Home Equity Debt Consolidation Calculator
Using home equity to consolidate debt can sharply lower your rate — but it secures consumer debt against your house. Weigh the savings against the risk.
A worked example
Running this tool on current national benchmarks (Federal Reserve / Freddie Mac via FRED (St. Louis Fed)) — swap in your own numbers to see how the result moves.
- Total debt to consolidate
- $30,000
- Current average rate
- 20%
- Current total monthly payment
- $750
- Consolidation loan rate
- 8%
- Consolidation term (years)
- 10
new payment $363.98/mo
- New monthly payment$363.98
- New total interest$13,678
- Current total interest$19,850
How the interest you could save changes with total debt to consolidate
Holding the other inputs at the example above, here is how the result moves as total debt to consolidate changes.
| Total debt to consolidate | Interest you could save | New monthly payment |
|---|---|---|
| $15,000 | $3,440 | $181.99 |
| $25,000 | $397 | $303.32 |
| $30,000 | $6,172 | $363.98 |
| $45,000 | — | $545.97 |
| $60,000 | — | $727.97 |
The math behind it
Like other consolidation math, it amortizes your current debts at their average rate and payment, then amortizes a home-equity loan at its (usually much lower) rate over your chosen term, and compares total interest. Because home-equity rates are low, the interest saving can be large — but the term is often long, which adds interest back, and the debt is now secured by your house. The calculator shows the new payment, payoff time, and net interest impact.
Assumptions & limits
- Consumer debts are combined into one balance at an average rate.
- The home-equity loan is fixed-rate over the term you choose.
- Interest rates are fixed for both paths.
- Closing costs on the home-equity loan are not included — they can be substantial.
- The model does not account for the risk of pledging your home as collateral.
Common questions
What is the real risk of using home equity to pay off debt?
You convert unsecured debt — credit cards and personal loans, which cannot take your house — into debt secured by your home. Lower rate, higher stakes: if you cannot pay, the lender can foreclose. The interest saving is real, but so is the collateral, and this calculator cannot price that risk for you.
Why might a low-rate home-equity loan still cost more?
Home-equity loans often run 10, 15, or 20 years. Even at a low rate, that many years of interest on the balance can exceed what your current debts would cost over their shorter payoff. Watch the total-interest figure, not just the rate, and remember closing costs are not shown here.
Is the interest tax-deductible?
Generally, home-equity interest is deductible only when the loan is used to buy, build, or substantially improve the home that secures it — not when it is used to pay off credit cards. Do not assume a deduction for debt consolidation; confirm your situation with a tax professional.