Methodology

Formulas

Fixed loan payment: P × r(1+r)^n / ((1+r)^n − 1), r = APR ÷ 12, n = months, payments at period end, monthly compounding. 0% APR → P ÷ n. Extra payments apply to principal the same month.

CLTV: (first mortgage balance + new second lien) ÷ appraised home value. Equity: home value − mortgage balance. Max at cap: value × cap − mortgage, floored at zero.

HELOC draw (interest-only): drawn balance × APR ÷ 12, with an optional intro rate applied to the first K months. Repayment: standard amortization of the drawn balance over repayment months. Annual fees × (draw + repayment years) plus closing costs join the total paid. Stress: repayment re-priced at +2% and +4% with no cap relief — intentionally conservative.

Effective APR with fees: the rate r* satisfying amortPayment(net proceeds, r*, n) = actual payment, solved by bisection. Upfront fees: net = loan − fees. Financed fees: principal = loan + fees, net = loan. Mirrors calculator.net’s APR-including-closing-costs figure.

DTI: (current mortgage payment + other monthly debts + new equity payment) ÷ gross monthly income, flagged at 43% (most lender caps) and 50% (the outer band banks cite).

Assumptions

30/360-style monthly periods; property tax + insurance shown as a separate housing-cost line, never inside the loan payment; fees are upfront cash unless you choose financed mode; HELOC models assume the full initial draw persists through the draw period (worst-case, standard for comparison).

Verified against

Spot-checked $30k/8%/15yr (~$287), $50k/8.5%/10yr (~$620), $100k/9%/15yr (~$1,014) against bank amortization tables; HELOC $40k/9% interest-only ($300) and 15yr amortized (~$406) by hand. Rounding may differ by cents from lender servicing systems.

Limits

Planning estimates, not offers: appraisals, rate locks, DTI overlays, draws repaid mid-period, teaser rates, floors/caps per lender, and tax treatment are outside the model. Confirm any decision with your lender’s Loan Estimate and, for taxes, a professional.