Introduction
A second mortgage lets you borrow money using the equity in your home. Equity is the part of your home you already own: your home's value minus what you still owe on your first mortgage. This 2nd Mortgage Calculator shows what that loan would cost you each month and over time.
You can check two kinds of second mortgages:
- Home Equity Loan: you get all the cash at once and pay a fixed amount every month.
- HELOC: a credit line you draw from as needed, with a rate that can change.
Type in your home value, your first mortgage balance, how much you want to borrow, and your interest rate. The calculator gives you your monthly payment, total interest, total cost, and your payoff date. It also checks your CLTV (combined loan-to-value) against your lender's limit, so you know if you can even qualify, and how much you can borrow at most.
You also get a full amortization schedule, charts, a side-by-side loan vs. HELOC comparison, and step-by-step math so you can see how every number was found. Add an extra monthly payment to see how much interest you save and how many months you cut off your loan.
How to use our 2nd Mortgage Calculator
Enter your home value, your first mortgage balance, and the amount you want to borrow. The 2nd mortgage calculator shows your equity, your combined loan-to-value (CLTV), your monthly payment, total interest, total cost, and a full amortization schedule.
Home Equity Loan or HELOC tab: Pick the tab that matches your loan. Choose "Home Equity Loan" for one fixed lump sum, or "HELOC" for a credit line you draw from over time.
Home Appraised Value: Type what your home is worth today. Use a recent appraisal or a market estimate.
Remaining Balance on 1st Mortgage: Type how much you still owe on your main home loan. Your latest mortgage statement shows this number.
Desired 2nd Mortgage / Credit Line: Type how much you want to borrow. For a HELOC, enter the full credit line, not just your first draw.
Annual Interest Rate: Type the rate your lender quoted. Use the fixed rate for a home equity loan, or the current rate for a HELOC.
Loan Term (Home Equity Loan): Pick how many years you will take to pay the loan back. A shorter term means a higher payment but less interest.
Lender's Maximum CLTV: Type the highest combined loan-to-value your lender allows. Most lenders cap it near 80% to 90%.
Origination / Closing Costs: Type the one-time fees to open the loan. Include the appraisal, title, and lender fees.
How Are Costs Paid? Choose "Pay upfront" if you pay fees in cash. Choose "Include in loan" to add them to the balance, which raises your payment.
Extra Monthly Payment: Type any extra money you will pay each month toward principal. The calculator shows the interest and time you save.
Initial Draw at Closing: For a HELOC, type how much you will borrow on day one.
Additional Monthly Draw: Type how much more you plan to take out each month while the line is open. Enter 0 if you will not draw again.
Draw Period: Pick how many years you can borrow from the line. Ten years is common.
Repayment Period: Pick how many years you have to pay the balance off after the draw period ends.
Lifetime Rate Cap: Type the highest rate your HELOC can ever reach. This is in your loan papers.
Rate Adjustment Scenario: Choose best case, moderate, or worst case to see how a rate change would move your repayment payment.
Interest-only during draw period: Leave this on if you only pay interest while drawing. Turn it off to pay principal and interest from the start.
Calculate and Reset: Results update as you type, but you can click Calculate to refresh. Click Reset to return to the default numbers.
What Is a Second Mortgage?
A second mortgage is a loan that uses your home as backing, on top of the mortgage you already have.5 Your first mortgage stays in place. The new loan sits "behind" it, which means the first lender gets paid first if the home is ever sold or taken back.5 Because the second lender takes more risk, the rate on a second mortgage is often higher than the rate on a first mortgage.5
You borrow against your home equity. Equity is your home's value minus what you still owe. If your home is worth $500,000 and you owe $330,000, you have $170,000 in equity. Lenders will not let you use all of it. They typically require you to keep at least 10% to 20% of your home's value as equity.6 That caps your total borrowing at 80% to 90% of the home's value.
The Two Main Types
Home Equity Loan
You get all the money at once in one lump sum.6 The rate is fixed, so your monthly payment never changes. You pay principal and interest every month for a set term, often 5 to 30 years. This works well when you know the exact cost, like a roof, a kitchen remodel, or paying off credit cards.
HELOC (Home Equity Line of Credit)
A HELOC works more like a credit card tied to your house. You get a credit limit and pull money out only when you need it. There are two stages:
- Draw period (usually ten years): you can borrow, and some plans let you pay interest only, so the balance does not shrink.16
- Repayment period (often ten or 15 years): borrowing stops and you must pay off principal plus interest, so payments can jump a lot.1 Some plans instead make you pay the entire balance all at once, which is called a balloon payment.1 This calculator assumes the balance is paid off over the repayment period.
HELOC rates are usually variable. They move with the market, so your payment can rise.1 Federal rules require a HELOC to state a maximum interest rate that can apply over its life, which is the highest rate you could ever be charged.4 It is smart to check what your payment would look like at that cap before you sign.
CLTV: The Number Lenders Care About
CLTV means combined loan-to-value. It adds your first mortgage and your new second mortgage, then divides by the home's value.7 If you owe $330,000 and want $75,000 more on a $500,000 home, your CLTV is 81%. A lender with an 85% cap would allow up to $95,000. Above the cap, you would need to borrow less or find a lender with a higher cap, and a higher CLTV can also mean a higher rate. Lenders also weigh your monthly debt load, so check your ratio with the DTI Calculator before you apply.
Costs to Watch
Second mortgages can come with closing costs, such as origination fees, appraisal, and title work. You can pay them upfront or roll them into the loan. Rolling them in raises your balance and your monthly payment, and you pay interest on the fees too. Some lenders waive some or all of the up-front costs for a HELOC, while others charge fees.1 The APR is a broader measure of the cost of borrowing than the interest rate, because it also reflects points, broker fees, and other charges.3 A HELOC's APR does not include fees, so be careful comparing it with a home equity loan's APR, and do not look at the APR alone.3 Remember that you still have to pay property taxes and insurance on your home.6
Things to Know Before You Borrow
- Your home is the collateral. Missing payments can lead to foreclosure.
- Paying extra each month cuts your interest and shortens the loan. Even $100 a month adds up.
- Interest may be tax deductible if the money is used to buy, build, or substantially improve the home that secures the loan.2 Check with a tax pro.
- Home values can fall. If that happens, your equity shrinks and a lender may freeze a HELOC.1
- A cash-out refinance is another option, but it replaces your first mortgage. If your current rate is lower than today's rates, a cash-out refinance would leave you with a higher rate on the whole balance, while a second mortgage lets you keep your low rate.9
Which One Fits You
Pick a home equity loan if you want one fixed payment and a set payoff date. Pick a HELOC if your costs come in stages, like a long project or tuition bills, and you can handle a payment that may change. Either way, compare the total interest, not just the monthly payment.