How your payment is calculated

A home equity loan typically uses a fixed interest rate and a set repayment schedule. The monthly payment is based on the loan amount, the annual rate, and the number of months in the repayment term. This calculator uses a standard amortization formula to estimate the payment you would make each month.

As you pay down the loan, more of each payment goes toward principal and less toward interest. This means the interest portion is highest in the early years of the loan and decreases over time.

Borrowers often compare the monthly payment against the household budget, total interest cost, and available home equity before taking out a loan. A shorter term usually means a higher payment but lower total interest.

• Fixed-rate home equity loans often have predictable payments.
• Longer terms lower the monthly payment but raise total interest.
• Loan cost depends on both interest rate and repayment term.
• Lenders may require appraisal, underwriting, and closing costs.