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$50,000 at 8% fixed costs $36,009 in interest — the same money as a HELOC at 8% costs $90,373.
The home equity loan is the unglamorous sibling of the HELOC, and for a known, one-time expense it is usually the cheaper one: fixed rate, fixed term, amortization from day one. Borrow $50,000 at 8% for 15 years and you pay $477.83 a month and $36,009 in total interest. The same $50,000 drawn on a HELOC at the same 8% — ten years interest-only, twenty years amortizing — quietly runs $90,373, two and a half times as much, because the draw decade never touches principal. The constraint is your equity: lenders cap combined loan-to-value at about 80%, so a $400,000 home with a $300,000 mortgage has only $20,000 of borrowable room. This calculator applies the CLTV cap, prices the payment, and shows the HELOC gap on your exact numbers.
Owners with a known one-time expense use it to see the boring option win: $50k at 8% fixed costs $36,009 in interest against the HELOC's $90,373 at the same rate — and the 80% CLTV cap decides how much equity is actually borrowable.
Lenders cap combined loan-to-value — your first mortgage plus the new loan, divided by the home value — typically at 80%, sometimes 85–90% for a rate premium. The formula is: home value × cap − mortgage balance. A $400,000 home with a $300,000 mortgage at an 80% cap allows just $20,000, no matter how long you've owned it. Appraisal matters too: the cap applies to the lender's appraised value, not your Zestimate, and a low appraisal shrinks the ceiling. Borrowers within a few years of a big purchase often discover they have far less usable equity than the appreciation headlines suggest.
Amount known and needed all at once → the fixed loan almost always wins. The math above is decisive: at identical rates the HELOC's interest-only decade more than doubles lifetime interest ($90,373 vs $36,009 on $50,000 at 8%). The HELOC wins in two real situations: staged spending (a renovation paid to contractors in phases — you only pay interest on what you've drawn) and fast repayment (a two-year bridge where the IO period is a feature, not a trap). Rate risk cuts the same direction: the fixed loan never moves, while most HELOCs float at prime plus a margin — a 2-point prime move adds $83/month per $50,000 drawn. If you choose the HELOC anyway, treat the draw payment as fiction and budget for the amortizing one.
Same rule as HELOCs, made permanent in 2025: only when the funds buy, build, or substantially improve the home securing the loan — a roof, an addition, a full kitchen. Debt consolidation, tuition, and cars don't qualify no matter which equity product you use. The cap is $750,000 of total mortgage debt (first plus second), and you must itemize — with the 2026 standard deduction at $16,100 single / $32,200 married, plenty of borrowers get nothing. When it does apply, it's real money: $36,009 of interest at the 24% bracket is $8,642 back. Either way, the loan is secured by your house — the comparison against an unsecured personal loan at 11% is really a question of whether the rate savings justifies the collateral.