How much of your equity you can actually borrow
Your equity is the home’s value minus what you still owe — but you can’t tap all of it. Lenders cap your first mortgage plus the new home-equity loan at a combined loan-to-value (CLTV) of about 80–90%, so your borrowing ceiling is that limit minus your current mortgage balance.
For example, on a $450,000 home with a $250,000 mortgage and an 85% CLTV limit, the ceiling is $382,500 of total debt — leaving about $132,500 to borrow, even though your raw equity is $200,000. Raise or lower the CLTV field to match what your lender allows.
Home equity loan vs HELOC vs cash-out refinance
A home equity loan is a lump sum at a fixed rate, repaid on a set schedule — that’s what the payment above models. A HELOC is a revolving line at a usually variable rate: you draw what you need during a draw period, then repay. A cash-out refinance replaces your whole first mortgage with a bigger one — worth comparing on our refinance calculator if today’s rates are near your existing rate. Fixed loans suit one-time costs; HELOCs suit staged spending like a phased renovation.
What lenders check besides equity
Available equity is necessary but not sufficient. Lenders also weigh your credit score, your debt-to-income ratio (run yours on the DTI calculator), and stable income. Because a home-equity loan sits in second position behind your first mortgage, its rate is typically higher than a primary mortgage but lower than an unsecured personal loan or credit card — the home is the collateral.
The real risk — and the tax angle
Your house secures the loan, so falling behind can put it at risk; borrow against a plan to repay, not to cover ongoing shortfalls. On taxes, interest on a home-equity loan is deductible only if the money is used to buy, build, or substantially improve the home that secures it, within the overall mortgage-interest limit — using it for a car or credit-card payoff makes the interest non-deductible. Confirm the current rules with a tax professional or the IRS. To see the loan alongside your existing housing costs, use the mortgage calculator.