This calculator uses your equity and loan-to-value ratio to determine how much you’re eligible to borrow against your home.
What you’ll need:
- The estimated value of your property. Only a professional appraiser can provide an official valuation. Tools like Zillow or Homes.com can provide estimates.
- Your mortgage balance. You can find this on your most recent mortgage statement or by checking in with your mortgage provider online.
Plug these two numbers into our home equity calculator below to get an estimate of the amount of equity you can start putting towards your financial goals!
Home Equity Loan Calculator
Your home equity is the difference between the amount you owe on your mortgage and the amount your home is worth. For instance, if you owe $150,000 on your home but your home’s current value is $250,000, you have $100,000 worth of equity in your home.
There are two main financial tools which allow borrowers to generate funds by tapping their home equity: A Home Equity Line of Credit (HELOC) and a Home Equity Loan (HELOAN). We’ll go beyond the basics to help you understand exactly how these products work. And with the right information at hand, you can even check your HELOAN’s or HELOC’s size and rates.
What Is Loan-to-Value Ratio?
Your loan-to-value ratio describes the amount you can borrow as a percentage of the value of the property securing the loan. Lenders use this as a metric to determine the risk of a loan.
The loan-to-value ratio is calculated by dividing your outstanding mortgage amount by the current value of your house (as you estimated to determine your equity). To reuse the previous example, let’s say you have a home worth $250,000 but you’re carrying a mortgage principal of $150,000, giving you $100,000 in equity. Divide the mortgage principal by the home’s value. In this example, there’s a 60% LTV ratio. As a general rule of thumb, banks won’t allow you to access equity if you owe over 80% of the home’s worth.
Home Equity Loan Calculator: Your Credit Score and Loan Eligibility
The final metric used in determining your eligibility for a HELOAN or HELOC is your credit score. In short, your credit score is a three-digit number that gives lenders an idea of your risk level as a borrower. Factors affecting your credit score include:
- Payment history
- Credit utilization
- Length of credit history
- New activity
- Credit mix
- Negative history
So keep in mind that while the calculator will show you the size of the line of credit or loan you may be eligible for, that decision won’t be final until the lender analyzes your credit.
About Home Equity Loans (HELOAN)
A Home Equity Loan or HELOAN is paid out as an up-front lump sum, with a fixed repayment term. Most HELOANs have a fixed interest rate, and fixed payments for the duration of the repayment period. If you know how much you need or want to guard against any temptation to let your spending get ahead of you, then a HELOAN could be a good option for you.
A HELOAN can be best for borrowers with the following expenses:
- A home renovation/expansion with a set budget
- A one-time personal expense such as a vacation, medical bill or wedding
- Consolidation of higher-interest debt (like credit cards)
- Franchise fees or other one-time costs to start a business
Home Equity Loan vs. Line of Credit
Home Equity Loans and Home Equity Lines of Credit (HELOC) use your home equity as collateral to offer you financing options with attractive rates. This provides funds for borrowers to consolidate higher-interest debt, make home improvements, start a business or whatever you wish. Which one is best for you? Find out here!
So why use a HELOC instead of a credit card? Since it’s secured by your home, HELOCs typically have a much lower interest rate than credit cards or other unsecured loans. This, combined with the ability to withdraw and repay funds as needed and the flexible payment structure, makes a HELOC the best of both worlds between a credit card and a HELOAN for many use cases.
If you’d like to see how large a line amount you might be able to access and at what rates, you can start your HELOC application here.
IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT.
To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account.
What this means for you: When you open an account, we will ask for your name, address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents.
Eligibility for a home equity loan or HELOC up to $500,000 depends on the information provided in the home equity application. Loans above $250,000 require an in-home appraisal and title insurance. For HELOCs borrowers must take an initial draw of $50,000 at closing. Subsequent HELOC draws are prohibited during the first 90 days following closing. After the first 90 days following closing, subsequent HELOC draws must be $1,000 or more (not applicable in Texas).
The time it takes to get cash is measured from the time the Lending Partner receives all documents requested from the applicant and assumes the applicant’s stated income, property and title information provided in the loan application matches the requested documents and any supporting information. Spring EQ borrowers get their cash on average in 26 days. The time period calculation to get cash is based on the first 6 months of 2022 loan fundings, assumes the funds are wired, excludes weekends, and excludes the government-mandated disclosure waiting period. The amount of time it takes to get cash will vary depending on the applicant’s respective financial circumstances and the Lending Partner’s current volume of applications.
Spring EQ cannot use a borrower’s home equity funds to pay (in part or in full) Spring EQ non-homestead debt at account opening. For HELOCs in Texas, the minimum draw amount is $4,000. To access HELOC funds, borrower must request convenience checks.
Interest rates may be adjusted based on factors related to the applicant’s credit profile, income and debt ratios, the presence of existing liens against and the location of the subject property, the occupancy status of the subject property, as well as the initial draw amount taken at the time of closing. Speak to a Prosper Agent for details.
Qualified applicants may borrow up to 95% of their primary home’s value (not applicable in Texas) and up to 90% of the value of a second home. Home equity loan applicants may borrow up to 85% of the value of an investment property (not applicable for HELOCs).
All home equity products are underwritten and issued by Spring EQ, LLC, an Equal Housing Lender. NMLS #1464945.
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