Home Equity Loan Calculator · Practical guide
Home Equity Loan vs HELOC
Same collateral, very different structure — one is a fixed lump sum, the other a flexible credit line. Here's how the costs compare.
At a glance
The short answer
A home equity loan hands you one lump sum at a fixed rate with the same payment every month until it is paid off. A HELOC is a revolving line you draw from as needed, usually at a variable rate, with interest-only payments allowed during the draw period. If you know exactly how much you need and value a predictable payment, choose the loan. If expenses arrive in stages, the HELOC's flexibility earns its keep.
Interactive tool
Home Equity Loan Calculator
Enter your own values, then compare the result with the examples below.
Amortization Schedule
| Year | Interest | Principal | Balance |
|---|
Key differences
| Feature | Home Equity Loan | HELOC |
|---|---|---|
| Payout | One lump sum | Draw as needed, up to a limit |
| Rate | Fixed | Usually variable |
| Payment | Same every month from day one | Interest-only during draw, then P&I |
| Closing costs | Often 2-5% | Usually lower, sometimes waived |
| Best for | One-time costs, consolidation | Phased projects, standby credit |
What $50,000 costs each way
Take $50,000 for a renovation. As a home equity loan at a fixed 6.5% over 15 years, you pay $435.55 a month and about $28,400 in total interest, and the balance falls from the very first payment. As a HELOC at 7% with a 10-year draw, you could pay just $291.67 a month interest-only — but if that is all you pay, you still owe the full $50,000 when repayment starts, the payment then jumps to about $387.64 for 20 more years, and lifetime interest reaches roughly $78,035. The HELOC is cheaper month to month; the loan is far cheaper overall.
Rate risk is the decider for many borrowers
HELOC rates float with the prime rate, so a payment that is comfortable today can rise within months. Home equity loan payments never move. If your budget has little slack, that certainty is worth the loan's slightly higher upfront cost. Run both scenarios — fixed loan above, or the companion HELOC calculator — with the same dollar amount to see the real trade-off.
Frequently Asked Questions
Which is easier to qualify for, a home equity loan or HELOC?
Requirements are similar: typically 15-20% equity, a credit score of 620 or higher, and a debt-to-income ratio under about 43%. HELOCs sometimes have slightly stricter credit standards because the lender takes on variable-rate risk.
Can I have both a home equity loan and a HELOC?
Yes, if your equity and income support both, though few borrowers need two second liens at once. Combined borrowing still must fit within the lender's total loan-to-value cap, usually 80-85%.
Is interest deductible on a home equity loan or HELOC?
For both products, interest may be deductible only when the funds buy, build, or substantially improve the home securing the debt. Using either for other spending generally makes the interest non-deductible. Consult a tax professional.
What happens to a HELOC or home equity loan if I sell my house?
Both are liens on the property and must be paid off from the sale proceeds at closing. If the sale price does not cover all liens, you cannot complete a normal sale without bringing cash or negotiating a short sale.