Second Mortgage Calculator
Calculate your home equity loan or HELOC payment, see your combined loan-to-value ratio, and compare total cost between the two loan types.
Property & Equity
Second Mortgage
Monthly Costs
HELOC rates are variable and may change over the life of the loan.
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How Second Mortgages Work #
A second mortgage lets you borrow against the equity you have built in your home while keeping your original mortgage in place. The term "second" refers to the loan's position in the lien hierarchy — if you default and the home is sold, the first mortgage lender is repaid before the second mortgage lender. Because of this added risk, second mortgages carry higher interest rates than first mortgages, typically 1–3 percentage points above prevailing rates.
There are two main types of second mortgages: home equity loans and HELOCs (Home Equity Lines of Credit). A home equity loan gives you a lump sum at a fixed interest rate, repaid in equal monthly installments over a set term — typically 5, 10, 15, or 20 years. A HELOC works more like a credit card: you are approved for a credit limit and can borrow as needed during a draw period (usually 5–10 years), paying interest only on what you have drawn. After the draw period ends, the HELOC enters a repayment phase where the outstanding balance is amortized over 10–20 years with full principal and interest payments.
The maximum you can borrow depends on your combined loan-to-value ratio (CLTV). Most lenders cap CLTV at 85%, meaning the sum of your first mortgage balance and second mortgage cannot exceed 85% of your home's current appraised value. On a $400,000 home with a $280,000 first mortgage, that translates to a maximum second mortgage of $60,000. Some lenders allow up to 90% CLTV but charge higher rates for the additional risk.
When to Choose Each Type #
A home equity loan is best when you need a specific amount for a one-time expense — a kitchen renovation, debt consolidation, or a major purchase. The fixed rate and predictable payments make budgeting straightforward. You know exactly what you owe and when it will be paid off. The trade-off is that you pay interest on the full amount from day one, even if you do not need all the funds immediately.
A HELOC is better when your borrowing needs are ongoing or uncertain — home improvements spread over months, tuition payments across semesters, or a financial safety net for unexpected expenses. During the draw period you pay interest only on the amount you have actually borrowed, which can mean lower initial costs. However, HELOC rates are typically variable, so your payments can increase if market rates rise. The transition from interest-only draw payments to fully amortizing repayment payments can also cause payment shock similar to an interest-only mortgage.
Understanding Combined LTV #
Combined loan-to-value (CLTV) is the single most important metric lenders use to evaluate second mortgage applications. It measures the total debt secured by your home as a percentage of its current market value. A CLTV of 80% or below is considered low risk and qualifies for the best rates. Between 80% and 90%, rates increase and some lenders may require additional documentation. Above 90%, most lenders will decline the application entirely.
To calculate your CLTV: add your existing mortgage balance to the proposed second mortgage amount, then divide by your home's current value. For example, a $280,000 first mortgage plus a $50,000 second mortgage on a $400,000 home gives a CLTV of 82.5%. The calculator above color-codes your CLTV — green for 80% or below, yellow for 80–90%, and red for above 90% — so you can instantly see where you stand. If your CLTV is too high, consider borrowing less or waiting until your first mortgage balance decreases or your home value increases.
Frequently Asked Questions #
What is a second mortgage?
A second mortgage is a loan taken against your home equity while your first mortgage remains in place. It is subordinate to the first mortgage in the lien hierarchy. The two main types are home equity loans (fixed rate, lump sum, equal monthly payments) and HELOCs (revolving credit line with a draw period followed by a repayment period). Second mortgage rates are higher than first mortgage rates because the lender takes on more risk.
What is the difference between a home equity loan and a HELOC?
A home equity loan provides a one-time lump sum at a fixed rate, repaid in equal installments over a set term (5–30 years). A HELOC is a revolving credit line — you borrow as needed during a draw period (5–10 years), paying interest only on what you use. After the draw period, the balance amortizes over a repayment period (10–20 years) with higher monthly payments. Home equity loans offer payment predictability; HELOCs offer flexibility but carry rate variability.
How much can I borrow with a second mortgage?
Most lenders allow borrowing up to 85% of your home's value minus your existing mortgage balance. On a $400,000 home with a $280,000 mortgage, that is $400,000 × 85% − $280,000 = $60,000. Some lenders go up to 90% CLTV with higher rates. Your credit score, income, and debt-to-income ratio also affect how much you can borrow.
What is combined loan-to-value (CLTV)?
CLTV is the total of all mortgage balances divided by your home's appraised value. If your home is worth $400,000 and your mortgages total $330,000, your CLTV is 82.5%. Lenders use CLTV to assess risk — lower ratios get better rates. Most cap second mortgages at 85–90% CLTV.
Are second mortgage interest rates higher than first mortgages?
Yes. Second mortgages carry higher rates because they are riskier for lenders — in foreclosure, the first mortgage is repaid first. Home equity loan rates are typically 1–3 percentage points above first mortgage rates. HELOC rates are variable and may start lower but fluctuate with market conditions.
Is second mortgage interest tax-deductible?
Interest may be deductible if the funds are used to buy, build, or substantially improve your home. Under the Tax Cuts and Jobs Act, the combined mortgage debt limit for deductibility is $750,000 ($375,000 if married filing separately). Interest on funds used for other purposes — paying off credit cards, buying a car, vacations — is generally not deductible. Consult a tax professional for your specific situation.