15 × 12 = 180, and the payment is $492.37 a month. The total paid is $492.37 × 180 = $88,626.56, and the interest is $88,626.56 − $50,000 = $38,626.56.
| Case | Monthly payment | Total paid | Interest |
|---|
| Default ($50,000, 8.5%, 15 yr) | $492.37 | $88,626.56 | $38,626.56 |
| $80,000 loan (the max) | $787.79 | $141,802.50 | $61,802.50 |
| $25,000 loan | $246.18 | $44,313.28 | $19,313.28 |
| Rate 7.0% | $449.41 | $80,894.54 | $30,894.54 |
| Rate 10.0% | $537.30 | $96,714.46 | $46,714.46 |
| Term 10 years | $619.93 | $74,391.41 | $24,391.41 |
| Term 30 years | $384.46 | $138,404.43 | $88,404.43 |
| Home value $600,000 | $492.37 | $88,626.56 | $38,626.56 |
| Mortgage $350,000 | $492.37 | $88,626.56 | $38,626.56 |
The worked example, line by line
Setup: home value $450,000, mortgage balance $280,000, LTV cap 80%, loan $50,000, annual rate 8.5%, term 15 years.
Line 1 — the equity. $450,000 − $280,000 = $170,000.00.
Line 2 — the maximum borrowable. 80% × $450,000 − $280,000 = $360,000 − $280,000 = $80,000.00.
Line 3 — the monthly rate. 8.5% ÷ 12 = 0.708333% a month.
Line 4 — the number of payments. 15 × 12 = 180 payments.
Line 5 — the monthly payment. $50,000 × 0.00708333 × (1.00708333)^180 ÷ ((1.00708333)^180 − 1) = $492.37 a month.
Line 6 — the total paid. $492.37 × 180 = $88,626.56.
Line 7 — the interest. $88,626.56 − $50,000 = $38,626.56.
Every branch, checked
$80,000 loan, the maximum: the payment is $787.79 a month, the total paid is $141,802.50, and the interest is $61,802.50. Borrowing the maximum costs $295.42 a month more than borrowing $50,000, because the payment scales with the loan.
$25,000 loan: the payment is $246.18 a month, the total paid is $44,313.28, and the interest is $19,313.28. Halving the loan halves the payment, because the payment is the loan times the same factor at the same rate and term.
Rate 7.0%: the payment is $449.41 a month, the total paid is $80,894.54, and the interest is $30,894.54. A rate 1.5 points lower saves $42.96 a month and $7,732.02 of interest over 15 years.
Rate 10.0%: the payment is $537.30 a month, the total paid is $96,714.46, and the interest is $46,714.46. A rate 1.5 points higher costs $44.93 a month more and $8,087.90 of interest over 15 years.
Term 10 years: the payment is $619.93 a month, the total paid is $74,391.41, and the interest is $24,391.41. A shorter term raises the payment by $127.56 a month but saves $14,235.15 of interest, because the loan is paid off sooner.
Term 30 years: the payment is $384.46 a month, the total paid is $138,404.43, and the interest is $88,404.43. A longer term cuts the payment by $107.91 a month but costs $49,777.87 of extra interest, because the loan runs twice as long.
Home value $600,000: the equity is $600,000 − $280,000 = $320,000.00, and the maximum is 80% × $600,000 − $280,000 = $200,000.00, but the payment stays $492.37, because the payment follows the loan, not the home value. A dearer home raises the ceiling, not the payment.
Mortgage balance $350,000: the equity is $450,000 − $350,000 = $100,000.00, and the maximum is 80% × $450,000 − $350,000 = $10,000.00, but the payment stays $492.37, because the loan is the same $50,000. A bigger mortgage shrinks the ceiling, not the payment — and here the $50,000 loan would be above the $10,000.00 maximum, so it could not be borrowed at these values.
Reverse — the loan a monthly payment affords: $300 a month affords a $30,464.91 loan, $400 a month affords $40,619.88, $600 a month affords $60,929.82, and $800 a month affords $81,239.75, all at 8.5% for 15 years. The $81,239.75 loan is above the $80,000.00 maximum at 80% LTV, so it is not borrowable at these values, while the other three are inside the maximum.
What the defaults assume
The model assumes a fixed rate for the whole term, with the same payment every month, and it assumes the home value and the mortgage balance are as entered. It assumes the LTV cap is 80%, which is the usual cap for a home equity loan, and it assumes the loan is paid off in equal monthly payments with no extra payments, no fees and no closing costs. It leaves out the property taxes, the homeowner’s insurance and the closing costs, which are priced separately, and it leaves out the risk that the home value falls, which would shrink the equity. Rounding convention: money is rounded to cents, and all figures are computed from unrounded values, rounded only for display.
Output · formula · meaning
| Output | Formula | What it means |
|---|
| Equity | home value − mortgage balance | $170,000.00. |
| Max borrowable | LTV cap × home value − mortgage balance | $80,000.00 at 80% LTV. |
| Monthly payment | loan × r × (1+r)^n ÷ ((1+r)^n − 1) | $492.37 a month. |
| Total paid | payment × n | $88,626.56. |
| Total interest | total paid − loan | $38,626.56. |
| $80,000 loan (the max) | same model, $80,000 | $787.79/mo, $141,802.50 total, $61,802.50 interest. |
| $25,000 loan | same model, $25,000 | $246.18/mo, $44,313.28 total, $19,313.28 interest. |
| Rate 7.0% | same model, 7.0% | $449.41/mo, $80,894.54 total, $30,894.54 interest. |
| Rate 10.0% | same model, 10.0% | $537.30/mo, $96,714.46 total, $46,714.46 interest. |
| Term 10 years | same model, 10 years | $619.93/mo, $74,391.41 total, $24,391.41 interest. |
| Term 30 years | same model, 30 years | $384.46/mo, $138,404.43 total, $88,404.43 interest. |
| Home value $600,000 | same model, $600,000 home | Equity $320,000.00, max $200,000.00, payment $492.37. |
| Mortgage $350,000 | same model, $350,000 mortgage | Equity , max , payment . |
| Reverse: $300/mo affords | payment × ((1+r)^n − 1) ÷ (r × (1+r)^n) | $30,464.91. |
| Reverse: $400/mo affords | same inverse formula | $40,619.88. |
| Reverse: $600/mo affords | same inverse formula | $60,929.82. |
| Reverse: $800/mo affords | same inverse formula | $81,239.75 — above the $80,000.00 maximum. |
Who uses this
- The homeowner funding a renovation: they learn a $50,000 loan costs $492.37 a month and $38,626.56 of interest over 15 years — so they know the true cost of the renovation, and they check the $80,000.00 maximum before they plan a bigger job.
- The borrower comparing rates: they learn 7.0% costs $449.41 a month against $537.30 at 10.0% — so they know a 3-point rate gap is worth $87.89 a month, and they check the $30,894.54 of interest against the $46,714.46 before they sign.
- The borrower choosing a term: they learn 10 years costs $619.93 a month and $24,391.41 of interest against $384.46 a month and $88,404.43 of interest at 30 years — so they know the shorter term saves $64,013.02 of interest, and they check the $235.47 a month against their budget.
- The homeowner working from a monthly budget: they learn $400 a month affords a $40,619.88 loan — so they know what their budget buys, and they check the $600 a month at $60,929.82 before they stretch.
Accuracy & limitations
The math is exact for the numbers you enter: the equity is the home value minus the mortgage balance, the maximum is the LTV cap times the home value minus the mortgage balance, the payment follows the standard loan formula, and the total paid is the payment times the number of payments. What the model cannot do is value your home for you: check the home value against recent sales or an appraisal, because a $50,000 error in the value moves the maximum by $40,000 at 80% LTV. It assumes a fixed rate, equal monthly payments, no extra payments, no fees and no closing costs, and it leaves out the property taxes, the homeowner’s insurance and the closing costs. It does not say whether a lender will approve you: the lender checks your credit, your income and the home’s value before it lends. For the mortgage itself, see 15-year vs 30-year mortgage calculator; for the payment schedule, see amortization schedule calculator.
Cite this calculatorBright Side Kit. “Home Equity Loan Calculator: Payment, Equity & Max Loan 2026.” brightoolbox.com, 2026. Method: Equity = home value − mortgage balance; max borrowable = LTV cap × home value − mortgage balance (floor $0.00); monthly rate r = annual rate ÷ 12; n = years × 12; payment = loan × r × (1+r)^n ÷ ((1+r)^n − 1); total paid = payment × n; total interest = total paid − loan. Defaults: home $450,000, mortgage $280,000, LTV 80%, loan $50,000, rate 8.5%, term 15 yr → equity $170,000.00; max $80,000.00; payment $492.37; total $88,626.56; interest $38,626.56; loan $80,000 (max) → $787.79/mo, $141,802.50 total, $61,802.50 interest; loan $25,000 → $246.18/mo, $44,313.28 total, $19,313.28 interest; rate 7.0% → $449.41/mo, $80,894.54 total, $30,894.54 interest; rate 10.0% → $537.30/mo, $96,714.46 total, $46,714.46 interest; term 10 yr → $619.93/mo, $74,391.41 total, $24,391.41 interest; term 30 yr → $384.46/mo, $138,404.43 total, $88,404.43 interest; home $600,000 → equity $320,000.00, max $200,000.00, payment $492.37; mortgage $350,000 → equity $100,000.00, max $10,000.00, payment $492.37; reverses: $300/mo → $30,464.91; $400/mo → $40,619.88; $600/mo → $60,929.82; $800/mo → $81,239.75 (above the $80,000.00 maximum, not borrowable). Bright Side Kit. "Home Equity Loan Calculator: Payment, Equity & Max Loan 2026." https://brightoolbox.com/home-equity-loan-calculator/ Accessed October 25, 2026.
Embed this calculatorPaste this into any web page to embed the live calculator. The “Powered by Bright Side Kit” link below it must stay intact.