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Home Equity Loan Formula:
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Zillow's Home Equity Loan Calculator helps homeowners determine how much they can borrow against their home equity. It calculates the maximum loan amount based on your home's value, current mortgage balance, and the lender's loan-to-value ratio requirements.
The calculator uses Zillow's home equity loan formula:
Where:
Explanation: The formula calculates your available equity by multiplying your home value by the maximum LTV ratio, then subtracts your existing mortgage balance to determine how much you can borrow.
Details: Understanding your available home equity is crucial for making informed financial decisions about home improvements, debt consolidation, major purchases, or investment opportunities.
Tips: Enter your home's current market value in dollars, the lender's maximum LTV ratio as a decimal (e.g., 0.8 for 80%), and your current mortgage balance. All values must be positive numbers.
Q1: What is a typical LTV ratio for home equity loans?
A: Most lenders offer LTV ratios between 80-85%, meaning you can borrow up to 80-85% of your home's value minus your existing mortgage balance.
Q2: How accurate should my home value estimate be?
A: For best results, use a recent professional appraisal or Zillow's Zestimate. The calculation is only as accurate as your home value input.
Q3: What if my calculated loan amount is negative?
A: A negative result means your mortgage balance exceeds the maximum loan amount available. You may need to pay down your mortgage or wait for home values to increase.
Q4: Are there other factors that affect loan eligibility?
A: Yes, lenders also consider credit score, debt-to-income ratio, employment history, and property type when approving home equity loans.
Q5: What's the difference between home equity loans and HELOCs?
A: Home equity loans provide a lump sum with fixed rates, while HELOCs offer revolving credit with variable rates. This calculator applies to both.